Advanced BioFuels USA

(Argus Media)  Belgium-based ethanol producer Alcogroup’s chief executive Charles-Albert Peers spoke to Argus about near-term prospects for the European ethanol market following the introduction of gasoline with a maximum blended volume of 10pc ethanol (E10) in Belgium in 2017, and the outlook for conventional biofuels beyond 2020. Peers is also the president of the European renewable ethanol producers association ePURE. Below is an edited transcript of the interview.

Belgium will introduce E10 to the domestic market on 1 January 2017. How might this affect European ethanol demand?

With the EU 2020 targets for renewable energy across its member states, countries are looking at how to reach those targets. Some countries are reluctant to introduce the E10 blend because of a negative response from drivers associations and oil companies. But the example of Belgium — if successful — will provide encouragement for other countries to introduce E10 by 2020. This could lead to a significant increase in ethanol demand.

Even with E10 in Belgium, it will still be difficult for the country to meet the 2020 targets of 10pc renewable fuel for road transport. But it would have been impossible without the introduction of E10. This holds true for most EU countries.

It is essential the European Commission (EC) follows the implementation of the existing directives towards the 2020 targets across all member states, prior to the introduction of a plan for 2030. This should be the first point of attention.

Belgium is a small market. The move from 95 RON gasoline with a maximum blended volume of 5pc ethanol to a maximum ethanol content of 10pc volume will add around 100,000m³ (592,300 bl) to annual European demand of about 5.5mn m³ (32.6mn bl).The additional volume of ethanol will not be altered significantly.

How will consumers be encouraged to use E10 instead of E5?

In Belgium, 95 RON E5 will be mostly taken off the market as of 1 January and will be replaced with 95 RON E10 in order to meet the 8.5pc mandate, although there is no legal obligation to do so.

As the base gasoline for 95 RON E5 is different to that of 95 RON E10, oil companies do not want to store the two grades and prefer to switch all blends to 95 RON E10.

The impact on prices will be marginal, probably €0.01/litre. In order to reach the 8.5pc mandated target, oil companies will have some flexibility through the blending of ethyl tert-butyl ether (ETBE) with 98 RON. In Belgium 98 RON is often €0.10-0.12/litre higher than 95 RON.

Therefore, the financial incentive is there for consumers to choose the 95 RON E10 blend. About 96pc of the 1.8 million gasoline vehicles in Belgium that were built since 2000 are said to be compatible with the E10 blend.

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If we want to follow the COP21 (Paris agreement of the 21st meeting) decisions, we have to reduce greenhouse gas (GHG) emissions by 80-90pc in the road transport sector by 2050. This is the equivalent of reducing gasoline consumption by four litres per vehicle for every five litres used today.

There will probably be a transition to electric vehicles but how long this will take is far from certain and the source of electricity must be renewable as well. The reality in the intermittent period will most probably see more hybrid cars on the roads, which will take market share from diesel cars and also use gasoline. There, ethanol can play a major role.    READ MORE and MORE (Ethanol Producer Magazine)