The future of biofuel

Research into alternative fuels has become one of the most crucial tasks for the progress and survival of humanity. The ever∞dwindling supply of natural resources in the wake of today’s environmental concerns coupled with the instability of the world’s oil supply and waning resources have ensured biofuels are here to stay.

The advantages of biofuels are palpable. Biofuel technology has the ability to reduce the amount of greenhouse gases emitted and lower the global usage of fossil fuel. It also promises  higher energy security to the nations producing it as they no longer depend on imports at a time of extreme market volatility. In addition, biofuels can help rural development and create a new job infrastructure which aids local economies significantly.

The first generation
Biofuels are produced from organic matter and can take the form of any solid, gas or liquid. There is a vast range of organic matter that is used to produce platforms for the conversion and production of biofuel. It can be split into two groups: First and second∞generation biofuels. It is commonly accepted that technologies using the starch or sugar segments of plants such as cassava, sugar beets, wheat, corn, and sugar cane to produce ethanol are considered first∞generation biofuels. So are those that exploit sunflower oil, vegetable oil, palm oil, rapeseed or soybeans to turn it into biodiesel. First∞generation biofuels have now been produced commercially for numerous years. The key first∞generation biofuels are:

Biodiesel
Biodiesel is Europe’s most commonly used biofuel. It is generated by mixing triglycerides, fats and oils with methanol or ethanol through a chemical process referred to as transesterification. Creating it in this particular manner gives almost as much energy as conventional diesel but provides better lubrication. It has similarities to mineral diesel and is normally used in diesel engines once it has been mixed with the said mineral. A known issue with it however is that even slight exposure to various metals, water, light and even heat can bring about total dilapidation.

Syngas
Syngas is the end product of a gasification process and an extremely diverse product and can be utilised as a standalone fuel. It is mainly suited for producing chemical products and transportation fuels.

Bioalcohols
Ethanol, butanol and propanol are all bio alcohols and can serve as direct substitutions for gasoline. Butanol in particular is perceived to be a highly energy efficient fuel which can be used in a range of gas engines.

Biogas
Rise to biogas is given through anaerobic digestion of organic materials and can be produced from waste materials that are biodegradable. It consists of methane and can be attained from biological and mechanical treatment methods.

Second–generation biofuel
Second∞generation biofuels on the other hand constitute technology and equipment that converts biomass such as forest and agricultural deposits, the plant jatropha, and micro algae. It is typically composed of cellulose, lignin and hemicelluloses, and is universally known as lignocellulosic biomass. The advantage of second∞generation biofuel production is that it has a much lower impact on food production overall and is certainly more sustainable.

It is no surprise that research into second and third∞generation biofuels and outflow are a thriving global industry which proffers vast potential for investment. Energy and metals industries business data provider, Visiongain, estimates that international expenditure on biofuels for 2011 is likely to total $46.63bn.

The market gained interest particularly over the past 12 months as the price of oil rose rapidly and extensively due to global economic market volatility. This forced the EU bloc and the US to reconsider their energy policies and greatly reduce oil imports. Numerous inducements and tax credits brought in by policy makers have further encouraged biofuel manufacturing and consumption. Biofuel production remains largely focused in the regions of South America, the US and Europe, but regions including the Middle East, Asia, and Africa have of late upped their manufacturing in this industry.

Many sectors have benefitted from the growing biofuel industry. One of the most noticeable areas is aviation. New Zealand-based bio-technology group LanzaTech recently created a fuel which airline Virgin Atlantic said is a breakthrough aviation fuel because it has half the lifecycle carbon footprint of standard fossil fuel kerosene. This technology comes thanks to companies like Swedish Biofuels, which has pioneered methods of capturing waste gases from industrial steel production. According to LanzaTech this procedure could be applied to the metal processing and chemical industries in addition to an estimated two-thirds of the globe’s steel mills.

Over the next year tests will take place to establish the advancement of this cutting∞edge fuel. If the checks prove successful, Virgin noted that within three years flights from China, India and Europe could be fuelled with the new, cleaner technology. Commercial deployment is due in 2014 but the technology will first be trialled in New Zealand, and if successful, a Shanghai-based demonstration plant is due to be erected before the end of 2011.

Hedging bets
Interest in biofuels swaps has also increased tremendously over the past 18 months. However, experts believe that more clear-cut regulatory transparency is required if the market is to mature further in this area. Both US and European biofuel swap markets grew noticeably after newly introduced legislation encouraged the use of biofuels. This has led to a rise in production and in turn a climb in demand for hedging products.

According to the latest data on the Chicago Mercantile Exchange (CME) the amount of ethanol future contracts has risen over 600 percent. Figures show that the industry has gained a vast interest, with the most recent statistics showing that open interest has increased by over 150 percent from 4,000 to 10,00 contracts from the beginning of 2009 to mid-2011. Over the same period it showed that from an estimated 3,000 monthly traded contracts, they had now gone up to about 22,000. An impressive 300 percent increase was recorded for European T2 ethanol, which climbed up from 200 contracts in December 2009 to approximately 800 monthly contracts by July 2011.

Breaking through 
There is currently a vast amount of development in the industry, so it proves near impossible to follow every novel trend and idea. However, worries over the sustainability of first∞generation biofuels have strengthened. Big corporations do not want to be left behind and are catching on fast to the fact that fuelling a lower carbon future with biofuels is the way forward. This has given pioneering start-ups an opportunity to go into strategic partnerships with large multinationals in this field.

Additionally, an increasing amount of university-led associations are spearheading ideas to help expand cost-reduced production of sophisticated biofuels derived from renewable biomass. According to experts, low∞carbon biofuels represent the most viable and commercially pragmatic approach to eliminating carbon dioxide from transport fuel over the coming decades. June this year saw one of the largest biofuel deals to date between Brazilian bio-ethanol conglomerate Cosan, and Royal Dutch Shell, the multinational oil company. The joint venture, named Raízen, is scheduled to begin operations in Brazil and will become the biggest maker of low∞carbon biofuel. It is said to benefit from combining Shell’s global resources in sophisticated biofuels with Cosan’s technical expertise of generating ethanol on a large magnitude. Shell, which has to date taken a lead role as one of the key distributors of sustainable biofuels, will now for the first time turn its hand to manufacturing. The aim is to generate and put on the market close to two billion litres of the lowest∞carbon biofuel commercially obtainable each year.

The rise and rise
The rapid ascent in biofuel production over the past few years has triggered calls for more coherent policies in the area from lawmakers. The DC-based independent environmental research institute Worldwatch Institute published a report recently indicating a 17 percent rise in international biofuel production in 2010.

Figures showed that biofuels now supplied 2.7 percent of all fuel for transport globally compared to two percent a year earlier. Global ethanol production increased by 15 percent in 2010 to reach 22.9 billion gallons. It was up 3.4 billion gallons from the 19.5 billion produced at the end of 2009, said the Renewable Fuels Association.

Europe, which is a region where biodiesel is heavily used, holds a market share of around 75 percent, the European Biodiesel Board (EBB) said. In 2010 the bloc opened the doors for imports from nations including Indonesia and Argentina when domestic demand reached 12.3 million tons and by far outstripped domestic production. The EBB noted this was particularly due to countries such as France, Spain and Germany, which represent the bloc’s largest biofuel consumers. In comparison US ethanol manufacturing has risen slighty slower, it saw a rise of 30 percent to 13.1 billion, 3.1 billion higher than the 2009 figure.

The key regulation behind this industry expansion is the modified 2009 Renewable Energy Directive which imposes stretching renewable targets for 2020 across Europe. The European Commissions’ original proposal came in January 2008 but the European Council and parliament had proposed amendments which were then implemented.

A Europe-wide average of 20 percent was set as a renewable energy target for 2020, and was divided into legally binding targets for all 27 member states. Indicative trajectories to follow included a 20 percent rise towards the target by 2011-12, 30 percent by 2013-14, 45 percent by 2015-16 and 65 percent by 2017-18.

Many entrepreneurs also have been calling for international policy makers to rethink the law to help drive a green economic recovery. Chairman of the Virgin Group, Sir Richard Branson continues to campaign vigorously and has set up the ‘Carbon War Room’ NGO to encourage low carbon policies and the development of cutting∞edge technologies. Branson cautioned that unless a measure to compel bigger outlays in renewable energy is implemented, the global economy will experience: “The mother of all recessions”. He believes that lawmakers need to embark on a vital reform of the existing tax structure to motivate investment in green and clean technologies. “The way to kick-start the revolution is to have no tax at all on the entire clean energy while gradually increasing tax on dirty energy,” the entrepreneur said. 

Relying on biofuels
The answer to how much humans will come to rely on biofuel in the future is slowly taking shape as companies develop a greater understanding of the technology and give a clearer indication of any potential progress.

Biofuels hold noteworthy prospects to transferring a portion of the requirement for fossil fuels. A recent forecast by market intelligence firm, Pike Research, shows that production and utilisation of biofuels will grow more than twofold, with the global market for biofuels increasing from $82.7bn in 2011 to $185.3bn by 2021.

According to the research, the extensive increase of biofuels could modify the industrial and geopolitical landscapes by meeting growing consumer demand in aviation, ground and maritime fuel markets. However, conventional biofuels are often limited and hampered by financing, environmental issues and price parity.

Although previous triumphs in the US, Brazil and the EU, have exhibited the commercial feasibility of conventional biofuels, the industry is now entering a novel period of flexibility, product objectivity, and the recent emergence of superior feedstock.

The market analysis by Pike Research shows that key players in the field are convinced that manufacturing and utilisation will, over the next ten years, further increase in both developed and developing economies. Furthermore, it found that uneven feedstock access and consumption will likely lead to a boosted global biofuel trade. Countries such as Brazil and parts of Europe are already emerging as primary suppliers internationally.

Brazil now leads the world in biofuel for transport use. Motorists at petrol stations are offered the option of pure ethanol or a mixture of gasoline and ethanol. An estimated 90 percent of the nations’ newly produced vehicles can now run on both fuel types. Advances in technology and efficiency gains such as increased biomass yields per acre and more gallons of biofuel per ton of biomass could potentially reduce the economic price tag and environmental force of the production of biofuels. Brazil’s sugar cane association Unica says that the country momentarily yields an estimated 7,000 litres of ethanol per hectare of cane in contrast to 2,500 litres for a hectare of wheat in Europe or 3,800 litres for the same measurement of corn in the US.

As conventional corn∞based ethanol increases, more sceptics express their concern with respect to the “food for fuel” debate that has been troubling the industry. Biofuel companies working on second∞generation biofuels hope to overcome that issue through the use of innovative feedstock. The race is now on to find the cutting∞edge technology required to bring the market a product that will benefit the environment without affecting basic human needs.