Advanced BioFuels USA

by Maija Sihvonen* (Advanced Biofuels USA) Global Cleantech Summit 2015 concentrated on cleantech strategies and business cooperation. Some venture capitalists have already declared cleantech dead as it has undergone the typical innovation life-cycle and has suffered somewhat from hype. However, based on the presentations at the conference, it seems cleantech continues to offer new business opportunities as the need to adopt new methods for energy production and cut down emissions is urgent and influential international actors like China are actively looking for solutions to their growing environmental challenges.

The European targets for reducing green house gas emissions in the near future also remain ambitious. During the opening, Olli Rehn, Finland’s Minister of Economic Affairs, presented the European Union’s climate and energy targets for 2030: 40%, green house gas reductions, 27% share of renewable energy of final energy consumption and 27% energy efficiency improvement compared to 2007.

Southeast Asia – rising leader of cleantech

The geographical focus at the summit was Asia, especially China and India – the key players in global climate issues. As 46% of the world’s population lives in emerging Asia (China, India and Southeast Asia), it represents a substantial market for the cleantech industry.

Dr. Anil Gupta from the University of Maryland talked about the global strategies for emerging Asia. China has traditionally been a challenging business environment for foreign companies and will likely stay that way. According to Gupta, China is going though the most difficult time in its history since the 1970’s. Competition is hard and China has also suffered from recession experiencing a 16% slowdown in its GDP. At the same time, however, China offers great business opportunities for cleantech companies as it struggles with agricultural productivity, water scarcity, energy security and pollution control.

Compared to China, India is a more business-friendly market. Although still behind China, India is the world’s fastest growing economy. The challenge is that India is still quite agriculture-centered and lacks China’s economic resources. Gupta stated that Southeast Asia’s near-term prospects for cleantech are especially promising in Indonesia, Vietnam and the Philippines.

Future of cleantech markets

Is the green transformation of global business inevitable as some have claimed?

Physicist Hashim Yamani noted that cleantech funding has declined since 2011 and the cleantech industry has followed a similar pattern to dotcoms and biotech. The challenge is short-term thinking: investors expect fast returns on investment, which is usually unrealistic with cleantech solutions.

Yet the prospects of cleantech market look bright. Yamani noted that cleantech finance is often more dynamic in developing markets. For example, cleantech could aid India  in developing its rural countryside. However, cleantech should not be viewed as a coherent industry but rather as a toolbox of diverse technologies with several industries working together.

Senior industry analyst Ross Bruton estimated that by 2020 cleantech will be a 1,3 trillion USD market. Top trends in cleantech can be found in the fields of energy and environment: smart cities, water and solar power, which was a 600 billion dollar market in 2014.

The future looks promising for the biofuel market as well. Bruton estimated that it will reach 143 billion dollars by 2020: hydrocarbon fuels will be produced from municipal waste in 2025 and biofuels from algae in 2020. Especially China’s ambitious green house gas reduction targets will make it a leader of the cleantech industry by 2020 with 33% of renewable power, 40-45% emissions cut compared to 2005 levels by 2020 and 245 GW of added renewable energy capacity by 2020 (compared to 110 GW in the EU).

Renewable biofuels: new opportunities for Finland

Biofuels played a visible part in the summit. Finns are proud of their knowhow in the biofuel sector and great expectations are set for the industry. Two major Finnish biofuel manufacturers, Neste and ST1, were represented by several speakers in the conference.

ST1 produces ethanol made of waste and residues from bakeries and breweries, among other sources, in a new Bionolix plant in Hämeenlinna. The aim is to produce 300.000 m³ of ethanol for transport by 2020.  ST1 also uses cellulose from sawdust in its Cellunolix plants. Currently, a new Cellunolix plant is being built in Kajaani and ST1 has plans to build two more with the capacity of 100.000 m³ per year.

Tuija Kalpala from Neste noted that with 2 million tons per year, Neste is the world’s biggest producer of 100% renewable diesel. Neste’s most famous product NEXBTL is suitable for all diesel engines and has no blending limits. Neste’s products are also spreading to the US: one of the distributors is California based Propel fuel and among their customers is Google, which uses Neste’s biofuels in their buses and ferries. Currently, Neste’s biofuel is also being tested as Boeing jet fuel.

* Advanced Biofuels USA contributor, Maija Sihvonen, a technical writer and student of energy technology at Aalto University in Helsinki, Finland, aims for a career specializing in renewable energy and politics.