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European Commission sets out new road for biofuels

The EC will limit the consumption of biofuels due to competition with food crops and land use

In a move which shocked Europe’s rapidly-expanding biofuels industry, the European Commission (EC) said in September that it will put a brake on the use of existing biofuels in gasoline and diesel. Driven by concerns about competition with food crops over land-use, the EC is to introduce legislation to limit the consumption of existing biofuels to approximately the present level.

While signalling the end of the rapid growth in production of first-generation biofuels, the move is intended to advance the development of second-generation materials which do not compete with food production. First-generation biofuels are typically ethanol produced from wheat for gasoline, and vegetable oils for diesel. Second-generation biofuels are expected to be produced from wastes – cellulosic materials such as forestry wastes and straw for ethanol, and used cooking oils and animal fats for diesel.

The EC’s plan is to cap the use of first-generation biofuels at 5% of gasoline and diesel – only just above the present level of 4.5%. But the requirement under the Renewable Energy Directive for 10% of road transport fuels to come from renewable sources by 2020 is to stay in force.

To promote the development of second-generation biofuels, the EC proposes that their contribution towards the requirement should be quadruple-counted. Accordingly, the 10% target could be met with, say, 5% of first-generation rapeseed biodiesel and 1.25% of second-generation wheat-straw ethanol, although the actual renewable content will be only 6.25%. The EC says all support for the production of first-generation biofuels should end in 2020.

The proposal met with fierce criticism from biofuels producers, many of which have been expanding to meet the expected growth in demand, and from farmers which have benefited from high wheat and rapeseed prices in recent years. But the – few – companies with the technology to make second-generation biofuels stand to benefit.

Finland’s Neste claims to be the world’s largest producer of renewable diesel, operating two units each of 190,000 tonnes a year (t/y) capacity at its Porvoo refinery, together with a facility of 800,000 t/y in Singapore and another of the same size at Rotterdam. The firm’s NExBTL technology, based on hydrotreating, can process waste animal and fish fats, although its plants also process non-waste vegetable oils. In September Neste launched a new grade of diesel in Finland, containing a minimum of 15% of NExBTL biodiesel.

But in Germany – Europe’s largest market for biofuels, where they hold a 5.6% share of transport fuels consumption – “current incentives are not sufficient to mobilise the necessary extensive, strategic investments for large-scale use of second-generation biofuels”, according to Shell in September. The company published a study, carried out jointly with academic institutions, which calls for a 10-year launch programme for the new fuels and says they are not marketable without additional subsidies.

Locally-produced biofuels could meet 20% of Germany’s transport fuels demand by 2030, the study said, and as much as 70% of demand by 2050 – when demand will be “massively reduced” by improvements in fuel consumption. But development of the market to that extent will depend on ensuring sustainability and reducing the production costs of advanced biofuels, as well as ensuring that they are compatible with all uses.

At present, most cars and commercial vehicles can only take up to 10% of bioethanol in gasoline or up to 7% of biofuel in diesel. Biodiesel is seen by the study as the main focus for development because demand for diesel, jet-fuel and marine diesel is forecast to rise while Europe is already in deficit.

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