Second generation biofuels

Unlike first generation biofuels that use food crops such as corn, wheat or sugar cane as feedstock, these second generation fuels convert cellulose material from the whole plant. This promises to end the use of food grown for humans or livestock being diverted to make biofuel.

Indeed, in providing a market for biomass such as corn stalks, which were previously an inconvenient waste product, second generation biofuels will increase the financial return from growing food crops. The enzymes can also be used to convert biomass from plants grown on marginal land that is unsuitable for cultivating food crops.

“The big news is that it was only the starchy part, and now it’s the whole plant,” say Lars Hansen, Europe president of Novozymes. “There’s a lot of waste in the world. We’re transforming that into fuel.”

The EU’s delay in developing biofuels generated from plant waste reflects practical problems, such as a dearth of available land for fuel crops in many countries, under current farming practices. This is layered on top of the tricky environmental, economic and trade conflicts that Europe has encountered with first generation biofuels, in particular, the way in which EU tax incentives led to food crops being used as feedstock. 

EU: no incentives to build biorefineries

The result is a muddled scene in which companies and investors lack incentives to finance expensive, long-term biorefinery projects. Government austerity programmes designed to trim debt may further crimp public financial incentives for new projects, as the US and China increase their investments. Meanwhile, the sluggish global economic recovery has tempered any oil price recovery, further weakening the case for investors.

“In Europe we talk, we talk, we’ve got targets coming out of our ears,” says Christophe Bourillon, a spokesman for the Europe bioethanol fuel association. “The industry is tired of talking.”

As a result of the delay, industry officials and some experts warn the EU may forfeit the ability to influence the emerging global bioenergy market, miss out on the creation of thousands of jobs, be tied to its reliance on fossil fuels, and frustrate its own renewable energy goals. A recent study by the World Economic Forum estimating that second generation biofuels will generate $230 billion for the global economy, mostly in the US, and create more than 800,000 jobs by 2020.

“An exclusively negative focus has stopped Europe from being a player in the market,” says Jeremy Woods, lecturer in bioenergy at Imperial College London. “If we want to influence land management to be positive, we have to do it from the perspective of incentives.”

Biofuels certification

Marlene Holzner, energy spokeswoman for the European Commission, defends Europe’s track record and downplays the need for incentives for biofuels. The Commission has pumped €4 billion into energy infrastructure, for wind and other renewable energy sources, she says. The Commission has also spent €200 million on biofuels research since 2000, notes Mark English, spokesman for the EC’s research  directorate general.

Early in June the Commission released a new voluntary biofuels certification programme, which aims to ensure that the EU’s renewable transport fuels targets do not cause environmental degradation. Member states are obliged to replace 10 per cent of fossil fuels for transport with renewable energy by 2020.

Under the certification programme, independent auditors examine the life-cycle of biofuels, from cultivation to consumption, to verify that the use of the fuels actually reduces greenhouse gases. To be certified, biofuels must deliver greenhouse gas savings of at least 35 per cent compared to fossil fuels, rising to 50 per cent in 2017 and to 60 per cent, for biofuels from new processing plants, in 2018. The certification programme echoes one created in California in 2007.

The EU will help biofuel producers and distributors promote and brand their products by issuing a kind of Commission seal of approval that can be put on tanks, and used in marketing materials, Holzner says.

The European Industrial Initiative on Bioenergy, a public-private partnership, will unveil proposals in November to develop seven demonstration projects to boost the supply- chain for biofuels. Dutch chemical and pharmaceutical company DSM and other chemical companies have been conferring with commissioners and other government officials about multi-state, public-private projects to facilitate the production and distribution of biofuels, but the proposals are still in their infancy.

“There’s no real mechanism in Europe to scale-up,” says Stephan Tanda, a DSM board member. “The new research commissioner may change that. But it might take years.”

While European policymakers have deliberated, European chemical companies have taken advantage of US programmes aimed at developing second-generation biofuels. For example, DSM led a consortium that won a $7.9 million US Department of Energy contract in October 2008 to develop enzymes needed or ethanol production.

“The likes of DSM and Novozymes go to where the market is,” Tanda says.

Converting cellulose to fuel

Last month, both DSM and Novozymes announced new enzymes they say will speed the conversion of cellulosic biomass into sugars and reduce the energy consumed during conversion. DSM has also synthesised yeast designed to accelerate the transformation of the newly-generated sugars into ethanol.

Some experts caution against the rapid escalation of biofuels production. “Up to now everything we’ve done quickly in the biofuels area has had other adverse effects on the environment,” says Oliver Inderwildi, head of the Low-Carbon Mobility centre at Oxford University’s Smith School.  “We shouldn’t implement anything quickly.”

The EU aggressively adopted first-generation biofuels, mainly biodiesel from palm and rapeseed oil, with production quadrupling from 103,711 barrels per day in 2004 to 426,955 barrels per day in 2008, according to the US Department of Energy. In that time production slightly more than doubled in the US to 656,025 barrels per day, and in Brazil to 486,348 barrels per day. China also doubled its production - from a low base - to reach 37,529 barrels per day.

The price of oil peaked at around $147 a barrel in July 2008, and as the price plummeted, investor enthusiasm for renewable energy cooled. Meanwhile, scientists increasingly echoed organisations including Oxfam and Greenpeace in warning that consumption of biofuels derived from corn, sugar cane or palm oil in Europe would lead to deforestation and inflated food prices in developing countries.  Evidence of forest land clearing in Malaysia helped support the warnings.

Recessionary lurch for biofuels

The revelations put a damper on biodiesel and ethanol production in Europe, as governments withdrew tax credits and other incentives for producers and consumers.  Though biofuels were not alone among renewable energies that lost ground, the sudden change caused an immediate lurch in Europe’s biofuels markets at a bad time for new projects generally, due to global recession.  

The German government, which initially levied no taxes on biodiesel or bioethanol, ended the tax holiday late in 2006, and by 2010, nearly half the country’s biodiesel plants shut down production, because consumers would not pay the higher cost of biofuels, Reuters reported.

In contrast, the US government and individual states are still subsidising every step of the biofuels value chain, from production to distribution, according to the Pew Foundation. Governments supply preferential loans, grants, research and development funding, crop-price supports, and the provision of land and infrastructure at below market cost.

For industry, the US model creates the consistency and clarity needed to secure investment, Hansen says.

“People making ethanol need this kind of assurance,” he adds. “It’s not just a fashion statement.”