Europe’s ethanol CEOs besieged by RED II and illusory truths

By James Cogan, an Industrial Engineer at Ethanol Europe Renewables Ltd

Special to The Digest

The CEOs of Europe’s big ethanol firms (Tereos, Cristal Union, Alco Group, Crop Energies) are under seige.

They are battling imported and sometimes fake used cooking oil, not-yet-viable advanced fuels, palm oil diesel, imports from countries which didn’t even sign the Paris Agreement and good old fossil oil relabeled as “double counted renewable”.  Europe’s new RED II legislation is a smorgasbord of climate-harming substitutes for domestically sourced conventional ethanol.

But do the numbers and two things jump out:  domestically sourced conventional ethanol is safe and effective, and we are going to need it for at least another thirty years.  Electric vehicles won’t reach parity with combustion engines until sometime around 2050 and by that time the total fleet will have doubled in size.   Conventional climate friendly ethanol allows the combustion fleet reduce its carbon footprint during those transition decades.

It is true that electric vehicle sales are growing at a rapid pace, with the world EV fleet doubling in the past year alone.  The total fleet of road vehicles, conventional and electric, is also set to double, reaching two billion in thirty years from now.  Put together, the small electric fleet growing quickly and the large conventional fleet growing slowly will result in a roughly fifty-fifty split between conventional and electric engines on the road in 2050.  This is good news for electromobility but it does mean the world will still be burning as much liquid fuel on the road in 2050 as it is today.

Source:  Business Insider UK (link)

Peak Oil on the Road

Peak oil in road transport will be reached ahead of 2050, or sometime around 2035 when the electric fleet starts to make its presence felt on a large scale.  Fossil carbon transport emissions will be up 25% in the period.   Globally, transport activity doubled between 1970 and 2010[1] and is set to double again by 2050[2], with an average annual growth rate of 1.5%.    And by the way this is a conservative estimate.   It could actually be twice that as growth in world GDP in the same period is predicted to be 3%[3].  If it is twice that then oil use on the road could potentially grow as much as 80% above today’s level with peak oil in transport occuring as late as 2045.

Peak Oil on the Road:  Projection based on 20% average annual growth in electric vehicle sales to 2050 and 6% scrappage rate.

Global sales of oil burning cars and light vehicles exceeded 90 million units in 2017[4].   This compares to around a million[5] for the electric sector, a relatively modest number though very large in comparison to the global stock of electric vehicles, which reached two million a year ago.   What this means in terms of trends in greenhouse gas emissions is that for every new electric vehicle joining the world’s car fleet today there are still nearly a hundred new fossil burners taking to the roads.  Sixty of the new ones are replacing end-of-life vehicles, which have a lifespan of 15-20 years, but thirty of them are actually adding to the fleet size.  The conventional fleet is still growing way faster than the electric sector can catch up, and will continue to do so until peak oil on the road is reached.

It’s not unlike the trend in dietary habits across the globe, with the growing number of climate aware people cutting their meat intake still vastly outnumbered by those taking to red meat for the first time.  Peak red meat is still some time away.

Illusory Truth

An illustry truth is something people believe to be true as a result of repeated exposure even though it is not true.    The super rapid uptake of electric vehicles is an example of an illusory truth.  Many citizens and governments believe that the world fleet of vehicles will be well on the way to renewable electrification in under a decade, rendering unnecessary any further support for biofuels.  They ignore the many factors that make the “truth” illusory:  Sales of combustion engines vehicles in absolute numbers are still growing  way faster than sales of EVs;  The vehicle fleet replacement rate is about 5% per year, meaning it takes 20 years for a new sales trends to become fleet-wide trends;   Electricity producers are struggling to convert current supply to renewable supply, never mind servicing additional renewable demand;  Consumers are not ready to take a cut on their range of model and make options and makers will require decades to develop new ranges;  Vehicle financing institutions, makers and owners have vast amounts of capital tied up in the residual value of their conventional vehicles and will be reluctant to embrace change which might threaten that capital;  Many consumers and governments do not see climate change as their problem and are years away from making changes.  Many don’t believe climate change is happening.  The list goes on.

Even Volkswagen’s terrific announcement this month, to have 25% of it’s output electric by 2025, does not make the EV feeling less illusory.  Let’s hope Volkswagen reach 50% electric sales by 2030.  In the absence of governments forcing early scrappage – which is not out of the question – it’ll still take until 2050 for the total fleet to become 50% electric.

What to do

All this points to two imperatives for climate change legislators.  Firstly, efforts to accelerate electric vehicle take-up should be intensified greatly.  There is no such thing as too much support for electro-mobility.   Secondly, the right policy frameworks should be put in place to assure safe effective solutions like conventional ethanol are available for reducing the carbon footprint of traditional liquid fueled engines in the lengthy interim.

Works in Today’s Cars Today

Ethanol can be blended at up to 100% of the fuel going into the gas tanks of conventional cars, depending on engine type and fuel standards.  Virtually all petrol engine vehicles made in the world today can run on a 25% ethanol blend, either as they are or with minor changes.  For each percentage point of ethanol used in petrol the carbon savings are between a half and one percent with the precise figure determined by the way the ethanol was produced and by the methodology used to calculate the savings.  To take a practical example, if ethanol were to be blended at 20% in the fuel of Europe’s entire fleet of 100 million petrol vehicles the effect in terms of greenhouse gases would be the equivalent of taking 15 million of those vehicles off the road.  That is a huge contribution.  Europe has made a start, putting about 5% ethanol in its petrol on average to date.  The USA is at 10% and Brazil at nearly 30%.  China aims to reach 10% by 2020.

The consensus among transport energy analysts at the IPCC[6] is that low carbon biofuels can and must be deployed in the existing fleet for reducing the carbon intensity of internal combustion engines.

Right now conventional bioethanol is the world’s most cost effective, climate friendly and readily available form of fossil fuel substitute there is.  It is helping make the transition to electro-mobility that bit more manageable.

Europe’s ethanol CEOs have a great product.  It’s worth a crazy fight to maintain a role for this product at the heart of European transport climate action.

Author: James Cogan is an industrial engineer and policy analyst.  He currently advises Pannonia Ethanol in Hungary.

[1] Figure 8.1 of IPCC Report ”Climate Change 2014:  Mitigation of Climate Change”

[2] Figure 8.10 of IPCC Report ”Climate Change 2014:  Mitigation of Climate Change”

[3] https://www.pwc.com/gx/en/issues/the-economy/assets/world-in-2050-february-2015.pdf

[4] http://news.ihsmarkit.com/press-release/global-auto-sales-set-reach-935-million-2017-risk-greater-ever-ihs-markit-says

[5] http://electriccarsreport.com/2017/02/global-plug-vehicle-sales-2016/

[6] http://www.ipcc.ch/pdf/assessment-report/ar5/wg3/ipcc_wg3_ar5_chapter8.pdf