The stimulation of
the biofuels market
Author: Lodewijk Michiel Henry Universiteit van Amsterdam Student 0130705
Msc Economics
Supervised by: Prof. dr. J.W. Velthuijsen September 2007
Table of contents
Introduction and explanation of the research question………3
1. The (transport) energy market and basics about biofuels………6
1.1 What are biofuels?...9
1.2 Why biofuels?...11
1.3 Effects on the biofuels market...12
2. Production levels and developments of biofuels………..………….14
2.1 Actual biofuel production levels………..….……..14
2.2 Needed improvements to realise the potential of biofuels………..16
2.2.1 The development of second generation biofuels……….16
2.2.2 Improvements on the production process………18
2.2.3 Improvements related to the logistics………..19
3. EU relationship to energy and biofuels………..………22
3.1 The EU position on energy and biofuels………...22
3.2 The EU energy policy – focus on the targets for biofuels……….………..23
4 The consequences and potential barriers due to the growing demand for biofuels...…….25
4.1 The consequences of the growing demand for biofuels………..………25
4.1.1 Environment consequences………..25
4.1.2 Consequences on developing countries………...27
4.2 Barriers – Competition with food and fibre production for use of arable land...28
4.3 Countries with experiences in biofuels………30
5. Availability of biomass……….35
5.1 Availability of biomass in the EU (related to the biofuel requirements)………35
6. Cost structure of different biofuels………39
6.1 Energy contents and breakdown of different biofuels……….39
6.2 Competition between biofuels and fossil fuels………42
7. Investments in the biofuels market………44
7.1 Investments by the private sector and governments………44
7.2 Industry investments………46
7.2.1 Car industry………..46
7.2.2 Oil and energy industry………47
8. The stimulation and future of the biofuels market……….49
8.1 Focus on Europe………..49
8.3 To achieve this process – “The certificate system”……….54
8.4 Biofuel sustainability………...55
9. Conclusion………...…………..57
10. Retrospect and recommendations………59
10.1 Focus on the EU………61
Introduction and explanation of the research question
The international trade and use of biofuels is rapidly increasing all over the world. The world production of biofuels has more than doubled over the last five years (Groenboek, 2007). Biofuels are seen as the most important and most developed of all renewable sources in the world’s energy market. Biofuel is a term used to describe biomass processed into a more convenient form for use as a fuel. It commonly applies to liquid transport fuels, but it also includes gas and solid fuels such as wood pellets (IEA). Most common biofuels are bio-diesel and bio-ethanol, but there are many others.
The world production of biofuels is growing due to the increasing interests and developments in biofuels. Increasing interests in biofuels is caused by environmental and climate concerns1 , as well as by the global increased demand of energy and the fact that conventional energy resources are ‘running dry’. This growing need for renewable energy sources provides great possibilities for an increased use of biofuels. For the production of biofuels, biomass is needed. The production processes from biomass to biofuels are still under development and will be further improved in the following years (IEA). To realize the growing demand for biofuels, also the supply side of biofuels need to be stimulated and further mapped out. International trade will fulfil to the basics of supply and demand in this market.
The international flow of biofuels is the result of differences in supply and demand between countries. Relations between import and export and between feedstock use for food or fuel are important factors considering biofuels. Policies and related conditions are determinant in the supply and demand of biofuels and governmental interference will definitely have an influence in the overall costs for production and use of biofuels.
Biofuels are a promising source of renewable transport energy with regard to a variety of criteria such as availability, conversion efficiency and usability in the present-day energy policies. There are several governments around the world that believe biofuels will play an essential role for the world’s future need and demand for energy. Countries has adjusted their energy policies and created major opportunities for the market for biofuels to grow. In the EU and in developed countries of the world, governments have set strong new targets to
increase the proportion of clean energy and the share of biofuels shall have in the fuel market.
Hence biofuels markets are developing fast and have great potential. Because biofuels are developing quickly and are a relatively new energy source they are also immature, poorly mapped and rely on policy objectives and incentives that prove to be volatile (Faaij, 2006). So barriers to stimulate the market remain.
Worldwide debates are taking place on the sustainability of large-scale use of biofuels and international trading. A great concern is that there are insufficient possibilities to test biofuels on their sustainability. This could be addressed through the introduction of certain policies and support systems (e.g. through certification). However, when positive measures are not being implemented on time this could cause risks like damaging the image of biofuels as sustainable. As a result the development and implementation process to test sustainability has high priority, as well as other related aspects concerning the growing biofuels market need attention.
This thesis will discuss the existing transport energy market and the role biofuels play in this market. The present and future developments of biofuels will be investigated with attention on the key factors of the market of biofuels. Energy security, climate change, the oil price, biomass availability and price, investments and modern technologies are factors that influence and have impact on this market. The main focus will be on the European Union (EU) market. The EU policy and point of view on biofuels will be discussed and analysed. The key factors together with related aspects that have impact on the developments and stimulation of the biofuels market are thoroughly analysed and discussed to answer the central question:
“What is the most efficient way to stimulate the biofuels market in Europe and especially the development and implementation of the (second generation) biofuels?”
To come to a well structured and thoroughly studied answer this thesis is divided in the following chapters: Chapter one will explain the existing (transport) energy market and basics about biofuels. Chapter two will expand on the energy picture and will discuss developments in biofuels market. In chapter three the EU and progressive countries view on energy and biofuels will be examined and the EU policy on biofuels explained. The EU’s targets are discussed and the impact these targets will have. In the next chapter the
availability of biomass and the concerning issues through increase use of biofuels and demand for biomass are investigated. Chapter five looks at the cost structures of different biofuels. Than in the following chapter, investments of companies and governments in the biofuels market are analysed. In chapter seven the stimulation and development of the biofuels market, with focus on Europe is discussed. Finally conclusions and recommendations will be given how to stimulate the biofuels market in Europe most efficiently.
1. The (transport) energy market and basics about biofuels
The demand of the energy market is supplied by energy services from a range of sources. Globally, electricity accounts for around 17% of global final energy demand, low temperature heat 44% (of which traditional biomass used for heating and cooking in developing countries has a significant share), high temperature industrial process heat 10%, and transport fuels 29% (IPCC, 2007). Ideally these different sources of energy should:
• Secure supplies; • Be affordable and;
• Have minimal impact on the environment and people. However these three (government) goals often compete
In last decades and especially in the last years the global energy demand had grown largely. Figure 1 shows an overview of the total world energy consumption. The world energy consumption has almost doubled since the seventies. In 1973 the world’s total energy consumption was 4607 million tonnes of oil equivalent (Mtoe) and in 2004 it was 7644 Mtoe. This is due to the ongoing prosperity of the Western world and their unfulfilled need for energy. Global population growth also plays a role; the more people the more energy needed. However the growth in demand for energy, particularly in the last years, is mostly caused by emerging countries. China and India are the main drivers. Their economies are growing so fast, yearly around 10%, which means that their need for energy is growing at least with the same rate.
Figure 1: Total energy consumption (Mtoe = Million tonnes of oil equivalent)
NMS4 = Czech Republic, Hungary, Poland and Slovakia Source: COECb
The International Energy Agency (IEA) predicts that the global energy demand in 2030 is going to be almost 60% higher than in 2002. This growth of energy will cause the three goals to compete. Because to secure supplies in an affordable way and with minimal impact on the environment and people becomes harder the greater demand is. Alternative energy sources are being searched for and biofuels is one of them2.
When we focus on the transport energy market the three (government) goals are even more interfered with each other. At present transport energy supply is already vulnerable due to its major dependence on a single fuel source: oil. Petroleum products provide around 97% of transport fuels (World Energy Outlook, 2006) and much of the supply is concentrated in a few countries with economic and political problems threatening their stability. Countries such as Iran, Russia, Iraq, Nigeria and Venezuela are playing a major role in producing and exporting crude oil. Not seen as the most stable countries. On the importers side, the United States, the EU, Japan and China consume most of the oil, with their own production being limited or even non-existent. See also figure 2 for more details.
Figure 2: Producers, Exporters and importers of Crude Oil
Source: IEA, 2006, Key World Energy Statistics
In the total energy market and even more in the transport energy market there is a high dependency on oil and oil plays central role. Besides that the supplies of oil is becoming
less secure by strong declines in North Sea and Gulf of Mexico oil field, the prices are also widely fluctuating. Over the last three years the prices of oil increased largely from approximately $30 to $70 per barrel, see also figure below.
Figure 3: Crude oil prices 1861-2006 US dollars per barrel
Source: BP Statistical Review of World Energy 2007
This fluctuating has an impact on the world economy. Low-income economies that import fossil fuels are particularly vulnerable to price increases which can badly affect their balance of payments (foreign currencies – dollars – are required to buy petrol) and increase their vulnerability (ESMAP, 2005). Also the high income countries are vulnerable for high oil prices, because countries such as the United States, Japan and the EU consume the bulk of the oil, so high oil prices will cost them a lot of money. This could result in increase prices (in general most costs will go up), which could slowdown the economy and lead to a higher inflation.
Transport energy fuels impact the environment and people in different ways. Transport fuels, such as oil, have a negative impact on the environment as it produces CO2 not only during when used for transport, but also during manufacturing and distribution.
Biofuels are seen as a part solution for transport fuels, by becoming less demanding on oil and becoming environmental friendlier. Actual world consumption of biofuels is about 1% but the IEA prognoses it will be about 7% of the transport fuel consumption in 2030. Although biofuels exist for a long-time, just in the last years they have became of real significance. This process and what biofuels exactly are will be explained in the next paragraphs.
1.1 What are biofuels?
Biofuel is a term used to describe biomass processed into a more convenient form for use as a fuel. Broadly biofuels are defined as solid, liquid or gas fuel (Wikepedia). Biofuels are produced from biomass such as plants or organic waste. Biofuels can replace fossil fuels as gasoline and diesel but can also be blended in different concentrations with gasoline or diesel.
Biofuels have the potential to cut CO2 production. In principle the use of biofuels is CO2 neutral because the plants they are made from absorb CO2 as they grow. This is released again when the biofuel is burnt. However, energy is required to grow and harvest the plants and to convert and distribute them into biofuels. In this process CO2 is produced. So biofuels are not completely CO2 neutral but emit relative less CO2 than fossil fuels3. This reduction varies between the different biofuels and can rise to 90% (IEA, 2007, Energy Technology Essentials). For many years biofuels are being used and numerous biofuels have been developed.
There are significant differences between first and second generation biofuels and also amongst biofuels of the same generation. First generation biofuels are made from several food crops while the second generation biofuels are made from crop and forest residues. Differences are due to the manufacturing and use of the biofuels and vary in cost, performance and CO2 production. The first generation biofuels can help to improve the energy security and can offer CO2 reduction. Because first generation biofuels are made from food crops it also creates concerns about competing for mainly water and land resources with food crops. The result has been that food prices have risen significantly (e.g. wheat 60% in 2007) and are expected to rise even further, which will especially be felt by the poorer people in developing countries for which food forms a large part (up to 65%) of their living basket (Blas, 2007).
On the contrary, second generation biofuels are made from a wider range of raw materials such as straw, organic wastes and woody material. So because they are made from non-food feed stocks they do not compete with food crops. Second generation biofuels have many other potential advantages over the first generation. For instance, the cost of second generation biofuels has the potential to be more comparable with standard gasoline and
3 By life cycle analysis and/or well-to-wheels studies, the net CO2 emitted is calculated from the growing of the plant right through to the vehicle exhaust emissions.
diesel and can further reduce CO2 emissions. However, second generation biofuels are not yet commercialised and will not be available in significant quantities for the next five to ten years (World Energy Outlook, 2006).
Biofuels are an important step in a global strategy and an inevitable part of the future energy mix. By present-day technology, biofuels are the best available alternative to fossil fuels for transport. Already many biofuels exist and with the development of second generation biofuels and further improvements on the first generation their diversity is being expanded. Most common and with great expansion potential are bio-ethanol and bio-diesel. Both are already commercial available and especially bio-ethanol will be the main focus of this thesis. Of further importance is the introduction and development of the second generation biofuel: cellulose-ethanol. The exact processes of all these biofuels are complicated and so only the most common ones will be shortly explained.
Bio-diesel is a diesel fuel with strong resemblance to conventional diesel. Feedstock includes rapeseeds, sunflower seeds, soy seeds and palm oil seeds. The production process is divided in three steps. First the oil is crushed out of the seeds. Here arises crude oil that undergoes a purification process. After a trans-esterification process, step 3, bio-diesel is produced. New processes have been developed to expand the relatively small resource base of bio-diesel. Examples are recycled cooking oils and animal fats and synthetic biofuel production via biomass gasification and catalytic conversion to liquid. This is done by using the Fischer-Tropsch process and offers a variety of potential biofuel production processes that may be suited to current and future engine technologies. Nowadays bio-diesel is most often used in 5%-20% blends (B5, B20) with conventional diesel, but sometimes also in pure B100 form (IEA Energy Technology Essentials, 2007).
The most common biofuel used in the world is bio-ethanol, accounting for more than 90% of total biofuel usage (World Energy Outlook, 2006). Bio-ethanol can be produced from many feedstocks, including cereal crops, corn (maize), sugar cane, sugar beets, potatoes, sorghum, cassava. The conventional production process is based on enzymatic conversion of starchy biomass into sugars, and/or fermentation of 6-carbon sugars with final distillation of ethanol to fuel grade. Bio-ethanol is used in low 5%-10% blends with gasoline (E5, E10) but also as E85 (85% ethanol) in flex-fuel vehicles (FFV). These cars are designed to run on gasoline or a blend up to E85. Except for a few engine and fuel system modifications, FFV’s are identical to normal gasoline models.
Nowadays research focuses on advanced processes, so called second generation biofuels. With great potential is lignocellusose-ethanol that utilise the all available lignocelluloses materials to produce biofuels. Feedstocks for lignocellusose-ethanol are cellulose wastes, maize stover, cereal straw, food processing wastes and dedicated fast-growing plants such as poplar trees and switch-grass which hold the potential to increase variety and quantity. Another advantage is that the feedstocks could be grown on non arable land or be produced from integrated crops, which could considerably increase land availability (IEA Energy Technological Essentials, 2007). Although second generation biofuels are not yet commercial viable, research is under way to commercialise second generation production techniques.
Because biofuels are not the same and different biofuels vary in cost, performance and CO2 production depending on what they are made of, how they are manufactured, used and transported. In some cases biofuels can be produced in ways which cause environmental problems in terms of soil protection, water management, biodiversity, air protection, and chopping of the world's forests. But that doesn't change the fact that it is possible to manage biofuel development in ways that reap the potential benefits, without engendering new problems. Commercialised bio-ethanol and bio-diesel are good examples of that. In the following paragraph this increasing demands in biofuels will be explained and later also the effects on this involving expansion.
1.2 Why biofuels?
Biofuels go back as far as Nicolaus Otto, the 19th century German inventor of the internal combustion engine. He expected it to run on ethanol. When Rudolf Diesel wanted to demonstrate his new diesel engine at the 1900 Paris World Fair, he used peanut oil. In fact Diesel was a great believer in the potentials of biofuels. In 1912, with unusual foresight, he said: “The use of vegetable oils for engine fuels may seem insignificant today, but such oils may become, in the course of time, as important as petroleum and the coal-tar products of the present time” (Wikepedia).
So how come that in the past five years biofuels, actually an old technology, is back at the top of political agendas around the world? Several reasons have led to a sudden worldwide interest in biofuels, but the main ones are energy security and climate change.
Climate change has to do with the global warming problem. According to the Intergovernmental Panel on Climate Change, the global temperature rose by 0.7°C in the 20th century. Recent IPCC estimates even say that, without action on climate change, temperatures could rise by as much as 4.7°C by the end of this century. In the last few years an increased awareness and knowledge of the environment is developed and the need for reduction of greenhouse gases (GHG)4 and clean air targets are stimulated. To address the climate change issue the topic of energy plays a central role. Emissions caused by the use of energy represent three quarters of GHG emissions. So biofuels are seen as a part of the solution as they could reduce greenhouse gas emission.
Looking at the energy topic, the global demand of energy is increasing and conventional energy resources are finite. First of all biofuels can reinforce security of supply through diversification of energy sources. Secondly the oil reserves are declining and there are lesser new big oil-fields discovered (BP Statistical Review of World Energy, 2007). This together with other factors5 is causing the oil price to rise, as can be seen from figure 3. Many governments recognize that biofuels could provide an alternative to reduce the high dependence on imported oil. Because of the high oil prices and the production processes of biofuels becoming cheaper (see chapter 6), biofuels as a result are becoming more competitive and more attractive as an alternative.
Climate change and energy security are closely related topics and the two main reasons why biofuels are in such a growth phase. But there are also other factors that have effects on the biofuels market and stimulate or restrain the market. The next paragraph will discuss these.
1.3 Effects on the biofuels market
Several factors have effects on the biofuels market. The oil price shocks and severe supply disruptions of 1973 and 1979 (see figure 3) are good examples to show the effect of the oil price factor. During that period considerable progress was made as a result of large
4 Greenhouse gases are components of the atmosphere that contribute to the greenhouse effect. Some greenhouse gases occur naturally in the atmosphere, while others result from human activities such as burning of fuels. Greenhouse gases include water vapor, carbon dioxide, methane, nitrous oxide, and ozone.
5 Examples are the growing demand in oil and wars and tensions between Western countries and oil production countries as Iraq and Venezuela.
research, development and deployment (RD&D) investments to produce bio-ethanol and bio-diesel. Since then the oil price declined as did interest and research and development funding in biofuels. Until the last couple of years6 since the oil price has increased again. What can be concluded is that the interest in biofuels is not a recent breakthrough created by cutting-edge technologies. The reality is that biofuels have a long and distinguished history with a close relationship between the biofuels market and the oil price dependency.
In addition, other factors that have effects on the biofuels market are (agricultural) policies and investments. An example is the just introduced EU policy on biofuels. The EU introduced a policy that made it obligatory to their member states to have a 10% share of biofuels in the overall transport fuels in 2020. This policy stimulates the demand for biofuels, which also stimulate the development for more efficient ways in producing biofuels. The EU policy will have a world-wide impact and makes biofuel a global discussion topic. It will also help to further develop and stimulate biofuels. Due to this policy, governments of the EU member states have started investing in the development of biofuels. Finally, and probably even more important is that this policy also encourage the private investment in biofuel production and processing plants (OECD, 2004). Investments will result to more efficiency and improvements in the biofuels processes. So eventually policies and partly related to that investments, have effects on the biofuels market.
Important to understand is that the factors that have effects and/or stimulate the biofuels are different from the aspects that really drive the demand for biofuels. The demand for biofuels is for the most part depended on the total energy demand. Globally, the energy demand is increasing largely, see the first paragraph. This growing demand for energy will cause a demand for all sources of energy, including biofuels. Besides that present-day people are looking for sustainable energy because of the awareness of the environment. Consequently, total growing energy demand and the search for more sustainable energy sources are factors that are causing the main growth of demand for biofuels.
In the following chapter the biofuels production levels will be showed and the developments are discussed. By doing this, an overview is created and the future role of biofuels becomes clearer.
6
Only Brazil went on developing and created a well established biofuels market. More on this special case in paragraph 3.4.
2. Production levels and developments of biofuels
2.1 Actual biofuel production levels
The two main biofuel producers are the United States and Brazil. These two countries will also account for the most of the production increase of biofuels in the future. The two most common biofuels, bio-diesel and bio-ethanol will be looked into.
Figure 5: World fuel Ethanol Production, 2000 and 2005
Source: Renewable Energy Policy Network for the 21st Century (REN21), 2006
In 2005 the ethanol production already increased to 33 billion litres, up from 30.5 billion litres in 2004, an 8 percent increase, with most of this in the United States. Brazil processed around 15 Gl from sugar cane feedstock in 2005 which met 44% of its total national automobile fuel demand. A further 2.5 Gl were exported, being half of the world ethanol trade7. The United States caught up to Brazil’s production level for the first time, growing by 15 percent in 2005. Bio-ethanol production from subsidised corn crops increased from 4 Gl in 1996 to over 7 Gl in 2002 and then doubled again to 15 Gl in 2005. It now accounts for 3% of the total US gasoline market (REN21, 2006). Besides the US and Brazil, other countries like China, Canada and the EU countries are increasing their bio-ethanol production.
Also bio-diesel production levels increased heavily over the last few years. In 2005 global production of bio-diesel reached 3.9 billion litres. In that year the EU bio-diesel production increased by 75 percent and it tripled in the United States. The production of bio-diesel is
mainly led by Germany, which alone accounted for half of global bio-diesel production in 2005.
Figure 6: World bio-diesel production, 2000-2005
Source: Renewable Energy Policy Network for the 21st Century (REN21), 2006
The production levels of biofuels are growing significantly and the arising biofuel market looks booming as (energy) demand looks unstoppable. Seen is that the production levels of bio-ethanol are by far the biggest as also the consumption. The increases of bio-ethanol have caused huge flows of bio-ethanol around the world, see figures 7 and 8. Nowadays it is expected that these flows are even bigger, but relevant numbers are not yet available.
Figure 7: Flows of bio-ethanol in 2000 Figure 8: Flows of bio-ethanol in 2004
(thousand tons) (thousand tons)
To control and achieve this growing demand and supply of biofuels progresses happen and have to be undertaken. Improvements are needed to keep up with present-day developments. In the next paragraph these improvements will be discussed.
2.2 Needed improvements to realise the potential of biofuels
The increases of trade in biofuels are of such amount that improvements are bound to come. Some improvements happen naturally but others have to be undertaken and changes have to be made. Research and developments are of great importance to fulfil the rapidly growing demand for biofuels. Besides, the supply should be achieved in a responsible and sustainable way.
Much research8 is done to develop a sustainable biofuel with the ease of practical logistical adjustments. Focus of the research lay on improvements of existing processes and on the development of more effective and sustainable biofuels (second generation biofuels) with a focus on ethanol processes (GAVE, 2001).
To create clearness improvements are divided in three topics: 1. The development of second generation biofuels 2. Improvements on the production process 3. Improvements related to the logistics
2.2.1 The development of second generation biofuels
Although second generation biofuels are not commercial viable, they have great potential. Important is the development of dedicated feed stocks and to increase the range of raw materials that can be used to make biofuels (COECa). The second generation biofuels are made from a wider range of raw materials. This simply means that more materials are available to make biofuels. What for the large-scale use can be cost-competitive and so a great advantage with regard to first generation biofuels.
8 Research and so improvements consist of investments by governments and companies (more on these investments in chapter 7).
Several new processes are being developed and one of the most promising is ethanol production from lignocelluloses feedstock. This process is already well advanced and potential advantages of produced ethanol from lignocelluloses are:
• Lignocelluloses biomass is available in large amounts • Lignocelluloses biomass is available at low cost
• Lignocelluloses biomass can be cultivated with a high yield per hectare and low energy inputs
• Lignocelluloses ethanol is expected to be cost-effective in reducing greenhouse gas emissions
Already three pilot plants have been established in the EU, in Sweden, Spain and Denmark and the processes are under development to become commercial viable in hopefully five to ten years (COECa).
Besides lignocelluloses-ethanol also other second generation biofuels are under development. A good example is the Fischer Tropsch-process (process). The FT-process creates a FT-diesel that can be used similar to conventional diesel. Potential advantages are:
• The logistics are the same to conventional diesel and so the same pipelines and tankers for transportation might be used
• Also the storage at the distribution centres is similar to that of conventional diesel • FT-diesel are very clean: they are free of sulphur, nitrogen and other contaminants Because of these characteristics FT-diesel great advantage is that it can be designed “tailor made” to the desires of car manufactures (Broek, van den, et al, 2003) and that a lot of costs can be saved due to the similarity to conventional diesel.
Overall, the second generation biofuels are still under development and before they become commercial viable will take five to ten years. Lignocelluloses ethanol and FT-diesel are second generation biofuels with nowadays the most potential to become the best successors for the first generation. However, besides the development of new processes, the actual processes of producing biofuels can also be more cost reductive and sustainable. In the next paragraph improvements on the production process will extended are looked on.
2.2.2 Improvements on the production process
The production of first generation biofuels is widely commercialised and optimisation is an ongoing process. Optimisation in the production process can be done by improvements made in different sectors.
A main point in the production process is to reduce the costs. The biofuel industry reduces production costs by using larger biofuel production plants and adoption of energy-saving technologies. In the coming years, new plants are built with state-of-the-art technology.
Improvements can also be made by breeding new crop varieties and growing specialist energy crops9. The kind of crop being used for the production of biofuels is of meaning for the costs but also have different impact on emissions avoided with replacing biofuel for gasoline. New crops can produce more biomass and create biofuels that contain more energy and emit less GHG emissions. Important issues within developing and growing energy crops are:
• Assessing whether the selected crop will be economically viable to grow, harvest and store under the specific circumstances of the market at that time;
• Selecting the most appropriate species and provenance to best match the soil types and climatic conditions;
• Let crop management maximise environmental benefits, minimise any negative impacts and let the crop fit in with existing crop rotations and machine and labour availability (IEA Bioenergy Project Development & Biomass Supply, 2007).
However, change of crops means that landowners should change their land use. This will only happen on a large scale if the landowners can gain more revenue from growing a new energy crop than is being received from the currently traditional crops grown. Therefore there are a few options. Agricultural subsidy need to be introduced or adjusted to encourage the new crop production or the co-benefits from growing the crop need to be better valued (IEA Bioenergy Project Development & Biomass Supply, 2007). Improvements in the raw materials of biofuels have potential10 but need some time to fully make use of their potential.
9
These can be vegetative perennial grasses cut annually or even 2 or 3 times each year; short rotation forests harvested every 5 to 10 years and either replanted or allowed to re-grow from the cut stump; or annual crops purpose grown for their energy components such as oil, or sugar or straw.
What is seen is that existing fist generation biofuels processes can be improved. By expansion, implying new technologies and by breeding new crops improvements are made in the production process of biofuels. These improvements are predominantly related to reduce costs or to produce more. However in this production process improvements can also be made related to the reduction of greenhouse gas emissions. This depends on the type of production facility, type of crop used and some other factors. Improvements are possible by using state-of-the-art technology both in farming practices and in the production facilities.
Consequently, several improvements can be made to the production process. I just mentioned a few shortly. The improvements help to realise the potential of biofuels and the role improvements related to the production process play is central. In the following paragraph the improvements related to logistics will be analysed.
2.2.3 Improvements related to the logistics
In general, the production process of biofuels gets much attention. But the involved logistical problems to realise the potential of biofuels are not often discussed. Virtually no research pay adequate attention to the logistics associated with raw material production, transportation, and storage and inventory management, though it is of vital importance in my opinion. This paragraph discusses improvements related to the logistics. But will also pay much attention to logistical processes to this very day.
The logistics of biomass production exist of: • Harvest,
• Storage, • Transport • Delivery
These logistics are a key part of the supply chain that is often overlooked. Large volumes of variable biomass material need to be transported all over the world. Important is to increase the efficiency and the effectiveness and thereby reduce the costs of logistics. At present the expenses of logistics of biofuels correspond to a significant share of the total cost of traded biofuels (Jansen, 2001).
The logistics costs are closely related to infrastructure and transportation systems. Operations that are a part of this overall transportation cost are: Packing, loading, transportation, unload and storage. There are three major ways for transportation of biofuels; ship, train and trucks.
Sea shipping is the most competitive alternative over long distances, followed by trains and trucks. On relatively short distances transport mostly take place by truck. All three transportation options have there features. For instance, a major advantage when transporting biofuels by train is the possibility to bypass two transfer points; the exporting harbour and the importing harbour. Also is it unnecessary to provide large storage facilities since a trainload is of a much smaller magnitude as a shipload (Nolen, 2001). Sea transport has the lowest variable costs possible. Ocean ships come in all sizes. But the bigger the cargo capacity of a ship, the more efficient a transport can take place. A negative point is that ships are often especially dedicated to carrying biomass and cannot be used effectively on their return trip. When ships are designed to carry out more general tasks, they can be used to take return freights as well (Jansen, 2001).
Another interesting point in the logistics chain is to create storage possibilities for biofuels. Particularly, where biomass cargo is transferred between transport modalities of different scales. A large ship can take a thousand times more freight as a road truck. This implies logistic bottlenecks which can only be resolved by providing sufficient storage facilities. An additional reason for the necessity of storage facilities is the possible seasonal dependency of biofuel supply. The supply of biomass is often limited to a part of the year, while demand is always up and high capital investment costs call for a continuing supply of feedstock. This asks for a peak production during part of the year, which could stress the logistic capacity of the storage facilities and potentially of the whole chain.
Overall, the costs do not depend much on the type of transport but are more sensitive to the bulk density and moisture content of the cargo (Ehrning, 2001). A good example is: When trucks are transporting materials with a low energy density, the bulk density of the cargo might be lower than the mass-volume ratio of the truck used. In that case the number of necessary truck rides can be limited by applying special densification techniques to the material. In case of material with a high energy density, the maximum allowed tonnage is crucial. A lot of weight is caused by the water contained in the biomass so the number of necessary truck rides can possibly be reduced by drying the material before transport. What happens is that some forest and crop residues are often not competitive because the biomass
resource is dispersed over large areas leading to high collection and transport costs. The costs will be minimized if the biomass can be sourced from a location where it is already concentrated, such as an ethanol plant or sugar mill (IEA Bioenergy Project Development & Biomass Supply, 2007).
In conclusion, seen is that there are various costs and features in the logistical process of the production of biofuels. These steps have a significant impact on the cost structure and are a key part of the supply chain. Important for the future and improvements that need to be done are:
• To map out the various costs; so biofuels can be produced as effective and with the lowest costs possible
• Technology improvements in transport, storage and other logistical steps should be stimulated and perhaps financial supported; as they will help to develop the central future goal of a sustainable and cheap biofuel
All these improvements are made to achieve the growing demand of biofuels in the best possible way. What means the most sustainable and relative cheap way. However, the growing demand for biofuels will anyhow have certain consequences and barriers. Before discussing certain consequences and potential barriers (see chapter 4), the next chapter will first discuss the EU relationship to energy and biofuels. How the EU is handling the growing need of energy and what the EU position is in the fast developing biofuels market.
3. EU relationship to energy and biofuels
Particularly the EU has major concerns about energy security. The EU is besides the largest importer of energy also the second largest consumer of energy in the world. The total needs for energy in the EU current depends for 50% from external sources and following IEA predictions this could rise to 70% by 2030. So that the EU have interests in an alternative energy source is obvious, but how does it face biofuels?
3.1 The EU position on energy and biofuels
The EU is increasingly dependant on insecure sources of energy imports. Especially for transport fuels there are doubts how long the flow of oil can match global demand into the future (“energy supplies”). The transport sector of the EU is importing more than 80% of its oil needs11 and this is set to increase (COECf, 2007). With oil prices remains high, it is not strange the EU is looking for alternatives. Secondly, the CO2-emissions from the transport sector continue to grow and the compliance of the EU’s Kyoto target is under threat (“climate change”). These two topics are of main focus in the EU policy on energy.
Biofuels have a unique role to play in this European energy policy. As in general (seen in paragraph 1.2: Why biofuels?), biofuels can reinforce the EU’s security of supply through diversification of energy sources and are one of the few practical ways to significantly reduce greenhouse gas emission in transport. Reducing the GHG emissions in EU transport sector is of high priority. This sector is responsible for one third of CO2 emissions in the EU, and those emissions are growing faster than in any other sector (COECf, 2007). The EU should develop a biofuels policy which meets the objectives on security of supply and climate change, while ensuring sustainable development.
Consequently, the European Union is forging a new common energy policy were biofuels figure prominently. Targets are introduced which will have significant impact on the biofuels market. In the following paragraph this new energy policy related to biofuels will be discussed.
3.2 The EU energy policy – focus on the targets for biofuels
The production of biofuels is increasing strong in the EU, already seen in figure 5. And due to the new energy policy this will surely increase further. The new EU energy policy is a successor of the in 2003 adopted piece of legislation. This so called biofuels directive promoted the use of biofuels and/or other renewable fuels12 for transport. And each EU member state was obligated to translate this into national law. The proposals took place under conditions that were different from today.
At that time, biofuels were a marginal fuel which counted for 0.5 percent of the transport fuel market. And only a few countries in the EU had experience with the use of biofuels (Broek, et al, 2003). Meanwhile, the real oil prices had fluctuated around the low price level of $20-$30 a barrel band for more than 15 years, see figure 1. As a result there were no major concerns at that moment. However, the directive set two indicative targets:
1. A 2% share of biofuels in the EU fuel market in 2005
2. A 5.75% share of biofuels in the EU fuel market in 2010 (Broek, et al, 2003) These targets were not mandatory and so there was and is no legal obligation for the member states to achieve the levels of biofuels13. In 2004 the average share of biofuels was 0.6 percent and 10 member states did not produce any biofuels at all. In 2006, biofuels' share only reached 1.5 percent (related articles of the IEA). And so the EU did not achieve the first indicative target in 2005.
Nowadays, there are positive developments within the EU. Nearly all EU member states have put measures in place to support biofuels and the European Commission has started several infringement procedures. Some member states are using tax exemptions and others are using biofuel obligations under which fuel suppliers must include a given proportion of biofuel in the fuel they sell. Partly due to this tools it is expect to see biofuels shares increase and reach around 4 to 4.5 percent in 2010 (Miguel, 2006).
Consequently, the EU is probably not achieving their 2010 targets. This gave them thoughts to review their policy. Due to the increasing urgency of insecure energy supplies and
12 An example is hydrogen. Hydrogen has enormous potential. However, are far away from large-scale viability and require major changes to vehicle fleets and to the fuel distribution system, whereas with biofuels a small and cheap adjustment to the engine will do (COECf, 2007).
13
Although a growing number of EU countries, like France, UK, Germany, the Netherlands, Czech republic, Slovakia, Italy, Austria, Poland, Hungary and Lithuania, are introducing an obligation to these
climate change, the EU came in March 2007 with an action plan for launching a new energy policy. The key objectives of the energy policy were (COECg):
• To improve the ability to achieve the target of 2010 • To look beyond 2010
• Reaffirms the importance of greenhouse gas reduction and security of supply The new energy policy consists of long-term scale propositions that look beyond 2010. This is done by the two following targets:
1. A 20% share of renewables in the EU total energy mix in 2020 2. A 10% share of biofuels in the EU fuel market in 2020
One of the great differences between earlier propositions is that these targets are not indicative but mandatory. Of main importance for biofuels is the mandatory target of a 10% share of biofuels in the EU fuel market in 2020. By introducing the second target the EU is working to create an internal biofuel market what will serve as a basis for encouraging relations with external partners.
The second target will definitely keep the EU demand for biofuels growing. And has impact on the production levels of biofuels in the EU but also world-wide. It will also have consequences on other aspects as import and export, the environment and sustainability14. Overall consequences and also potential barriers that occur by the growing biofuel demand (partly due to the new EU energy policy) will be discussed in the next chapter.
4 The consequences and potential barriers due to the growing demand for biofuels
All kind of developments on the biofuels market will have several positive and negative consequences and barriers always occur. This chapter will look at certain consequences due to the growing demand for biofuels and will look at the potential barriers that may rise.
4.1 The consequences of the growing demand for biofuels
The growing demand of biofuels has positive and negative consequences. Important is that the positives overrule. Some positive consequences are in line with the general advantages for biofuels. So will biofuels and also a growing demand for biofuels:
• Reduce GHG emissions • Enhance energy security • Diverse energy
• Increase energy access
But the growing demand has also other consequences. The demand will provide new end-markets for agricultural products, boost employment and growth for rural communities and accelerate technological innovation. That means that developing countries can also benefit from this growing market. In countries where production is expanded, terms of trade are improved and employment increases. However, important is to encourage the production of biofuels in ways that contribute the most greenhouse gas savings and is produced in sustainable and environmentally friendly way (COECf).
In the next two subparagraphs the environment consequences and the consequences for developing countries will be further discussed.
4.1.1 Environment consequences
Essential is to ensure that this growing increase in biofuels is fulfilled in a sustainable way. What also means to focus on the feed stocks of biofuels: biomasses. And the way they are cultivated and produced into biofuels. The development and process of the biofuels market must be tempered by environmental reality.
According to Peter Mandelson15 the EU biofuel policy should be determined by global environmental concerns. Prioritising the greenest biofuels whether produced within the EU or imported. He argues: “Biofuel policy is not ultimately an industrial policy or an agricultural policy; it is an environmental policy, driven above all by the greenest outcomes” (EU biofuels target has global impact, 2007). The point he addresses is noteworthy.
Biofuels have their own impact on the environment and have to be managed sustainable. The needed biomass have to be produced in a sustainable way and the manner how this is done is an essential question that depends on the definition of sustainability. For illustration; the residues of plantation forests that would otherwise be left to decay and wood process residues that would otherwise be disposed of in landfills are probably sustainable forms of biomass. Growing sugarcane for bio-ethanol production and using the bagasse for heat and power generation is possibly sustainable as long as the soil nutrients are well managed and any nutrients removed at harvest are eventually replaced. However, the intensive production of corn for ethanol production or oilseed rape for bio-diesel production need relatively high inputs of fossil fuels, nitrogenous fertilisers and agri-chemicals. And therefore can be marked with a question mark if they are sustainable or not (IEA, 2007, Bioenergy Project Development & Biomass Supply).
Figure 9: Residues of an Australian eucalyptus re-growth forest
Most biofuels deliver solid greenhouse gas savings. But there exist inefficient production techniques that do not. And although most biofuels will be produced on land that has been
cultivated for generations, some will come from land that is newly brought into cultivation. Here, there is a risk of causing big greenhouse gas losses through the release of carbon stored in the soil and in plants. There is also a risk of disturbing biodiversity and disrupting natural habitats (IEA). These risks, and the use inefficient production techniques, need to be avoided.
Seen is that the growing demand for biofuels can have positive but also negative consequences on the environment. To protect and sustain a healthy environment and at the same time stimulate the growing biofuels demand a clear (EU) biofuels policy should be developed. This policy should meet the objectives of security of supplies and climate change, while ensuring sustainable development. Herein should be noticed that we must not pursue a policy which simply shifts environmental problems from one sector to another or from one continent to another. That is also why next subparagraph looks at the consequences on developing countries.
4.1.2 Consequences on developing countries
The growing demand for biofuels can have many positive consequences for the developing countries. They can profit by:
• Improving terms of trade
• Expanding the production and use of produced biofuels • To adopt appropriate policies for their own long-term benefit • Increase of employment16
Many developing countries have spare agricultural capacity. And often a climate and land profile that suits energy-rich biomasses. However one of the greatest concerns in developing countries is of environmental value; that they produce biomass in an unsustainable way. Like systematically burning fields after harvests or if it comes at the expense of rainforests.
16 A good example is a recent study from the Inter-American Development Bank that argued that replacing 10% of Mexico’s petrol consumption with locally refined ethanol would save $2 billion a year and creates 400,000 jobs (Fuel for friendship, The Economist, 3 March).
Nowadays the European market demand is fulfilled by low-cost Brazilian bio-ethanol17 as well as more costly biofuels produced in Europe. Due to the imposed target of a 10% biofuels share in 2020 import will likely remain an important source (COECf). In the longer term, it is expected that the best performing biofuels in terms of economic, but also environmental performance, will dominate the market (GAVE, 2001). Vital is that developed and developing countries work together for putting in place sustainability schemes to pull producers towards more durable production methods. Striking a sustainability balance is difficult to realise in the developed world and even harder for developing countries with limited capacity to regulate and verify (IEA). So the EU and other developed countries (like the US) should help developing countries. By helping them to expand the production and use of sustainable produced biofuels and/or to adopt appropriate policies for their own long-term benefit. This will require programmes to promote technology transfer, capacity building and collaborative research and development. A strong degree of cooperation between countries, and between industry and government will be needed (World Energy Outlook 2006).
The growing demand for biofuels has several consequences on the developing countries. Several examples are briefly mentioned. But not yet discussed is the competition between food and fuel due to the growing demand of biofuels. This has especially for the developing countries a significant impact because those people spend a great share of their income on food (Khosla, 2007). In the next paragraph this barrier is discussed.
4.2 Barriers – Competition with food and fibre production for use of arable land
That the growing demand for biofuels has many positive consequences is seen. However, certain barriers to realise this demand remain. Examples are cost, regional market structure, water and fertiliser use, logistics and distribution networks and the competition with food and fibre production for use of arable land. This competition between food and fuel will be discussed in this paragraph.
About 14 million hectares of land are now used for the production of biofuels, equal to about 1% of the world’s currently available arable land. And this share rises to 2 a 3.5% in
17 However, nowadays import tariffs in the EU are so high that they almost prevent importing. In the future these tariffs probably will be lowered (IEA).
2030 (World Energy Outlook, 2006). This arable land is the point of discussion. Biomass energy production can divert agricultural production away from food crops. With the growing demand for biofuels the demand for biofuels crops also grow. The biofuels crops compete with food crops in a number of ways:
• Agricultural • Rural investment • Infrastructure • Water • Fertilizers • Skilled labour
The main objection is the competition with food production for land use; that this competition causes food shortages and price increases. The point often mentioned is that the growing demand for biofuels is causing food shortages. This is not reasonable. The world already grows more than enough food to feed everyone. However about a million people do not have enough food to meet basic daily needs. But that is not because there is not enough food produced. But distribution (Khosla, 2007) and the prices people have to pay for their food due to the economic system are seen as the real problems.
This problems related to the growing demand of biofuels is difficult. However, in the same period that biofuel demand increased the cost for sugar also increased by 100% and in smaller figures other food crops. It is hard to prove that the increasing food prices are partly or fully due to the growing demand for biofuels. However, it can be assumed that the growing demand for biofuels is at least partly involved in these price increases. That is also why the second generation biofuels are so important to become commercial viable. Because cellulose feedstock for instance could be grown on non arable land or be produced from integrated crops. That could considerable increase land availability and so reduces the pressure on the food prices.
Consequently, competition between food and fuel is a complex problem and more research on this topic is needed. However, to anticipate the problems the second generation biofuels should be further developed and become commercial viable. And the first generation biofuels, that need to be grown on arable land what is also used for food should be well managed and controlled. Certain countries, especially Brazil, are already far in developing a biofuel market and managing the demand for biofuels in a sustainable way. The learning
of these countries can be very instructive, for developing countries as for the EU. The next paragraph is about countries that have relative more experience with biofuels.
4.3 Countries with experiences in biofuels
Looking at countries with experience in biofuels it is logical to look at the two biggest producers of biofuels in the world: Brazil and the US. Especially Brazil has developed an extensive biofuel market. But also other countries have been active in biofuels. Examples are EU countries like Germany, France, Netherlands, Spain and Sweden and countries like Canada, Australia and Thailand. These countries have not been active in developing biofuels as long as Brazil but have also added significant research to the development of biofuels.
Interesting is to compare biofuels out of the different countries. Figure 10 gives a good sight in what kind of crops are used in the different parts of the world and their production costs. It can be seen that Brazil’s ethanol derived from sugarcane is by far the cheapest producer and that biofuels produced in the EU and US still cost significantly more18.
Figure 10: Cost of ethanol production
Source: Rousseff, 2007
Besides the lower production costs Brazil’s sugar cane also delivers the most GHG reductions. Compared to the biofuels from the EU and US (with around 20% to 50% emissions avoided), Brazil sugar cane avoid almost a double percentage of emissions (around 80% to 90%) with ethanol replacing gasoline (IEA, 2007, Energy Technology
Essentials). So far all facts about Brazil’s biofuels are positive, but Brazil biofuels are also in bad publicity sometimes, why?
It is suggested it deforests the Amazon forest. However seen from the figures, the crops and the ethanol plants are far away from the Amazon forest. The fact on the contrary is that more and more Amazon forest disappears and the rumours are that it is partly due to the growing demand for biofuels19. Probably there are many illegal chopping places. And so it is one of the most important tasks of the Brazil government to prevent that.
Figure 11: Sugar Mills location – 2007
Source: Rousseff, 2007 – Brazil Ministry of Mines and Energy – Brazil Ministry of Agriculture, Livestock and Food Supply
Figure 12: Crops location – 2005/2006
Source: Rousseff, 2007– IBGE (Preservation Areas) and CTC (Sugarcane Crops)
Overall Brazil is the most developed country concerning biofuels. And it is expected that Brazil will expand their production levels and have a great share in the biofuels flow around the world (World Energy Outlook, 2006). To manage the enormous flow of biofuels a well structured infrastructure is needed and a good overview of demand has to be mapped out. The production in 2006 was 18 billion litres of which 3.4 million was exported. Partly due to upcoming demand from the US and EU this is expected to grow further. Brazil is investing significantly and drawn up several issues as of 2010 (Rousseff, 2007):
• Investments20 that will amount US$ 8.6 billion in 77 plants
• Increase in the ethanol production (in comparison with 2006): 6 million m3 • Expansion in the sugarcane cropped area: 2 million hectares
• Expansion in exports infrastructure: to reach a capacity of 8 million m3/year
These issues are drawn to manage the increasing demand in the most effective way so that they create a better position in the world (bio) fuel market and as sustained as possible.
In contrast with other countries Brazil use of biofuels is far more advanced and larger. Biofuels accounts for 17.2% of total vehicle fuels and in almost every gas station available (Rousseff, 2007). So how come that Brazil is so much further developed than other countries? Brazil’s development of production and use of biofuels is closely related to the alcohol program PROALCOOL that started already in 1975 and is considered the largest commercial biomass program in the world 21. The program had the purpose of supporting production of ethanol that could be blended with gasoline. Overall, Brazil has good conditions for large-scale production of biomass, i.e. land availability, adequate weather conditions, no special constraint regarding labour, domain of technology and the existence of know how due to the alcohol program. And so Brazil is much further developed in biofuels than any other country.
As stated earlier, some European countries are also being active in biofuels. And due to the new energy policy more interest in producing and developing biofuels is created. In the last decade countries like Spain, Sweden, Germany and France have been active in developing biofuels as can be seen from their production levels in figure 13.
20
Agricultural and industrial phases 21
The main reason of the program was to decrease Brazil’s dependence of imported oil. The decision was also influenced by frequent problems due to the excess of sugar production and strong variations in the international price.
Spain is mostly active in bio-ethanol and Germany mainly focuses on bio-diesel. France and Sweden are producing both bio-ethanol and bio-diesel. And it was France that launched the first (of all European countries) biofuel program which started in the early nineties. France produces bio-ethanol for two third from sugar and for one third from wheat and is used to produce ETBE22, which is blended at 15% into a limited part of the French gasoline. In Spain the bio-ethanol is converted into ETBE and uses it in three to four percent blends in gasoline (Broek, van den, et al, 2003).
Figure 13: Bio-ethanol production and consumption by country in 2005
Sources: Production levels: eBIO and Consumption levels: Licht, 2006
Out of these countries Sweden and Germany have made most progress. Sweden is absolutely a country to make notice of. It is the only EU country that has achieved the 2005 target of 2% by bio-ethanol only and is now blending up to 5% ethanol in petrol. It is the most progressive EU country what can partly be seen due to the strong market development for the flex-fuel vehicles. Of all new cars, 15% are flex-fuel vehicles (Miguel, 2006). Germany, as noticed is more focused on bio-diesel, but the policies of the two countries have several common factors. They promote high-blend, pure biofuels and low blends compatible with existing distribution arrangements and engines. Both countries have given biofuels tax exemptions, without limiting the quantity eligible to benefit. Both have combined domestic production with imports (from Brazil in the case of Sweden, from other European member states in the case of Germany). And ultimately, both are investing largely in biofuel research en development and have treated first-generation biofuels as a bridge to the second-generation biofuels (COECf).
In the last couple of years the interest and so development increased and is expected to increase even more. This will happen in the above mentioned EU countries as in all other EU countries (due to the new energy policy). However in the majority of all EU countries the contribution of biofuels is still a too small share of the total fossil fuel consumption. So the biofuel consumption and production will have to grow substantially if they want to achieve the EU proposed targets. Useful for the EU countries is to look at the impressive learning of Brazil.
Looking back on how the EU biofuels market can be stimulated. It is important to look at the developments of biofuels in the EU. And learn from these developments as learn from further developed markets, as Brazil. Further is it important to know how much of the biofuel can be produced in EU countries, and in a sustainable way. The several cost structures of different biofuels and investments of companies and governments. These topics will be discussed in the next chapters to obtain a well analysed answer. The next chapter discusses the biomass availability in the EU for producing biofuels.
5. Availability of biomass
To meet the certain requirements of the growing demand of biofuels the availability of biomass must be analysed. The potential availability of biomass (in Europe) is in the first instance a question for the demand of potential available land. To make land available for biomass it is important to do that without conflicting with the food production, preserve of biodiversity and forests and the realisation of ecological and social economical responsible way of production.
5.1 Availability of biomass in the EU (related to the biofuel requirements)
The imposing targets of twenty percentage renewables in the total EU energy mix and a ten percent share of biofuels in the EU fuel market by 2020 are of a kind that is new for the EU and the world. By doing this, the demand for biofuels is stimulated with all kind of questions and consequences. One of the main questions is automatically: Will there be sufficient availability for biomass in the periods under consideration?
In general, the global potential biomass availability mainly depends on the population growth, the future average diet and the future agricultural productivity. In the EU the agricultural policy, especially its policy on set-aside land is also of importance (IEA). In this chapter the already past target of 2% in 2005 and the target of 5.75% in 2010 will be evaluated. Besides those, the 2020 target will be discussed.
Biomass production systems are frequently focussed on the production of food, animal feed or fibre. In some cases there is an energy by-product which is commonly used, either directly in heat and power plants or to produce biofuels. Commonly, all biomass residues can produce bio-energy. Modern biomass is anticipated by many advocates to provide a significant contribution to the global primary energy supply. The deployment of modern bio-energy projects and the growing international trade in biomass-based energy carriers offer potential opportunities23 for many countries wishing to achieve economic growth as
23
However developing a bio-energy plant can be a challenging process. Securing reliable and cost effective supplies of biomass feed stocks, produced in a sustainable manner over the operating life of the plant, can prove to be difficult (IEA, 2007, Bioenergy Project Development & Biomass Supply).
well as meet the goals for sustainable development (IEA Bioenergy Project Development & Biomass Supply, 2007).
Already is biomass the largest renewable energy source in use today. Seen from the figure is that biomass (or as in the figure combustible renewables and renewable waste) provides more than 10% of the world’s primary energy needs. Striking is that most of this 10% is in developing countries.
Figure 14: Fuel Shares of World Total Primary Energy Supply* – World total primary energy supply is 11 059 Mtoe in 2004
* TPES is calculated using the IEA conventions (physical energy content methodology). It includes international marine bunkers and excludes electricity/heat trade. The figures include both commercial and non-commercial energy.
** Geothermal, solar, wind, tide/wave/ocean. Totals in graph might not add up due to rounding. Source: IEA Renewables in Global Energy Supply, 2007
However, the share of biomass that is produced especially for biofuels is not that big. Most of this 10% use of biomass is burn cow dung on basic stoves (Sunlit uplands, The Economist, 2007) and often not that sustainable. So, as often mentioned in this thesis, the central point of discussing is that biomass must be produced sustainable or this natural resource will be depleted just like fossil fuels.
To see if there is enough biomass available that is suitable for the production of biofuels can be done in terms of the energy content of the liquid biofuel. Important is to create an overview of the availability of biomass in the EU. To do that the biomass availability of the Netherlands will be evaluated. The Dutch ratio between potential biomass availability and
