Second-Generation Biofuels Gain Traction But Growth Challenges Remain

by Ivan Castano (Renewable Energy World) Some 5 billion gallons of second-generation biofuels could hit the market in five years, a new research report by consultancy Frost & Sullivan revealed last month. However, analysts say the fledgling sector remains challenged by high feedstock and production costs due to a complex production chain.
...Frost & Sullivan analyst Tomasz Kaminski says several European biorefineires are already producing cellulosic biothenol, the main second-generation biofuel and that this is expected to increase in coming months.
...Converting biomass into biofuels remains a very costly and complex task that must become more efficient to increase the fuels' commercial appeal.
Producers "need to simplify the biomass-to-biofuel conversion, use less energy and optimize the process to deliver byproducts that can generate higher revenues for the refinery," Kaminsky says, adding that these include chemicals to make household cleaning products.
...On top of technical challenges, procuring a diversified range of biomass feedstock remains a big setback, Youngs says. So far, most demonstration scale second-generation plants operate on either forest or agricultural residue which supply chains are not yet well established.
Youngs notes farmers are unwilling to sign long-term feedstock supply contracts without firm refinery purchasing commitments. In turn, refineries are having a hard time offering these as a lack of project financing makes it difficult to decipher when their plants will come on-stream.
"Financing is a big issue," she adds. "It's hard to get loan guarantees. Who wants to finance a refinery with no guaranteed feedstock and who wants to finance a farmer to plant a crop that has no market yet?" "You are building two supply chains simultaneously and this is a big challenge."
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