Report from the 3rd Platts Biofuel Conference, Prague, 17-18 June 2014
by Maija Sihvonen* (Advanced Biofuels USA) Biofuel regulation with initiatives like ILUC (Indirect Land Use Change) and RED (renewable energy directive) were some of the key issues as the speakers in the 3rd Platts biofuel conference in Prague presented their views and concerns on the current state of the European biofuel sector and the roadmap for the future.
Just a few days earlier, on the 13th of June, energy ministers of the European Union member states approved the so-called ILUC directive, which aims at promoting the use of advanced biofuels and restricting the use of transport biofuels whose cultivation is seen as harmful to the environment. The aim is to restrict the use of raw materials that are suitable for food production to 7 % of total consumption.
The directive was commonly criticized in the conference for being too vague as each member state is allowed to set their own national targets for the advanced biofuels, while the targets remain non-binding. In addition, the directive would be in force only from 2017 (at the earliest) to 2020. The overall target for the transportation fuels for the year 2020 is 10 %. Almost every speaker in the Platts conference voiced their concern over the missing guidelines for the post 2020 regulation in the biofuels sector.
Timo Huhtisaari, sustainability and biofuels expert from North European Oil Trade Oy, called for intermediary targets in European Union’s renewable energy directive (RED) and praised the biofuel policy in the US for the constant steps to increase the market growth of biofuels. He saw the unclear future of European energy markets as responsible for the lack of investments in the biofuel sector. Several other speakers also stated that clear and consistent policies are required to give confidence to investors and to encourage R&D investments and commercialization of biofuels in Europe.
It was commonly agreed that support from the state as well as more direct regulatory support from EU are pivotal for the biofuels sector to cope with the difference in price of crude oil and advanced biofuels. According to the latest oil market report presented by Anselm Eisentraut from the IEA, global oil demand will continue to increase 1.3 % annually due to the needs of growing Asian economies, among others.
Some of the speakers had conflicting views on the current regulatory measurements. For example, some presenters saw double counting (counting certain biofuels double to fulfill the biofuel obligation) as harmful to the industry, but all agreed that there is an urgent need for changing the energy taxation system as ethanol is currently taxed more heavily than petrol in the EU.
Various views were presented on the biofuel alternatives. For example, Caroline Midgley from LMC pointed out that biomass processing is still expensive by global standards due to costly technology and high logistics costs even though the raw materials are cheap. She recommended switching to cellulosic sugars. Ian O’Gara from Accenture stated that 2014 will be the make-or-break year for cellulosic ethanol as cellulosic costs are likely to remain high.
On a more positive note, there are still several active and planned advanced biofuel plants globally, such as the Finnish biorefinery project in Lappeenranta, commissioned in summer 2014, as well as various other interesting projects. Gloria Gaupmann from Clariant presented their technology for producing cellulosic ethanol from feedstock and Marko Snellman from UPM introduced the Biofore concept car where UPM’s biomaterials such as plywood and biocomposite have been used.
In certain areas, biofuels have also continued to grow: Aleksander Rysiewicz from BZK pointed out that Eastern Europe with Poland in the lead has been actively developing its biofuel sector and there still remains room for more growth. The requirement is 7.1 % and the consumption is growing steadily.
Even though the past few years have been challenging for the biofuel industry and the production is falling behind targets of the IEA biofuel roadmap, Anselm Eisentraut stated that the advanced biofuel sector still continues to grow, albeit slowly. In the long term, global growth is estimated to vary between 2,1 and 2,6 percent for 2020 and 4,1 and 7,7 percent for 2035. In the next 7 years, the emphasis will be in the transportation fuels and in mid-term biofuels stay the main alternative.
* 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.