Price and market trends: Commercial production of cellulosic biofuels 'key to growth'

04 October 2013 09:36  [Source: ICB]

Commercial production requires clear policy signals from government that develop the supply chain, consultant says

If commercial production of cellulosic fuels is not in place by 2020, there is a chance that the UK will not meet European biofuels targets, Alex Stewart, associate director of Element Energy, said on 23 September.

“You need cellulosic fuels to continue to grow the industry. If they’re not in place by 2020, there’s a chance that targets will be missed,” Stewart said. Consultancy Element Energy published a report on the role of biofuels post-2020 in the UK earlier that month.

The report focused on three possible scenarios: a low biofuels pathway; a medium biofuels pathway; and a high biofuels pathway.

The low biofuels pathway is where biofuel blending remains at low levels, with maximum blends of E10 (10% ethanol blended gasoline) and B7 (7% biodiesel blended diesel), and a reliance on first generation biofuels.

The medium biofuels pathway supposes that 20% biofuel blends would be introduced from 2020, including some advanced biofuels that meet the Highly Restrictive Sustainability Standards Scenario, ,the UK government’s most stringent sustainability assumptions.

The high biofuels pathway is a scenario whereby there are blending levels of up to 19% of advanced drop-in biofuels into road transport fuels. This compares with the current level of 5% biofuels blended in UK road fuels.

Element Energy forecasted that under the high biofuels pathway, there would be a 27% reduction in emissions in 2030.

Emissions could be cut by 9% in 2030 by following the medium biofuels pathway, according to the consultancy.

INDUSTRY DOUBTS
However, with a culture of ever-changing legislation, investment in new biofuels capacities is difficult to secure, and industry sources question where the commercial production of advanced biofuels needed to meet EU targets will come from.

“If I was in the industry right now, I’d probably think these targets look quite challenging, especially given the recent European Parliament vote,” Stewart said.

The European Parliament recently voted that the use of first generation biofuels should be capped at 6% of the final energy consumption in transport by 2020, and that advanced biofuels should represent at least 2.5% of energy consumption in transport by 2020.

“The low biofuels pathway was a business-as-usual, no-regulatory-change scenario. With the 6% cap the low scenario is just not possible. You’d still require additional cellulosic fuel,” Stewart said.

With legislation a major influence in the biofuels industry, Element Energy says that the UK must implement clear policy signals to develop the advanced biofuels supply chain.

“There is a review being undertaken by the government, looking at ways to change the Renewable Transport Fuel Obligation [RTFO] to better improve supply of advanced biofuels,” Stewart said.

“There is talk of sub targets for advanced biofuels, and double-counting incentives, similar to those in the EU Renewable Energy Directive [RED]. These talks are going on between government and energy companies,” he added.

Despite these efforts, Stewart conceded that biofuels are difficult to make policies for.

“Electric vehicles and hydrogen vehicles are easier to make policies for. Biofuels and indirect land use change (ILUC), combined with non-governmental organisation’s (NGO) differing opinions, mean people want to keep a low profile and focus on legislating for things such as electric vehicles,” Stewart said.

Public opinion also makes developing biofuels policies difficult.

“We need to demonstrate that we’re using cellulosic and waste-based fuels, and then consumers would not mind,” he said.

Biofuels are essential to achieve lower carbon emissions, Stewart concluded.

“The Department for Transport said in order to decarbonise in 2050, every new car has to have zero emissions from 2040 onwards. If you then work back, looking at technical costs and consumer demand, you can still see a lot of internal combustion engine vehicles on the road by 2030.

“Electric vehicles will dominate the market in future, but there will be lots of engines that need liquid fuels into the 2030s.”


By: Sarah Trinder
+44 20 8652 3214



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