Light at the end of the tunnel
It has taken longer than hoped, but there is positive political momentum for advanced biofuels in Europe.
The EU is about to agree on its renewable energy policy for the period to 2030. The agreement on the new Renewable Energy Directive—also known as REDII—is a major milestone. It will provide some clarity on the role of biofuels in the EU energy mix for the next decade. So far, no other region has provided direction for investment in renewables within a similar timeframe.
Depending on negotiations between member states and the European Parliament, between 27% and 35% of the EU’s energy should come from renewables by 2030. The highest share will come from power generation, heating and cooling. But transport should contribute its fair share as well. Each member state will be required to ensure that 12-14% of renewables are used in transport.
Renewables in EU transport: a complex mix
Meeting the transport target is likely to take a complex mix. For the first time, this will include a minimum blending obligation for advanced biofuels. Biofuels made from used cooking oil and animal fats, renewable electricity used in electric vehicles and trains, and conventional biofuels will also contribute to the mix.
However, the role of conventional biofuels remains unclear at this stage. Today the maximum amount, known as the cap, is set at 7%. In the best-case scenario, it may remain at the same level. But it will be left up to member states to decide how much conventional biofuels to use within the 7% limit.
One key element that will impact conventional biofuels are so-called multipliers. These could include counting five times renewable electricity used in electric cars, double-counting for renewable electricity used in trains, and double counting for all non-conventional biofuels. Depending on the extent to which multipliers are used in REDII, they could artificially swell renewables’ contribution to transport. This would leave member states little or no incentive to use conventional biofuels.
First EU-wide mandate for advanced biofuels
The minimum blending obligation for advanced biofuels could be up to 3.6% for the period to 2030. Advanced biofuels in the EU are classified based on a list of feedstocks including ligno-cellulosic materials. Once agreed, this mandate should promote investments in cellulosic ethanol and other advanced biofuels.
Based on input from key technology providers, E4tech recently developed scenarios for cellulosic ethanol deployment in the EU from 2021 to 2030. The central scenario concluded that 46 plants could be built by 2030 in Europe. These could produce around 2.75 billion liters of ethanol. This is equivalent to an estimated 4% blend of cellulosic ethanol in gasoline by volume by 2030.
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A new era for the advanced biofuels industry?
Clearly, the introduction of an EU-wide blending obligation is a major milestone. Several countries (Italy, Denmark, France, Germany and Slovakia) have already established binding targets for advanced biofuels. But none provide such a long-term perspective and so large a market. The obligation should lead to investments in advanced biofuels in the coming years and a ramp-up of production. But this will only happen if the obligation increases year-on-year between 2021 and 2030. It will also take compliance mechanisms, for example in the form of penalties. Mid-term review clauses that challenge the ambition level of the obligation would also create uncertainty. This uncertainty would impact the effectiveness of the instrument. Finally, conventional biofuels investments should be safeguarded. The objective is to grow the pool of low carbon fuels, not to replace sustainable conventional biofuels by advanced.
Europe is in a unique position to take the lead on advanced biofuels deployment. European technological leadership and expertise have transformed lignocellulosic materials and waste-streams into low carbon fuels. Investments have been made and are ongoing, including:
- St1 has started production at their 10 million liters/year cellulosic ethanol plant in Finland. Other projects based on St1’s Cellunolix technology have been announced to follow in Finland, Norway or Sweden.
- Enviral is planning a 63 million liters/year cellulosic ethanol project in Leopoldov, Slovakia. Clariant is working on a first-of-its-kind plant using their cellulosic technology in Romania.
- Chempolis, a Finnish technology developer, is exporting their process to India for a bamboo-to-ethanol production plant.
- Energochemica has licensed the Proesa technology from Beta Renewables to realize a 70 million liters/year cellulosic ethanol plant in Straszke, Slovakia.
- Renescience opened the world’s first commercial scale facility transforming waste into recyclables and energy in the UK in 2017, and further projects are in development worldwide.
Global political momentum
Other regions have also announced ambitious policies for biofuels, including advanced biofuels.
India decided last year on the implementation of an E10 mandate by 2022. The gap between current levels and E10 needs to be covered by cellulosic ethanol by 2022. This means that around 12 cellulosic ethanol plants need to be in operation by 2022.
China also intends to introduce a nationwide E10 mandate that would double ethanol volumes by 2020. Within this framework, the government has set a goal of opening an advanced biofuels demonstration plant by 2020. It has also established a clear timeline on the large-scale production of advanced biofuels by 2025.
Finally, Brazil’s Congress approved the RenovaBio program, which seeks to further boost the use of renewable fuels, including cellulosic ethanol. Brazil already has a mandated blend level of 27% ethanol in gasoline and extensive use of ethanol in flex-fuel vehicles.
More action needed to achieve the Paris Agreement
Despite these positive global developments, more efforts are needed to further deploy low carbon fuels in more geographies. A recent report from EY on behalf of Michelin shows that sustainable biofuels have the most potential to decarbonize transport by 2030. Other solutions will also play an important role, but only a combination of solutions will deliver the necessary CO2 reduction. Replacing gasoline and diesel with sustainable low carbon fuels is an important part of the solution.
The International Energy Agency points to the need for a tenfold increase from today’s levels in the share of biofuels in the transport mix by 2050. Otherwise, we will not be able to meet the Paris Agreement’s target of keeping global average temperatures from rising 2°C. This means a tripling of production by 2030, with advanced biofuels contributing two-thirds of that increase. This would mean advanced biofuel production levels by 2030 that are at least 50 times higher than current levels.
To support this acceleration effort, the following initiatives were put in place as a follow-up to the Paris Agreement. They complement traditional country-level actions.
Below50 recruits consumer-facing companies to engage directly with the low-carbon fuel producers and promote ‘below50 fuels’. These fuels produce at least 50% less CO2 emissions than conventional fossil fuels. The aim is to create demand by increasing the number of companies choosing below50 fuels. Large fleet owner UPS has joined the initiative.
The Biofuture Platform is a country-led, multi-stakeholder initiative that helps countries reach their climate targets. It enables international coordination on low carbon fuels and bioeconomy development. Brazil, Canada, China, Denmark, France, India, the UK and US are among the 17 governments represented.
These initiatives demonstrate the growing momentum in action and awareness-raising activities. They communicate the importance of sustainable biofuels in addressing climate change. They also create new sustainable growth opportunities across the globe.
Effective policies and public private collaborations are needed for low carbon fuels to make their greatest contribution. We are at crossroads. Momentum has grown tremendously in both the public and private sectors, but we must continue to push for low carbon fuels to become the fuel of choice across the globe.
This article was first published in Biofuels International March/April 2018.