Biofuels to boom by 2020 as cellulosic ethanol becomes competitive, reports say

Source: Special to E&E • Posted: Thursday, March 14, 2013

ROTTERDAM, Netherlands — Up to a fifth of the world’s energy supply will come from biomass by 2020, according to 80 percent of energy industry participants in a survey published at the World Biofuels Markets conference here.

The survey was completed by 704 respondents and commissioned by Green Power Conferences, the organizer of the event. “There is significant demand for this energy type, and there are expectations for a regional growth shift over the next five years,” said Nadim Chaudhry, CEO of Green Power.

Survey respondents said biofuels will continue to grow in Europe, but at a slower pace than previously expected because of European Union policy restrictions. They were split 50-50 on whether the International Energy Agency’s goal of getting 27 percent of the world’s transportation fuel from biofuels by 2050 will be met, despite an increase in growth expected outside the European Union.

Seventy percent of respondents said road transportation will produce the most demand for biofuels in the next five years, while 24 percent thought aviation will supply the biggest chunk of demand. The remaining 6 percent chose sea transportation as the demand driver.

The European Union has a target of supplying 10 percent of transportation fuel from renewable sources by 2020. Dutch airline KLM started last week flying a weekly New York-Amsterdam flight with a Boeing 777 running on recycled cooking oil. The carrier aims to have 1 percent of its flights operating on biofuels by 2015.

Several countries are moving ahead with plans to use biomass in electricity generation. The United Kingdom offered last week to guarantee £75 million ($113 million) in loans to the Drax Group utility to switch the country’s largest coal-fired plant to burn biomass. Drax will spend £700 million to convert three of the six units at its 4,000-megawatt plant in North Yorkshire to burn wood chips instead of coal

Other utilities that have switched some coal units to biomass are RWE in Germany and DONG Energy in Denmark.

Biodiesel and ethanol markets on the rise

Meanwhile, a report from a U.K. think tank said Britain should reduce its reliance on corn ethanol for renewable fuels and instead encourage the use of cheaper and more sustainable biofuels, such as used cooking oil.

Britain requires that at least 5 percent of its fuel supply come from renewable fuels beginning next month. But according to think tank Chatham House, it would be better if the requirement specified targets for ethanol and biodiesel. The country is importing increasing amounts of corn-based ethanol from the United States while biodiesel consumption levels are shrinking, according to the report

The global market for ethanol and biodiesel rose to $95 billion last year from $83 billion in 2011, according to data from the Clean Edge research firm, as production of the fuels rose to a combined 31.4 billion gallons from 27.9 billion gallons.

In a separate report released yesterday, Bloomberg New Energy Finance forecast that cellulosic ethanol made from crop waste, wood chips and household trash will be cost-competitive with corn-based ethanol and gasoline by 2016 as the cost of enzymes, pretreatment and fermentation continues to drop.

According to the report, cellulosic ethanol cost 94 cents per liter last year, or about 40 percent higher than the 67-cent-per-liter cost of ethanol produced from corn. The gap will be bridged in the next three years, according to the report, which also surveyed industry participants.

Enzymes got 72 percent cheaper between 2008 and 2012, but the real savings will need to be made in capital costs, which will make up 45 percent of the overall biofuels expense by 2016, according to the report.

Yesterday, ZeaChem Inc. became the second biofuel company to announce successful production of cellulosic ethanol on a commercial scale at its facility in Boardman, Ore. The company is making ethanol from wood waste from local tree farms and other agricultural residues. The facility will make 25 million gallons of cellulosic ethanol and other chemicals per year once it reaches full capacity.