5 Musts for Advanced Biofuels to deploy, deploy, deploy

The United Nations Conference on Trade and Development released its first look at biofuels since 2007, and its first since the rise of 2G technologies.

In Switzerland, UNCTAD has released its first report on the state of biofuel technologies since 2007 and unveiled 5 five recommendations “for the responsible development of the second-generation biofuels industry”.

1. Create regulatory frameworks for advanced bioenergy tailored to national circumstances, which do not necessarily focus on the type of supply but instead on existing local demands. The fulfilment of such regulations is likely to meet domestic development strategies in line with the SDGs.

2. Promote cooperation between domestic organizations and foreign companies for joint ventures by means of investment agreements in order to facilitate technology transfer. This is important to avoid the emergence of a large technological gap between first-generation, land-intensive feedstocks and second-generation, capital-intensive biofuels in developed and developing countries.

3. Consider the broader aspects of bioeconomy sectors, including biomaterials, in ways that avoid locking industrial development paths into specific sectors or technologies. This would provide flexibility for market players that operate biorefineries as they could target multiple markets, including materials, feed, food and energy – both domestic and internationally.

4. Incorporate lessons from the sustainability criteria applied for first-generation biofuels into near and mid-term sustainability provisions or labels for advanced biofuels.

5. Continuously promote technical dialogue among different production regions of advanced fuels in order to ensure compatible standards for feedstock and promote trade in advanced biofuels.

In the wake of the environmental commitments countries have made with the Sustainable Development Goals (SDGs) and the Paris COP21 climate change agreement, the report focuses on how the market for second-generation biofuels can be exploited, and how to make the technology available in developing countries.

With a specific focus on cellulosic ethanol, a new type of biofuel produced from wood, grass or the inedible parts of plants, the report provides a wide-ranging review as of 2015–2016 of the second-generation biofuels sector, maps selected cellulosic ethanol projects, and details recent policy developments from around the globe. A key factor in decreasing costs for the industry has been process improvements that have allowed the market to expand, the report says.

The United States has the largest installed capacity for cellulosic ethanol production and the greatest number of working second-generation biofuel facilities, the report found, followed respectively by the People’s Republic of China, Canada, the European Union (EU) and Brazil.

Projects, partnerships and models

The report found that EU- and United States-based companies have engaged in partnerships abroad to build advanced ethanol facilities: for example, the Fuyang Bioproject in China is the result of cooperation between Italy-based Beta Renewables and the Guozhen Group of China.

While, as of 2015, there were no cellulosic ethanol projects on the African continent and in Latin America (excluding Brazil), progress has been made in bagasse-fired electricity co-generation and biomass cook stoves in these regions, the report says.

Overall, two main strategies have given traction to advanced biofuels in the world. The first is a market-segmentation strategy in conventional/advanced cellulosic biofuels used in the US, and more recently in the EU with the adoption of limits for conventional biofuels, resulting in premium pricing. The second is the availability of national development bank loans that have reduced risk and promoted growth in the industry, especially in China and Brazil. Low interest rates and a venture-capital culture have also played a role in advancing the position of second-generation biofuels.

The cautionary note: capacity vs production

However, while production facilities have been scaled-up over the past three years, evidence suggests that actual production is much smaller than nominal capacities. This is due to a confluence of factors including high feedstock costs, high processing costs, incomplete domestic regulatory frameworks favourable to advanced biofuels, risk avoidance, and limits to the amount of biofuel that can be blended with conventional petroleum-based fuel in major markets.

The report’s take on advanced biofuels

Advanced biofuels are an important tool to be considered in national policy in the coming decades. They are a renewable energy option with great potential help decarbonize transportation and other systems in developing countries. Advanced biofuels consequently relate to numerous SDGs and national commitments to limit climate change to tolerable levels. Their responsible development in the coming years should take into account lessons from rst-generation biofuels (and other renewable energy technologies), which have received intense scrutiny in recent years. In particular, rules on trade and the sustainability aspects of advanced biofuels should be applied coherently with other regulations, both domestically and internationally.

The background

The previous report in 2007 “highlighted a sector with great potential, but at the time that was a long way off from markets.” Since then, in 2015 countries made commitments toward a more environmentally balanced future through the Sustainable Development Goals and now seek to expand policies for low-carbon development after the agreement reached in Paris at COP21.  At the same time, UNCTAD noted that in 2015 the production of second-generation biofuels finally took off at commercial scale. Developing countries now face a new set of market opportunities and policy dilemmas to enhance their usage of biomass, which can now be transformed into more valuable products.

This report focuses on how these market opportunities can be capitalized on and how to promote technology transfer for developing countries interested in engaging in advanced biofuel markets for the attainment of the SDGs, and as an instrument to meet their commitments under COP21.

The Digest’s Take

It’s as compregensive a survey of global optinos for cellulosic ethanol as has appeared in some time — as such, a “must-read”.  We’ll have to wait for an equally comprehensive assessment of second-generation drop-in fuels, which this report did not tackle to any great extent.

We also note that, at present, the production vs capacity issue is likely more dire than UNCTAD generously allows. In computing that US production currently equals around 80 percent of installed capacity — the report captured all of the production, but did not by design capture the production capacity of cellulosic renewable biogas. It’s that technology which is responsible for more than 95 percent of cellulosic fuel production in the US at this time.

Download the complete report here.