London, UK [RenewableEnergyWorld.com] The term ‘biofuels’ has generally has come to mean liquid biofuels for use in transport and is applied to a wide range of products. These fuels may be used in internal combustion engines as replacements for petroleum, diesel oil or other additives.
Ethanol is the main replacement fuel for petroleum, while a diverse group of diesel-like products manufactured from vegetable or animal oils are known as biodiesel, and can replace fossil diesel in standard engines. Ethanol, also known as bioethanol, can be produced from the direct fermentation of sugar- or starch-containing foodstuffs, such as grain or sugarcane, or through so-called second-generation technologies, which involve enzymes and other chemical means to break down the cellulose in plant cells, allowing it to be subsequently turned into alcohol by fermentation.
Similarly, biodiesel can been made in various ways. The most common is the simple trans- esterification of fatty acids, removing glycerol and producing a diesel-like substance. For this process a variety of oils can be used, including animal fat, soy, palm, rapeseed, coconut and sunflower. Like bioethanol, there are also now a number of second generation biodiesel technologies, one of which uses the Fischer-Tropsch process to turn wood and plant matter into a synthetic gas, which can then be converted into diesel.
It is generally assumed that second generation biofuels will lead to greater reductions in greenhouse gas emissions than earlier products (although this is not necessarily the case) and with increasing concerns about the potential impact of large-scale biofuels development on food prices, water supply and land clearance, such advances become more likely.
Although, theory suggests that biofuels are carbon neutral – with the combustion process releasing only the carbon the plant had absorbed during its lifetime, once the energy inputs into farming, such as fertilizers and transportation are accounted for – this figure changes, depending on the crop and production technique. Land use change is also considered.
Based on announced targets and pending regulations, BP’s assessment is that biofuels could account for 11%–19% of the transport fuel market by 2030, and up to 30% is possible if certain barriers are addressed, particularly in the area of second generation cellulosic biofuels.
With the June 2009 official publication of the EU’s Renewable Energy Directive, all 27 member states are now obligated to supply 10% of the total transport energy requirements from renewables by 2020. There is a similar target in the Fuel Quality Directive that GHG emissions from road transport fuels will reduce by at least 6% from 2010 levels by 2020. Inevitably, the majority of this requirement will be delivered by biofuels – such as ethanol and biodiesel – as the only currently credible large-scale alternatives to oil and petroleum products. Biofuels will only be eligible for either Directive if they offer a minimum GHG saving relative to fossil fuels and do not come from land of high carbon stock or biodiversity. Member States are also obliged to gather information on a wide range of environmental and social sustainability issues.
The case for addressing renewable energy in transport is considerable. Under a business-as-usual projection, Europe will be importing 64% of its total energy requirements in 2020; it already imports more than half. However, for transport the current figure is 98%, and the sector is expected to account for more than 60% of the EU’s increase in carbon dioxide emissions between 2005 and 2020. Transport accounted for over 20% of the EU’s greenhouse gas (GHG) emissions in 2005. And, although progress has been made in reducing GHG emissions in many sectors over the past 15 years, Europe’s transport emissions continue to rise.
The Commission is set to establish a standard format for National Action Plans to meet the targets by the end of June 2009, and Andris Piebalgs, European Energy Commissioner, has confirmed that there are several flexibility components under development that are designed to make meeting the targets more cost-effective for the EU as a whole. ‘Apart from the possible trade in renewable raw materials, a framework for making statistical transfers and for agreeing joint projects is now being made available to achieve the targets at the lowest possible costs,’ he said.
Philip Wolfe, director general of the Renewable Energy Association, commented on the Directive, saying: ‘Spending money on boosting renewable heat, electricity and transport fuel production can help lift us out of recession.’
Ahead of the wider European Renewable Energy Directive, the UK had already established the Renewable Fuels Agency (RFA) to implement the Renewable Transport Fuel Obligation (RTFO), which came into force on 15 April 2008. The RTFO obliges fossil fuel suppliers – refiners, importers and any others who supply more than 450,000 litres of fossil-based road transport fuel annually to the UK market – to ensure that biofuels make up an increasing proportion of fuel supplied on UK forecourts.
The RFA administers the monthly reporting process required of fuel companies under the RTFO, issuing Renewable Transport Fuel (RTF) certificates, and aims to achieve 90% compliance with data reporting, and for 80% of all biofuels certificated to have achieved appropriate environmental standards by 2010.
The target for the first year of the obligation, 2008–2009, was 2.5% by volume. As well as obliging fuel suppliers to meet targets for the volumes of biofuels supplied, the RTFO requires companies to submit reports on the carbon emission savings and sustainability of the biofuels. The RTFO measures the sustainability of biofuels by seven criteria; preservation of carbon stocks, biodiversity, local impacts on soil, air and water, workers’ rights and land rights.
However, in response to concerns over the indirect effects of biofuels, the Gallagher Review was released in July 2008. The review, led by RFA chair, Professor Ed Gallagher, concluded that the introduction of biofuels should be slowed until effective controls are in place to prevent land use change and higher food prices. The document added that while there is a future for a sustainable biofuels industry, creating the right policy framework ‘is challenging and will take time.’ It also argued that biofuels production must target idle and marginal land, and the use of wastes and residues, and pointed towards specific incentives to encourage second generation biofuels to utilize marginal land and waste, without the need for agricultural land, for example using algae.
Professor Gallagher said: ‘Our review makes clear that the risks of negative impacts from biofuels are real and significant, but it also lays out a path for a truly sustainable biofuel industry in the future.’ The review proposed that the rate of increase of the UK’s biofuel target should be reduced to 0.5% per annum, and that targets beyond 5% by volume should only be implemented beyond 2013–2014 if biofuels are shown to be demonstrably sustainable. These higher targets should include a specific obligation on companies to use advanced technologies.
Subsequently, an amendment order passed on 1 April 2009 which reduced the rate of increase for biofuel supply under the RTFO. The revised RTFO also corrected an error in the original legislation, that had effectively halved the target for 2008-2009 and added two new eligible fuels, biobutanol and renewable diesel. The revised targets are 3.25% in 2009–2010, 3.5% in 2010–2011, 4% in 2011–2012, steadily rising to reach 5% in 2013. Originally, the initial requirement was for 2.5% in 2008–2009 and the RTFO had proposed that this should increase by 1.25% a year to 5% in 2010–2011.
However, the move has not been universally well received. For example Alwyn Hughes, chief executive of bioethanol company Ensus, which is currently building Europe’s largest biorefinery in the north east of England, commented: ‘We are very concerned at the suggestion of backtracking on existing commitments under the RTFO. We think this is unnecessary when sustainable production can already be achieved. Such a move would only serve to jeopardize the industry’s ability to deliver the substantial benefits that are possible. Furthermore this runs the risk of frightening off the very investment in renewables that the government is relying on to meet their own climate change targets.
‘Instead of encouraging a ‘go slow’ approach, we therefore need to press ahead quickly to actively promote a sustainable biofuels industry in both the UK and Europe,’ added Hughes.
Nonetheless, with the second reporting year under the RTFO underway, suppliers must now supply 3.25% of road transport fuel they supply as biofuel. The targets for carbon and sustainability performance this year have also increased, with suppliers expected to: deliver at least a 45% reduction in greenhouse gas emissions; ensure that at least 50% of biofuels meet sustainability criteria; and report at least 70% of the data required by the RFA.
According to the RFA’s third quarterly report, released on 7 April 2009 (covering 15 April 2008 to 14 January 2009), 987 million litres of biofuel had been supplied under the RTFO, estimated at about 2.7% of the total UK road transport fuel supplied during the period. At 84%, far more biodiesel was supplied than bioethanol, which comprised some 16% of the total. The majority of feedstock was imported – 96% of the fuel supplied – with the most widely reported source of biodiesel being American soy, covering 26% of the total. The most widely reported source of bioethanol was Brazilian sugarcane, equivalent to 81% of bioethanol supplied.
Over the nine month period, 18% of biofuels met an environmental standard compared to a target of 30%, although 99% of the fuel reported as coming from UK feedstocks met environmental sustainability standards. They also delivered GHG savings of 70%, compared to an average of 46% and a target of 40%, although this figure excludes emissions from indirect land use changes.
According to the RFA, nine of the 14 fossil fuel suppliers reported on, exceeded the target, however, Chevron, Murco, and Topaz had not reported any biofuels meeting the qualifying environmental standard, and Esso less than 0.5%.
The previous report, covering the first six months, found ConocoPhillips, Greenergy and Mabanaft currently above all three targets for biofuel sustainability.
RFA CEO Nick Goodall, had commented: ‘We believe that biofuels should be sustainable. The first half year’s experience of the RTFO in the UK, and the good performance of several companies, demonstrate that the biofuels industry can meet sustainability standards.’
UK Biofuel production
During a period of high oil prices, tax breaks and the pending introduction of the RTFO, a whole range of companies set up new plants, taking advantage of government incentives and the growing European market. In particular, a cluster of companies emerged around Teesside in the north east of England, which initially appeared to move UK biodiesel production to a more useful scale, although still expected by some to fall short of UK targets without significant imports.
Over the next few years, centred around this emergent hub, the UK’s biodiesel production capacity looked set to reach well over 800,000 tonnes annually, while ethanol capacity could have reached nearly 1 million tonnes. However, these high hopes proved abortive. The rising price of vegetable oil feedstocks (soya oil more than doubled to around £980/€1130/$1600 per tonne over twelve months) and fluctuating mineral oil prices, coupled with stiff competition from heavily subsidized imports of B-99 from the USA, left UK refining operations largely uneconomic. Consequently, a number of companies shelved plans for biofuels development in the country.
D1 Oils, for instance, based in Middlesbrough, had modelled itself on a traditional oil company and planned to control the flow of biodiesel from source to retail, with D1 seeds, farms, processing plants and, potentially, D1 brand biodiesel at the pump.
The company developed a five-unit refinery in Teesside with a combined output of 42,000 tonnes (four units producing 8000 tonnes each and one producing 10,000 tonnes) and was in the process of developing a new 100,000 tonne facility in Bromborough at Merseyside, when it announced in April 2008 that it was to withdraw from the business and close its UK refining sites.
D1’s chairman, Lord Oxburgh of Liverpool, commented: ‘As long as the subsidized imports continue, the UK is not a viable location for refining and trading biofuel to meet domestic demand.’
Reflecting its new strategy, in February 2009, D1 announced that it had agreed a plan with BP International to sell a substantial share of their global Jatropha planting joint venture – D1-BP Fuel Crops Ltd – to a third party in order to raise investment cash; with 220,000 hectares of Jatropha planting, and further investment required in oil expelling, storage and related infrastructure. Meanwhile, the research arm of D1 revealed that it has developed a process that expels crude oil from Jatropha seeds and at the same time purifies the seedcake (meal) left after oil extraction to produce high protein animal feed.
Having proved technical feasibility in phase one of its programme, D1 says it is now scaling up the process to produce sufficient quantities of purified seedcake for animal feed trials during 2009. The Scottish Agricultural College is carrying out the field trials on D1’s behalf. In phase three of the project, the results of trials will be used to complete regulatory approvals and to determine market entry strategies and, subject to regulatory approvals, a commercial release of the technology could be available as early as 2010.
The company also expects to release the next generation of commercial Jatropha plants selected for high oil yield and good biodiesel profile by then. D1 currently has a total of 13 selections of Jatropha material undergoing trials in Africa, India and South East Asia. According to an analysis of Jatropha’s carbon performance in India, carried out by Ecofys, biodiesel produced from these plantings delivers more than 60% carbon savings, including land use change.
Another of the north east companies, Biofuels Corporation, had started producing fuel at its new 250,000 tonne facility, Teesside 1, at the beginning of 2007 at Seal Sands in Middlesbrough. The biodiesel production, equivalent to some 284 million litres of biodiesel, used vegetable oil crops as the feedstock. However, now known as Earls Nook Ltd, the company subsequently decided to focus on more profitable contracts, including producing glycerol and other chemical products.
Argent Energy, based near Motherwell in southern Scotland, was the first company in the UK to begin large-scale production of biodiesel when its refinery opened in March 2005.
The plant can produce up to 45,000 tonnes a year, or in excess of 50 million litres, and the majority of the fuel is made from cheaper tallow (leftover animal fat from the meat industry) and used cooking oil, and is sold to Petroplus to be marketed as Bio-plus fuel.
Argent has considered developing a 170,000 tonne facility in Cheshire, in the northwest of England that would be developed in two phases of 85,000 tonnes each. However, these plans are currently on hold while more favourable market conditions develop, although the impact of a 20 pence per litre tax break for the biofuels industry, that is scheduled to be withdrawn in 2010, has yet to make itself felt. In addition, until recently, cheap US imports of a biodiesel B99 were undercutting the costs of the raw materials for domestically produced biodiesel.
However, despite the difficult trading market encountered by D1 and Biofuels Corp, further south in Immingham, the second phase of a 200,000 tonne per year biodiesel plant began commercial operations in mid-2008. This £12 million (€13.8 million) plant has been constructed by Greenergy, a London and Edinburgh-based oil company which sells petroleum and biofuel products across Europe and which supplies over 10% of all road fuels in the UK. Indeed, unlike many UK biofuels companies, the existing oils business of Greenergy allows it to run its biofuels segment at a much lower marginal cost while long-term supply contracts have given it some stability in the face of a volatile market. The plants are capable of using a variety of feedstocks, including rapeseed, soy, palm and used cooking oils, with the rapeseed sourced from the UK through so-called ‘Field to Forecourt’ contracts.
Aside from its production of 228 million litres of biodiesel a year, Greenergy has long been an importer of biodiesel into the UK, particularly in the south east where it has storage facilities. In April 2009, the company announced that it will be making a multi-million pound investment in a new, 80,000 m3 facility for petrol and diesel blending and storage in Teesside. The facility will deliver diesel supplies from summer 2009 and full petrol and diesel blending and loading facilities from early 2010.
As a result of the plan, existing tankage at the Vopak terminal at Seal Sands in Teesside will be converted to create an advanced petrol, diesel and biofuel blending terminal, replicating the facility that Greenergy currently uses at Vopak’s West Thurrock terminal on the Thames.
In December 2007, British Sugar launched operations at the UK’s first commercial bioethanol plant. Located alongside the world’s largest sugar beet factory at Wissington, Norfolk, it produces some 75 million litres (55,000 tonnes) of bioethanol annually from locally grown sugar beet.
The green fuel delivers 71% savings in CO2 emissions when compared to petrol, and it is destined for forecourts around the country, the company says, adding that its investment in bioethanol has increased demand for sugar beet by 650,000 tonnes above and beyond EU quota limits.
British Sugar has also entered a joint venture – Vivergo Fuels Limited – with BP and DuPont to build and operate a large bioethanol plant at Saltend, Hull. Expected to come on-stream in 2010, this plant will produce 420 million litres of bioethanol each year from UK grown wheat.
Meanwhile, the Ensus Group is building Europe’s largest wheat refinery at Wilton on Teesside in north east England. When completed in 2009, it will use locally grown animal feed wheat to produce over 400 million litres of bioethanol, 350,000 tonnes of high-protein animal feed, and 300,000 tonnes of carbon dioxide for use in soft drinks and food production each year. Their bioethanol will deliver carbon savings in the order of 70% relative to the fossil fuels displaced, they say. Furthermore, all of the protein from the wheat feedstock is conserved and recycled straight back into the food chain, avoiding the food versus fuel debate.
A lack of support for manufacturers, volatile pricing and cheap subsidized US imports have hit the UK biofuels manufacturing sector hard, despite the mandated growth in demand. Imports from the United States into Europe are larger than from any other country and increased to more than 1.5 million tonnes in 2008, from about 7000 tonnes in 2005.
Indeed, such is the concern over the dominance of the US in European markets that in March 2009, the European Union imposed tariffs on US biodiesel to help EU producers. US firms exporting biodiesel into the EU will have to pay additional antidumping tariffs of up to 29%, and anti-subsidy duties of 29%–41% for an initial six months. ‘The level of the measures, which are applied together, is set at between £185/€211.20 and £207/€237 per metric ton for the anti-subsidy duties and between £20.60/€23.60 and £18.20/€208.20 per metric ton for the anti-dumping measures,’ the European Commission said in a statement.
By September 2009, the EU executive, which oversees trade policy for the 27 nation bloc, must decide whether to impose ‘definitive duties’ for at least five years, which must then be approved by trade ministers.
Whether such measures will be sufficient to re-energize the UK’s biofuels industry remains to be seen, though having gone some way to addressing issues of fair trade, greenhouse gas savings, sustainability, land-use, and establishing a steady platform for demand growth, the foundations appear set to support one of the most vital renewable energy sectors in combating climate change.
As Commissioner Piebalgs, speaking in April 2009 at the First European Bioethanol Fuel Conference, observed: ‘The European Commission continues to believe that the case for biofuels is strong. Therefore strong promotional efforts are required.