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renewable energy > newsfile > bright future for biofuels, says report

Bright future for biofuels, says report

Posted: 12 Jun 2006

Biofuels can significantly reduce global dependence on oil, according to a new Worldwatch Institute report. This says that athough oil still accounts for more than 96 per cent of transport fuel use, biofuel production has doubled since 2001 and is poised for even stronger growth as the industry responds to higher fuel prices and supportive government policies.

Last year, world biofuel production surpassed 670,000 barrels per day, the equivalent of about 1 per cent of the global transport fuel market. "Coordinated action to expand biofuel markets and advance new technologies could relieve pressure on oil prices while strengthening agricultural economies and reducing climate-altering emissions," says Worldwatch Institute President Christopher Flavin.

The new report, sponsored by the German Federal Ministry of Food, Agriculture and Consumer Protection (BMELV), is a comprehensive assessment of the opportunities and risks associated with the large-scale international development of biofuels. It includes information from existing country studies on biofuel use in Brazil, China, Germany, India, and Tanzania.

Brazil is the world's biofuel leader, with half of its sugar cane crop providing more than 40 per cent of its non-diesel transport fuel. In the United States, where 15 per cent of the corn crop provides about 2 per cent of the non-diesel transport fuel, ethanol production is growing even more rapidly.

The report says that this surging growth may allow the United States to overtake Brazil as the world's biofuel leader this year. Both countries are now estimated to be producing ethanol at less than the current cost of gasoline.

Figures cited in the report reveal that biofuels could provide 37 per cent of US transport fuel within the next 25 years, and up to 75 per cent if automobile fuel economy doubles. Biofuels could replace 20-30 per cent of the oil used in European Union countries during the same time frame.

Ecological risks

As the first-ever global assessment of the potential social and environmental impacts of biofuels, Biofuels for Transportation warns that the large-scale use of biofuels carries significant agricultural and ecological risks.

"It is essential that government incentives be used to minimize competition between food and fuel crops and to discourage expansion onto ecologically valuable lands," says Worldwatch Biofuels Project Manager Suzanne Hunt. However, the report also finds that biofuels have the potential to increase energy security, create new economic opportunities in rural areas, and reduce local pollution and emissions of greenhouse gases.

The long-term potential of biofuels is in the use of non-food feedstock that include agricultural, municipal, and forestry wastes as well as fast-growing, cellulose-rich energy crops such as switchgrass. It is expected that the combination of cellulosic biomass resources and "next-generation" biofuel conversion technologies - including ethanol production using enzymes, or synthetic diesel production via gasification/Fischer-Tropsch synthesis
- will compete with conventional gasoline and diesel fuel without subsidies in the medium term.

The report recommends policies to accelerate the development of biofuels, while maximizing the benefits and minimizing the risks.

Key recommendations

Recommendations include:

  • Strengthen the Market. Biofuel policies should focus on market development, based on sound fiscal incentives and support for private investment, infrastructure development, and the building of transportation fleets that are able to use the new fuels.

  • Speed the Transition to Next-Generation Technologies. It is critical to expedite the transition to the next generation of biofuel feedstock and technologies, which will allow for dramatically increased production at lower cost, while minimizing environmental impacts.

  • Protect the Resource Base. Maintaining soil productivity, water quality, and myriad other ecosystem services is essential. National and international environmental sustainability principles and certification systems are important for protecting resources as well as maintaining public trust in the merits of biofuels.

  • Facilitate Sustainable International Biofuel Trade. Continued rapid growth of biofuels will require the development of a true international market in these fuels, unimpeded by the trade restrictions in place today. Freer movement of biofuels around the world should be coupled with social and environmental standards and a credible system to certify compliance.

Selected trends

The report highlights a number of selected trends and facts, including these:

  • Sugar cane is the most important crop for producing biofuels today and the feedstock for more than 40 per cent of all fuel ethanol. Corn ranks a close second: the primary source for biofuel production in the United States.

  • Biodiesel, produced mainly from rapeseed or sunflower seed, comprises 80 per cent of Europe's total biofuel production. The EU accounted for nearly 89 per cent of all biodiesel production worldwide in 2005. Germany produced 1.9 billion litres, or more than half the world total.

  • Global ethanol production more than doubled between 2000 and 2005, while production of biodiesel, starting from a much smaller base, expanded nearly fourfold. In contrast, oil production increased by only 7 per cent over this period.

  • From 2002-04, world oil demand increased by 5.3 per cent. China's consumption alone increased by 26.4 per cent, while consumption in the United States rose by 4.9 per cent; Canada 10.2 per cent; and the United Kingdom 6.3 per cent. Demand in Germany and Japan, meanwhile, dropped by 1 per cent and 2.6 per cent respectively.

  • Of the world's 47 poorest countries, 38 are net oil importers, and 25 of these import all of their oil. Yet many of these countries have substantial agricultural bases and are well-positioned to grow highly productive energy crops.

  • Roughly 80 per cent of the world's conventional oil reserves are under state control and off limits to private investment.

  • The World Bank reports that biofuel industries require about 100 times more workers per unit of energy produced than the fossil fuel industry. The ethanol industry is credited with providing more than 200,000 jobs in the United States and half a million direct jobs in Brazil.

    Energy balance

  • Transportation, including emissions from the production of transport fuels, is responsible for about one-quarter of energy-related greenhouse gas (GHG) emissions, and that share is rising.

  • The GHG balance of biofuels varies dramatically depending on such factors as feedstock choice, associated land use changes, feedstock production system, and the type of processing energy used. In general, most currently produced biofuels have a solidly positive GHG balance. The greatest GHG benefits will be achieved with cellulosic inputs, such as dedicated energy crops and waste residues.

  • Energy crops have the potential to reduce GHG emissions by more than 100 percent (relative to petroleum fuels) because such crops can also sequester carbon in the soil as they grow.

  • Despite controversy about the energy balance of biofuels, there is an emerging consensus that all common biofuels contain more useful energy than is required to produce them. Corn ethanol has been particularly controversial, but its average energy balance now clearly exceeds one, thanks to improved energy efficiency in both agriculture and ethanol refining. In the future, the type of processing energy used will be more relevant: a biofuel plant that uses biomass energy will contribute far more to reducing GHG emissions than one that uses coal energy.

  • Even with subsidies, the economic savings with biofuels from avoided oil imports can be considerable: between 1975 and 1987, ethanol saved Brazil $10.4 billion in foreign exchange while costing the government $9 billion in subsidies. This investment paid off even more in subsequent years.

    Regional outlook

  • In the United States, high oil prices and agricultural lobbying prompted passage in 2005 of Renewable Fuels Standard (RFS) that will require the use of 28.4 billion litres (7.5 billion gallons) of biofuels for transportation by 2012. Under new guidelines implementing the Energy Policy Act of 1992, many government fleet vehicles that run on diesel fuel are now required to use B20 (20 percent biodiesel) blends. Many in the industry believe that these targets represent a floor, rather than a limit, to biofuel production.

  • In Brazil, the government hopes to build on the success of the Pro´┐Żlcool ethanol programme by expanding the production of biodiesel. All diesel fuel must contain 2 per cent biodiesel by 2008, increasing to 5 per cent by 2013, and the government hopes to ensure that poor farmers in the north and northeast receive a fair share of the economic benefits of biodiesel production. Si,ilar measuree are being talken elsewhere in Latin America.

  • A European Union directive, prompted by the desire for greater energy security as well as the requirements of the Kyoto Protocol, has set the goal of obtaining 5.75 per cent of transportation fuel needs from biofuels by 2010 in all member states. In February 2006, the EU adopted an ambitious Strategy for Biofuels with a range of potential market-based, legislative, and research measures to increase the production and use of biofuels. Germany and France, in particular, have announced plans to rapidly expand both ethanol and biodiesel production, with the aim of reaching the EU targets before the deadline.

  • In Japan, the government has permitted low-level ethanol blends in preparation for a possible blending mandate, with the long-term intention of replacing 20 percent of the nation's oil demand with biofuels or gas-to-liquid (GTL) fuels by 2030.

  • In Canada, the government aims for 45 percent of the country's gasoline consumption to contain 10 percent ethanol by 2010. Ontario will be the center of the ethanol program, where the government expects all fuel to be a 5 percent blend of ethanol by 2007.

  • In Southeast Asia, Thailand, eager to reduce the cost of oil imports while supporting domestic sugar and cassava growers, has mandated an ambitious 10 percent ethanol mix in gasoline starting in 2007. For similar reasons, the Philippines will soon mandate 2 percent biodiesel to support coconut growers, and 5 percent ethanol, likely beginning in 2007. The palm oil industry plans to supply an increasing portion of national diesel fuel requirements in Malaysia and Indonesia.

  • Chinese and Indian planners have also sought to expand the national supply of ethanol and biodiesel. In India, a rejuvenated sugar ethanol program calls for E5 blends throughout most of the country; the government plans soon, depending on ethanol availability, to raise this requirement to E10 and then E20. In China, the government is making E10 blends mandatory in five provinces that account for 16 percent of the nation's passenger cars.

  • In Africa, efforts to expand biofuels production and use are being initiated or are under way in numerous countries, including Benin, Ethiopia, Ghana, Guinea Bissau, Kenya, Malawi, Mozambique, Nigeria, Senegal, South Africa, and Zimbabwe.

'Biofuels for Transportation: Global Potential and Implications for Sustainable Agriculture and Energy in the 21st Century' was released by the Washington-based Worldwatch Institute in collaboration with the German Agencies for Technical Cooperation (GTZ) and Renewable Resources (FNR).

Related links

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Biofuels can fuel cars of the future

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