25 February 2009 00:00 [Source: ICB]
State funding for the development of biorefineries is tiny in this region, compared with the vast sums thrown at their development in the US and China
IN THEworlwide push to develop technology and infrastructurefor biorefineries, Europe is losing ground internationally because of the fragmented nature of its R&D activities and the lack of funds and resources for large demonstration facilities.
Already in terms of financial commitments to development projects, particularly the construction of demonstration plants, the European Union is trailing the US by a long distance.
Even China is poised to pour large sums into biorefinery projects as a result of the priority being given to biomass-derived energy production and manufacturing in the country's latest Five Year Plan.
Demonstration units are important for the development of biorefineries because they are required to test technologies for making coproducts. Like their petroleum-based counterparts, biorefineries will need to gain financially from the better margins of higher-value products to be economically viable. These products will mainly be bulk and specialty chemicals.
However, the supply of funds for biorefinery projects is being squeezed by the recession. Furthermore, the fall in oil prices is raising doubts among investors about the competiveness of biorefineries.
"The problem in Europe, which is being made worse by the recession, is finding money for the building of demonstration plants," says Dirk Cerrez, director for industrial biotechnology policy at the European Association of BioIndustries (EuropaBio). "The EU is now spending a lot more on research in general but it doesn't have a budget for development schemes, like demonstration plants.
"We need three or four big demonstration biorefineries in Europe but at the moment it's uncertain where the money will come from," he adds. "At their present low level,oil prices are no longer a big impetus behind investment decisions."
Among its universities, research institutes and life science, energy and agribusiness companies, Europe has generated a lot of knowledge on technologies for biorefineries and their raw materials. But much of this knowledge is now being transferred abroad because of the lack of development projects in Europe.
Among European companies that are participating in projects for demonstration plants in the US, generously funded by the Departments of Energy and Agriculture in Washington, are Dutch group DSM andDenmark's Novozymes, both specialists in enzyme technologies for biomass processing, and Abengoa, the Spanish-based biofuels producer.
FOLLOW THE MONEY TO THE US
"Most European companies participating in US research projects in this field are multinationals, so being in the US or Europe orAsia is normalbusiness for them," explains Ynte Hoekstra, communications manager at DSM's white biotechnology operation. "The most eye-catching difference between the US and Europe is that while the US is striving and investing in bio-related projects, Europe is lagging behind in stimulating the industry."
Under former presidentGeorge W. Bush's administration, driven by the urge to make the US more independent of Middle East oil, the country's Department of Energy (DoE) announced plans to spend around $1bn (€784m) on biofuels research and development (R&D). As a result of a combination ofDoE grants and private-sector finance, almost $1bn is being invested in six demonstration biorefineries.
The vast majority of EU-backed R&D programs in biorefineries have been focused on research into biorefinery concepts centered on the processing of a variety of biomass types into diverse bioproducts.
DEVELOPING THE WHOLE BIOCHAIN
In the EU's latest round of R&D programs, under its seventh cooperation framework agreement (FP7), the biggest program will be the development of technologies for the entire value chain. They will extend from biomass production, logistics and pretreatment, to biomass conversion into bio-based energy, fuels and chemicals.
The program should attract funds totaling around €100m, €55m of which will come from the EU and the rest from the private sector. But its production facilities are unlikely to be much bigger than pilot plants.
The EU is seen as not only lacking initiative in the development field but also in the setting of targets for use of renewable fuels in transport, which will be a major impetus behind the construction of biorefineries.
The US target, drawn up under the Bush government, is a biofuels output of 36bn gallons (164bn liters) by 2022, equivalent to 20% of the country's transport fuel needs. US President Barack Obama has indicated he wants to raise that target to around 60bn gallons by 2030 bringing the market share of biofuels up to about 30%.
Under the climate-change package thrashed out by the EU in December, 2008, 10% oftransport fuels will have to come from renewable sources. But in addition to biofuels these will also include technologies like fuel cells and batteries.
"The EU's targets for renewable transport fuels are not ambitious enough in relation to biofuels," says Anders Tuxen, energy strategist at Danish bio-innovation company Novozymes. "A lot of different technologies will be competing against each other for a comparatively small share of the market in which there will be no incentive to go beyond 10%. Investors will be worried that the EU targets are too low."
Worries about overcapacity in biofuel production as a result of governments sticking to relatively low renewable fuel targets has led to the cancellation or delay of projects in many EU countries.
In the UK, which has one of the lowest biofuel targets for 2010 in Europe, six companies have recently canceled or postponed the construction of annual capacity of around 1.6bn liters of bioethanol.
Companies going ahead with biofuel facilities in Europeare holding back on their expansion into biorefineries with a wide range of higher-value coproducts.
At Delfzijl, Netherlands, BioMCN, funded by private finance and the Japanese chemical company Tiejin, will spend several years concentrating on the production of biomethanol from glycerin. It will then consider expanding into biorefining through the making of bulk chemicals like bio-based formaldehyde and acetic acid and specialty products like dimethyl ester (DME) as a propellant in cosmetics.
The company is scheduled to open a 200,000 tonne-a-year biomethanol plant at Delfzijl in April. It will thenstart raising funds for a second biomethanol facility of the same size to come on stream in 2010.
"We are aiming to expand into biorefining but that is a long-term concept which will not be realized for 10 years," says Rob Voncken, BioMCN's CEO.
Ensus, a UK-based start-up bioethanol producer, is restrictingits plants to three co-products ofanimal feed, carbon dioxide and electricity. It is due to open at Wilton, inthe UK, in the summer, its first plant, whichit calls a wheat refinery. It will havean annual capacity of 400m liters of bioethanol, 350,000 tonnes of high protein animal feed, and 300,000 tonnes of carbon dioxide for use in soft drinks, as well as 25MW of surplus electricity for adjacent plants at Wilton.
"All the co-product streams makes good business sense as well as improving the contribution to climate change," says Alwyn Hughes, Ensus' CEO.
Some European specialists in renewables now believe that biorefineries will emerge gradually not only from biofuel projects but also from sectors and industries where biorefining concepts are already well established.
One of these is the pulp and paper industry, where for years companies have produced bioethanol for their own energy needs. More recently, paper mills have been using lignin from the black liquor residue from pulp production to manufacture biopolymers for use as binding and dispersion agents, emulsion stabilizers, and extrusion aids.
Chemrec, a Swedish research company, backed by venture capital, has developed a gasification technology for turning black liquors into biofuels as well as biomaterials. If applied in all Sweden's pulp mills, it could provide 25% of the country's automotive fuel consumption, according to the company. Furthermore, because it would be a coproduct of pulp manufacture, its production costs would be much cheaper than that of plants making only biofuels.
Europe may have to rely on additions to existing infrastructure to build up the core of an internationally competitive biorefining capacity.
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