Brazil, India, the US, China and the EU point the way towards a 60 billion gallon biofuels market by 2022 – but can the capacity be built, and can the mandates survive pressure from opponents?
In Florida, the Digest today releases its annual review of biofuels mandates and targets around the world, looking at the state of biofuels mandates in 52 countries.
The bulk of mandates continue to come from the EU-27, where the Renewable Energy Directive (RED) specifies a 10 percent renewables content by 2020 but is under significant challenge over food vs fuel and indirect land use change concerns.
13 countries in the Americas have mandates or targets in place, 12 in Asia-Pac, and 8 in Africa.
Besides the EU, the major blending mandates that will drive global demand are those set in the US, China and Brazil – each of which has set targets – or, in the case of Brazil, is already there – at levels in the 15-20 percent range by 2020-2022. India’s fast-growing economy also has a 20 percent ethanol mandate in place for 2017, but the country has a shaky record of implementing mandates, so far.
Mandates in the Americas
Has a B7 biodiesel mandate in place – increased in 2010 from B5. The government had previously been on a program to reach B10 biodiesel blending by October, up from 7 percent in May, but a report in Agra-Net suggests that high soybean oil prices are the causal factor in delays in B10, in addition to falling demand for diesel which is bringing down import pressures.
Also has an E5 ethanol mandate in place.
Mandates a minimum ethanol content of 18-20 percent – reduced from 25 percent last year when ethanol supplies tightened on rising global prices for sugar.
On the biodiesel side, the Brazilian biodiesel industry is pushing for an intermediate blending rate of 7% for 2013 before the expected implementation of B10 in 2014 to help boost local demand for biodiesel. The country currently has a B5 policy but about 60% of the installed capacity is currently idled. In order to reach the B20 seen for 2020, the industry says it needs $14 billion in investment. has a B2 biodiesel mandate, scheduled to increase to B5 in 2013
Canada has a Renewable Fuel Standard featuring E5 ethanol, and B2 biodiesel. Canada introduced the 2 percent biodiesel mandate as of July 2011, and he Canadian Renewable Fuels Association and the Canadian Truckers Alliance are locked in a tit-for-tat debate over it. The CTA is claiming that the mandate will push diesel prices higher and that biodiesel is bad for some engines. On the other hand, the CRFA claims price increases would be unnoticeable over a 25-year period and that engines have shown better performance under state testing than with fossil diesel. Four provinces have individual provincial mandates, up to E8.5.
Also, the national government released its final regulations last year for its 5 percent ethanol mandate. The Canadian Renewable Fuels Association said that an assessment conducted by econometric firm Doyletech Corporation concluded that, “the grand total of the annual positive economic impact of renewable fuels is $2.013 billion.”
Has an E8 ethanol mandate in place since 2008, with discussions underway to increase the mandate to 10 percent.
Has an E5 ethanol and B5 biodiesel target in place, no mandates.
Has an E7 ethanol and B20 biodiesel mandate in place.
Has an E10 ethanol mandate that took effect last year.
Has an E2 ethanol mandate in place in Guadalajara, and will expand the blending mandate next year (2012) to Mexico City and Monterrey.
In Panama, the country is preparing to introduce an ethanol mandate beginning with 2% in April 2013, rising to 5% from April 2014, hitting 7% in April 2015 and reaching 10% by April 2016.
Has an E24 ethanol mandate and a B1 biodiesel mandate in place.
Has an E7.8 ethanol, and B2 biodiesel mandate in place. Expected to move towards B5 biodiesel.
Has a B2 biodiesel policy in place, but isn’t obligatory, and requires the use of domestic biodiesel. Expected to move to E5 ethanol in 2015. A plan is underway to develop a biodiesel plant in Montevideo and an ethanol plant in Paysandú for a total investment of $130 million. The B5 policy should be obligatory by 2015.
Last winter in Uruguay, he government said it was hoping to implement a B5 policy this year but it will depend on the ability to boost domestic biodiesel production. Already a B2 policy exists,
President Obama supports the preservation of the Renewable Fuel Standard, as a part of an “all of the above energy strategy”. However, there is fear that affordable private capital will not be available to support any major capacity building for advanced biofuels — putting the RFS itself, with its steep annual volumetric increases, in considerable jeopardy. The resulting lack of capacity and rewriting of mandates to support lower levels of capacity building — well, many US observers (including the heads of all the industry trade associations) take the view that the resulting market uncertainty will likely further reduce (or even zero out) investor interest in the sector.
The EPA proposes to mandate the blending of 15.2 billion gallons of renewable fuel into the US fuel supply in 2012, and increased the proposed mandate for advanced biofuels by 48 percent, to 2 billion gallons. The agency recently released its proposal for 2013 biodiesel requirements under the Renewable Fuel Standard:
Biomass-based diesel (1.3 billion gallons for 2013)
Other mandates have not yet been finalized for 2013. #012 mandated figures are:
Advanced biofuels (2.0 billion gallons; 1.21 percent)
Cellulosic biofuels (3.45 – 12.9 million gallons; 0.002 – 0.010 percent)
Total renewable fuels (15.2 billion gallons; 9.21 percent)
Overall, the US is moving towards a 36 billion gallon biofuels target by 2022.
Mandates in the EU
The EU currently has a 5.75 percent mandate directive in place, and was scheduled to move to 10 percent by 2020. But the European Commission has now proposed to reduce biofuel targets from 10 percent to 5 percent, introduce indirect land use change into calculations on acceptable feedstocks, phase out the use of certain arable crops altogether, and provide “multiple counting” benefits that they say will accelerate advanced biofuels adoption by providing huge incentives for their development.
“Given the EU’s existing 10% biofuels target for 2020 – which is not changing – the new policy means that the increase from 5% to 10% will have to come from non-food feedstocks,” noted Raymond James energy analyst Pavel Molchanov. “Put another way, what is currently a ~$22 billion annual biofuel market in the EU would have to double entirely via non-food feedstocks.”
The revised targets have met with hostile response from current EU producers.
“A proposal based on unfounded and immature ILUC science and a 5% cap in 2020 would destroy the biofuels industries and related sectors such as crushing and sugar facilities. It would also cut off European farmers from a key market, reducing the crops diversification,” said the ePure ethanol industry association, in a statement released at the time of the EU proposal.
There are some winners. “The new EU policy will not exclusively benefit energy crop companies such as Ceres,” said Raymond James’ Molchanov. “Waste biomass and algae can also serve as non-food feedstocks that would meet the new EU criteria – in fact, the Commission specifically identifies them as good options – but there is no question that the new policy would meaningfully support the adoption of energy crops.
The algae producers also applauded the new proposals.
“This is important good news for the EU algae sector and for future support to algae biomass development, research and production in Europe,’ said the European Algae Biomass Association, in a prepared statement. “In addition to the quadruple counting – which per se is potentially going to attract strong investment and economic potential to the algae biomass production chain in Europe – the proposal that will be published today also highlights that algae will be among the few raw materials for biofuels production for which European and public support will be ensured well beyond 2020, as clearly stated at paragraph 2 (“Aims”) of the explanatory memorandum.
Mandates in Asia-Pac
The states of New South Wales has an E4 ethanol blending mandate and a B2 biodiesel mandate in place. The Queensland E5 ethanol mandate was expected to take effect in Fall 2011, but was shelved after opposition from the Against Ethanol Mandates Alliance.
Overall, the country seeks to move to a 10 percent biofuels mandate by 2020, and currently has a 15 percent overall target for 2020. Nine Chinese provinces have required 10% ethanol blends to date, including – Heilongjian, Jilin, Liaoning, Anhui, and Henan.
The government approved last year a voluntary blend of 5% biodiesel and 10% ethanol with an eye on a mandate by the end of 2012, but action on the mandate has not been forthcoming
The country has an E5 ethanol mandate, scheduled to move to E10 as soon as production is in place, and ultimately has set a goal of 20 percent for all biofuels content by 2017 – it is highly doubtful that they will reach the target.
An on-and-off 2.5 percent biodiesel mandate, and an E3 ethanol mandate.
The country’s B5 blending mandate kicked off in June 2011. The program begins in Putrajaya and will be phased in over time throughout the rest of the country. Biodiesel will be price controlled while the government has recently removed the subsidy on fossil diesel.
Back in May, the Labour Party began pushing for the government to reinstate the biofuel obligation that the party had introduced in 2008 when it was in power.
The National party replaced the Labour party’s Biofuels obligation with a biodiesel subsidy. Bioethanol enjoyed at the time and still does have an excise exemption. The subsidy scheme essentially levelled the playing field between the two biofuels. The biodiesel grants scheme was not extended beyond its original time frame of 30 June 2012.
Has an E10 ethanol and B2 biodiesel mandate, supporters are asking the biodiesel mandate to be increased to B5.
Currently has a B2 biodiesel mandate in place. This year’s introduction of a B2.5 biodiesel mandate is expected to boost demand for imported Malaysian palm oil for use as fuel. Malaysian palm oil imports accounted for 32.2% of South Korea’s oil imports during 2010. Palm oil is beginning to make in-roads in the Korean market for cooking as well.
Has a B1 biodiesel mandate in place since 2008; considering an E3 ethanol mandate.
Has a B5 biodiesel mandate in place.
Has an E5 ethanol blending mandate.
In Thailand this month, the new policy mandating 5% blending of palm oil-based biodiesel came into effect on Nov. 1. The move to B5 from B4, which requires additional supply of 200,000 liters per day, was delayed due to lack of availability of locally-produced palm oil due to poor weather conditions but the supply issue has since been resolved, making way for implementation of the higher blend.
In Vietnam, the government was developing a plan as of October to promote biofuels production and consumption. Submitted by the Ministry of Industry and Trade, the plan will include 5% mandatory biofuel use in some big cities. The plan includes increased production of ethanol and biodiesel to 1.8 million tons through 2015 with a vision to expand the plan to 2025.
In Taiwan, the Taiwan Institute of Economic Research released a report in October on the benefits of ethanol blending in Tainan. Just last year, the country began producing ethanol from agricultural waste products, and has been exploring the possibility of introducing a blending mandate with 95E3 ethanol, a blend of 3% ethanol. “Tainan has a vigorous sugar industry and a lot of fallow farmland,” noted Tainan Mayor Lai Ching-de. “Setting up a factory here would help revitalize the economy in rural areas and encourage young people to return home.”
In the Philippines this month, a government-owned corporation supporting more than 3 million Filipino coconut farmers, CIIF Oils Mills Group, has again asked the Department of Energy to increase the 2.0 percent minimum mandated biodiesel blend to 5.0 percent.
Mandates in Africa
Has an E10 ethanol blending mandate in place.
Has an E5 ethanol blending mandate in place.
Has an E10 mandate in place in Kisumu, the country’s third largest city.
Has an E10 ethanol mandate in place, but depends on availability.
Has an E10 ethanol mandate in place.
Has an E10 ethanol target in place, no mandate.
Implemented an E10 ethanol blend rate in August – enforcement expected to begin this December.
Has an E5 ethanol mandate in place.
In South Africa this month, recent blending mandates that require minimum blending of 2% bioethanol have prompted a prominent law firm, Norton Rose, to release a warning that the requirements could lead to further price increases. According to the government, the policies aim to develop the local biofuels industry in an attempt to attract investment in rural areas and promote agricultural development.
In Zimbabwe, the Confederation of Zimbabwe Industries is pushing for mandatory E10 blending no later than December in line with the mandate put in place by South Africa on Aug. 23. South Africa doesn’t yet have commercial scale ethanol production but Zimbabwe’s own ethanol facility has been idle since February due to lack of a local market. If the government approves a 20% ethanol blending mandate, Green Fuel will need to raise about $40 million to fund an expansion that would allow it to satisfy increased demand. The roughly 2,000 employees who were put on half-time salaries in February when the plant shut down after reaching its maximum storage capacity are strongly urging the government to put a blending mandate in place.
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