Biofuels: the Commercial Reality

James Beal is managing director of Renewables East, an organisation that is driving forward the full range of low carbon energy solutions into the East of England and bringing economic and employment benefits to the region. Here he takes a look at the commercial reality of biofuels.

From being very much a fringe motor fuel in the UK, recent soaring petrol prices have thrust biofuel into the limelight. As the era of cheap petrol ends and world supplies become uncertain, consumers and governments are now searching for a secure, cheaper alternative to fossil fuels.

Biofuels, of course, are not new. The term biofuel is simply a generic one used to describe liquid or gas fuels that are not derived from petroleum based fossil fuels or that contain a proportion of non fossil fuel. Only 200 years ago the world relied almost entirely on such fuels. Later, Henry Ford preferred bioethanol to gasoline due to its efficacy and his concerns that the southern states would keep all the oil, while Rudolph Diesel ran his first engine on peanut oil.

In Brazil, bioethanol, an alcohol-based alternative fuel produced by fermenting sugar and starch crops that have been converted into simple sugars, has been used since the 1970s in an attempt to lower the country’s dependence on imported fossil fuels. These days, Brazil is the world leader in bioethanol and puts 100% sugar-based fuel into more than half its new cars.

In Europe, German consumption of biofuel is expected to rise by 25% this year to 1.5 million tonnes, a 100% increase since 2003. This is largely thanks to tax breaks and agricultural cooperatives. In the UK, the use of biofuels can only spread with optimum support. Both the EC Green Paper “Towards a European strategy for the security of energy supply” and the government’s 2003 Energy White Paper name biofuels as the most promising candidate for tomorrow’s low carbon transport fuels. However, while recent high petrol prices have fuelled the debate, the government’s 20p per litre reduction on bioethanol and biodiesel alone has so far been insufficient to fully kickstart the UK biofuel industry.

Of the UK’s carbon emissions, 26% stem from road transport. With the AA predicting that Britain’s road traffic will double by 2025, the pressure is on to minimise the sector’s environmental impact. Current best practice turns out crop-based biofuels that offer significant carbon savings in excess of up to 70% compared with mineral oil based fuels. We estimate that a blend of just 5% bioethanol would equate with the carbon savings of removing a million cars from the road.

Currently, biofuels are mostly blended with conventional petrol or diesel fuel and fit directly into the transport energy market. The British standard for diesel, BS EN 590, permits a biodiesel content of up to 5% by volume with out affecting the vehicle manufacturer’s warranty. This is a key advantage. Biofuels are a bridging technology that make use of existing infrastructures and avoid a proliferation of stranded, unused fixed assets while not necessitating expensive engine conversions.

While Britain was lagging behind other European countries in terms of both supply and demand for biofuel, demand is now beginning to outstrip supply. However, in order to make the most of this, we need investment to build new plants and encourage the market. The non-mandatory EU Directive sets a target of 2% of transport energy from biofuels by 2005 and 5.75% by 2010. In reality the UK could reach 0.3 per cent this year, but the prospects for 2010 hang largely whether the government introduces an ‘Obligation’ which would force suppliers to meet the Brussels target by 2010.

Nevertheless, at Renewables East we expect a clear trend towards biofuels greatly contributing to the replacement of petrol as a transport fuel over the next few decades. A UK biofuels industry will bring enormous commercial benefits to the East of England, in addition to the significant environmental advantages the fuel offers. An approximate 10,000 jobs could be created and secured in the rural economy to grow the wheat that produces bioethanol. This will generate a market for non-food crops, which would not need to be produced to food quality standards and are therefore potentially cheaper with less use of fertilisers.

It is a pity that many of the benefits stemming from an increase in other renewables are cancelled out by emissions from the UK road transport sector that continues to grow. What is encouraging, however, is that the benefits of biofuels are finally dawning on consumers and governments alike.

At the client

James Beal,

Renewables East

07808 291 375

01603 591 415

[email protected]

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