Advanced BioFuels USA

by Tammy Klein (Transportation Energy Strategies)  … • Hard-to-Abate Transport Sectors: A Citi report notes that hydrogen, bioenergy and CCUS are key to “cracking the nut” of hard-to-abate sectors like aviation, shipping and trucking and recommends sustainable aviation fuel (SAF) for aviation, ammonia for shipping and biofuels, electrification and hydrogen fuel cells for trucking as decarbonization strategies.

• Aviation Offsets Not Credible: A recent investigation by The Guardian and Greenpeace’s investigative arm, highlighted by Transport & Environment in Europe, shows that some aviation offsets have questionable validity. Will that drive airlines further toward SAF?
• Miscanthus Financing: A first-of-its-kind financing mechanism will support UK farmers in growing the feedstock.

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1. Citi GPS: Hard to Abate Sectors – In this report, Citi’s Sustainable Finance team took a detailed look at two hard-to-abate sectors — transport (road freight, aviation and shipping) and industry (cement and steel) — which need to be focused on to successfully meet net-zero emission commitments. Collectively, these sectors account for 25% of today’s global carbon emissions but have the potential to rise by 50% through 2050 given growth expectations.

Citi notes that although demand-side solutions can help, they’re not sufficient to drive emissions levels down towards zero. Instead, supply-side solutions need to be incorporated. The team identified three such solutions — hydrogen, bioenergy, and carbon capture, utilization & storage (CCUS) — they believe can be the keys to ‘cracking the carbon nut’ in hard-to-abate sectors. Citi says there is a cost premium associated with each of these solutions, but as technology advances and supply is scaled up, they expect costs to decrease and demand to increase.

Demand-Side Solutions in Hard-to-Abate Sectors

Source: Citi

To decarbonize these hard-to-abate sectors, Citi’s scenario analysis predicts it will cost between $1.6 trillion and $0.9 trillion, equivalent to 1.9% of global GDP in 2019, and will require cooperation between public and private institutions and a commitment to deploy capital and invest in technologies that enable the transition to a net zero economy.

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Estimated Cost to Decarbonize Hard-to-Abate Sectors (High & Low Scenario)

The figure below summarizes the results of its analyses on transport. The results show the technologies and available fuels that Citi believes are most likely to be used to decarbonize these sectors. Citi notes, “Other solutions exist, including the use of biofuels for the shipping industry, plus hydrogen and battery-operated flights for aviation.”

Decarbonization Solutions for Transport

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2. Transport & Environment: Carbon Offsets Used by Airlines Not Credible, Investigation Shows – A recent investigation by The Guardian and Unearthed, Greenpeace’s investigative division, found that carbon offset schemes used by some airlines, such as British Airways and EasyJet, are deeply flawed. One of the main offset accreditors, Verra, whose “avoided” deforestation scheme was criticized in the investigation for lacking credibility, also supplies credits for the UN Corsia scheme, the global agreement designed to tackle airline emissions.

In November 2020, T&E notes, the International Civil Aviation Organization (ICAO) broadened the range of natural climate solutions, such as forest protection schemes, accepted under Corsia. It was the first international compliance carbon market to accept such credits.

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Could we see an even greater reliance by the airlines on sustainable aviation fuel (SAF) because of this offset credibility issue? I think so.

3. Biofuels Digest: New Miscanthus Finance and End-User Offtake Agreements Assist UK Decarbonization –Biofuels Digest reported that, in an industry first, farmers in the UK considering planting the carbon negative crop Miscanthus can now benefit from a finance package to cover virtually all upfront costs for crop establishment, as well as new direct, long-term offtake agreements with end-users, with 10–15-year index-linked annual returns.

Oxbury Bank is working in partnership with Miscanthus specialist, Terravesta, to deliver the new finance package, which is supporting farmers to plant and establish the crop.

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One of the major discussions of the day concerns renewable diesel (HVO) feedstock: Will there be enough? Where will it come from? Can the industry move away from feedstocks such as soybean oil or used cooking oil? I think they can – over time and with the right mix of corporate support and government incentives to farmers, such as the foregoing financing arrangement. If governments want decarbonization and they want economies of scale, they will target agriculture with programs and incentives that will help farmers get there. That could mean growing non-traditional feedstocks for biofuels production, including for HVO.   READ MORE

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