All energy transition scenarios agree that one of the biggest challenges is the transport sector, as it accounts for a quarter of global greenhouse gas emissions and they are growing. Worse, the number of cars on the roads is rising exponentially. According to Morgan Stanley Research, economic growth in developing countries could double the number of passenger cars from one to two billion in just a few decades. In spite of India’s Paris climate pledge to reduce its carbon intensity by 33 to 35 percent by 2030 compared to 2005 levels, its CO2 emissions grew by 4.6 percent last year. In 2017, vehicle sales hit a record four million units in India, the largest car market in Asia Pacific. It’s a trend confirmed by the International Energy Agency (IEA), which foresees a doubling of the number of cars globally by 2030.
Can electrification solve the problem? The number of electric vehicles and hybrids sold sees double-digit growth every year. According to the latest edition of the IEA's Global Electric Vehicles Outlook, the number of electric and plug-in hybrids on the world’s roads exceeded three million in 2017, a 54 percent increase compared with 2016. Based on current and planned policies, the IEA scenarios foresee 125 million units on the road by 2030, up to 220 million if policy ambitions rise. But it’s not enough - or fast enough - to meet the goals of the Paris Climate Agreement. The European electricity association Eurelectric recently presented a new study that suggests virtually all cars would need to be electric in 2050 for a 95 percent E.U.-wide emissions reduction target. This would not only require big changes in driving habits, such as the widespread adoption of shared mobility and the development of autonomous driving, but also a drastic halving of the size of today's total vehicle fleet.
“You have to decarbonize the existing fleet,” says Nour Amrani, Public Affairs Senior Manager at Novozymes. So electrification is necessary but not sufficient or fast enough to decarbonize the transport sector. “It’s the most difficult of all sectors because you have to decarbonize vehicles, fuels and infrastructure at the same time,” sums up Valérie Corre, Director for E.U. Public Affairs ethanol/alcohol at Tereos, a French sugar producer. Liquid fuels will have a big role to play.
“For this to happen you need policy support,” says Amrani. Corre concurs saying “Everywhere in the world where you have a market for biofuels, there are regulations backing it.” She recalls that In the 1970s, Brazil supported sugar cane-based bioethanol production to fight starvation in the countryside by creating jobs. And the U.S. bioeconomy has been thriving for more than 15 years, thanks to the support of the U.S. Department of Agriculture’s BioPreferred® program, which replaces more than one billion liters of petroleum annually, contributing USD 370 billion to the U.S. economy and reducing emissions the equivalent of 200,000 cars.
The E.U., which has been at the forefront of global energy transition, has recently reviewed its legal framework to support renewable energy sources including biofuels over the next decade. For the first time it has introduced a mandate for advanced biofuels to become 3.5 percent of the market while capping first generation biofuels at 7 percent. These developments are within the context of an overall goal of 14 percent renewables in transport by 2030, up from half that which exists in the E.U. today. At the national level governments can promote blends such as E10, 10 percent of biofuel incorporated into conventional fuel, to boost the share of biofuels. Belgium, Finland, France, Germany and Sweden have typically done that. But for industry to accept the multi-hundred-million-Euro risk of building new biorefineries, you need much more than a biofuel mandate.
The "bottom of the barrel" principle
Bioenergy is Europe’s largest renewable energy source and is expected to remain a vital component of the energy mix in 2030. Hence Europe has just refocused support for its bioeconomy in line with a renewed industrial policy, a circular economy action plan, and a clean energy strategy. It has launched a €100-million Circular Bioeconomy Investment Platform to support, amongst other things, the development of new biorefineries. According to E.U.-funded research 185 second generation ethanol and 50 jet fuel biorefineries need to be deployed in the E.U. by 2030 to meet market demand in the energy sector.
Earlier E.U. initiatives started in 2012 with the first bioeconomy strategy, followed by a €3.7 billion public-private partnership called Bio-based-Industries Initiative in 2014, and a European Technology and Innovation Platform on bioenergy in 2016 to promote knowledge-transfer between all players at the European level.
The new E.U. rationale is holistic and acknowledges the link between biofuels and other sectors. It’s about time. “The circular economy has become a vital model for us because of the end of sugar quotas in the E.U. in late 2017, thereby ending a price control system,” Corre explains. “And the pressure on our business is exacerbated by international competition.” The price of sugar has fallen, so more than ever companies need to maintain traditional and develop additional outlets to stay competitive. They need to extract more value from by-products and thus diversify. Oil refiners know the importance of extracting as much value as possible from the distillation of an oil barrel, until the last drop, as long as science and technology allows it. Welcome to the bioeconomy, where biofuels are not an isolated sector but an integral part of a resource-efficient economy.
European support for a bioeconomy - which will support agriculture at the same time - is vital. “Innovation is generated by demand. You need demand. You need a potential, because you have to invest in R&D first and it’s expensive,” Corre explains. Flexibility is at the core of a biorefinery business model. The output of biorefineries has to adapt to local feedstocks today and changing demand in the future. Amrani explains: “Biorefineries produce ethanol today - conventional or cellulosic - as well as co-products like animal feed and lignin which can be used for power generation. But over time, these processes can evolve to include other downstream processes that yield a variety of hydrocarbon fuels as well as feedstocks for chemicals and materials. This versatility gives the biorefinery its unique adaptability to future changes in demand.” The Beta Renewables biorefinery project at Crescentino in Northern Italy was the first of its kind worldwide. Inaugurated in 2014, the USD 350-million investment aimed at producing bio-based products including biofuels from straw. It implemented the principle of the circular economy, where residues from one sector become raw material for another. This pioneer project was a test case for real-world biorefining. It acknowledged the need for an expensive pre-treatment of biomass and various challenges with supply flows. For example, biorefineries are typically located in the countryside and, unlike liquid fuels, biomass is light and of high volume, so the emissions from its transport need to be taken into account.
Today, the advanced biofuel sector is in a learning phase and some deployment is starting. A couple of advanced biofuels projects are underway in the world. A wood-based cellulosic ethanol plant should be completed this year in southern Finland by St1 Biofuels. The Finnish company also has projects to produce advanced ethanol from tall oil from pine trees in Sweden and from cassava waste in Thailand.
Several plants have been announced in southern and eastern Europe: Enviral/Clariant and Energochemica in Slovakia, Clariant in Romania and Ethanol Europe in Macedonia. These are likely to be operational in the early 2020s. In Brazil, Raízen, a Shell joint venture, has started to produce ethanol from bagasse in the São Paulo region.
Meanwhile, ArcelorMittal steel mills in Ghent, Belgium will house an interesting new project, Steelanol, which will convert carbon-containing gas from its blast furnaces into bioethanol, through a partnership with Chicago-based LanzaTech. Commissioning and first production is expected by mid-2020. “This facility in Europe embodies the key principles of the circular economy and drives to a zero-waste steel production world,” commented Jennifer Holmgren, CEO of LanzaTech. The project has received €10.2 million in funding from the E.U.’s Horizon 2020 research and innovation program towards an expected project cost of €14 million. It may not be a biorefinery exactly, but it is the circular economy in action.
A revolution for the oil sector
As we have seen above, the oil sector is part of some of the biorefinery investments. As Europe has embraced an economy-wide energy transition, its oil industry has responded with a strong commitment to embrace non-petroleum feedstocks, a revolution! In a “Vision 2050” roadmap, the European refining association Fuels Europe says it is wants to decarbonize through low-carbon liquid fuels. “The evolution of the E.U. refining system has already started,” it claims. But to unlock investments in low-carbon technologies, “the policy framework should enable investors to be remunerated for their risk capital” with support similar to that received by renewable energy producers during the last almost 20 years. The industry also asks for a single carbon price across the whole economy and measures to safeguard its international competitiveness.
The oil industry has several examples of R&D projects that showcase different pathways to develop the next generation of advanced biofuels, for example, biofuel made from lignocellulosic biomass such as straw and forest residues through thermochemical conversion or third generation biofuels made from algae.
Another interesting development is taking place among European refiners, who have suffered 20 closures over the last ten years. Several refineries have been reconfigured into biorefineries and they produce a range of biofuels and other products from feedstocks such as vegetable oils, tallow, used cooking oil and oil from algae waste. Using existing techniques and infrastructure, this shift of production can avoid refinery closures, which would lead to heavy job losses. The biofuels produced in this way have a hydrocarbon structure similar to conventional fuels. In some cases, such as hydro-treated vegetable oils (HVO), they are of such high quality that they can be fully blended with conventional fuels like liquid petroleum gas (LPG), diesel, kerosene or gasoline.
One example is Eni’s Venice Refinery. Here, Eni invested in an innovative Green Refinery project, which led to its transformation into a biorefinery able to produce a new generation of biofuels. The required investment was estimated at one-fifth of that needed for a completely new biorefining unit of the same capacity. Some of the equipment in the former plant could be reconfigured for the new process and the operational set-up was changed to create a new production route dedicated to biofuels. Since 2014, the biorefinery in Venice has processed around 360,000 tons of vegetable oil per year. This production level is scheduled to increase this year with a similar shift in operations at the Gela biorefinery. It will have the capacity to process about 720,000 tons of vegetable oil and produce 530,000 tons of green diesel a year.
In many ways, biofuels fit perfectly with the move to a circular economy. They make the most of existing feedstocks and technology and link the traditional energy sector with bio-based industries such as food, agriculture and organic waste processing. The result is a much needed reduction of emissions in the transport sector, and the creation of a core pillar of the circular economy. However, innovation has a price and policy support is indispensable. The scientific community has just told the world that there is no time to waste. Biofuels can help, as consumers have been using convenient liquid fuels for a century and expect them to be available, no matter what the fuel is made from.
A journalist on energy and climate issues for twenty years, he has been Brussels correspondent for various energy media such as Platts, Enerpresse, Energy Post and energy reporter at EU policy broadcaster ViEUws.eu. He was awarded the 2007 Louise Weiss Prize for European Journalism.