OFI May 2015

Biofuels Issue May 2015 t Vol 31 No 4 www.oilsandfatsinternational.com

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Leading edge technologies for refining plants

Degumming • Acid Degumming (wet/dry) • Ultra-shear acid Degumming • Bio Degumming • Membrane Degumming

Neutralising

Short/long mix Neutralising • Multimix Neutralising • Miscella Neutralising • Silica Purification

Detoxification

Bleaching

• Combiclean Process • Active carbon Purification

• Sparbleach Bleaching • Unibleach with prefiltration • Silica Purification

Deodorising

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• Qualistock Deodorising • Multistock Deodorising • Sublimax Ice Condensing

• Wintrend Winterising • Combifrac Winterising

Science behind Technology

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THE B USI NE SS MAG AZ IN E FOR TH E OILS AN D FATS IN D UST RY

PHOTO: OLHA ROHULYA/DOLLARPHOTOCLUB

CONTENTS VOL. 31 NO. 4 MAY 2015 EDITORIAL: Editor: Serena Lim Tel: +44(0)1737 855066; Fax: +44 (0)1737 855034 E-mail: serenalim@quartzltd.com Editorial Assistant: Rose Hales Tel: +44(0)1737 855157; Fax: +44 (0)1737 855034 E-mail: rosehales@quartzltd.com

FEATURES EUROPE

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The Netherlands’ bright biofuel future

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Italy held back by EU policy

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CANADA

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1 OFI – MAY 2015, BIOFUELS ISSUE www.oilsandfatsinternational.com

Contents Plan A.indd 1

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NEWS

COMMENT

Wake-up call

I

t cannot have escaped anyone’s notice that California is in the fourth year of a severe drought, with a drought state of emergency being declared in January.

There have been headline-grabbing sound bites of 25% cuts to urban water use, five minute shower limits, cities having to rip up grass in public places and that it takes one gallon of water to produce one almond (California produces 80% of the world’s almond supply).

In the home of Hollywood and Silicon Valley, is the drought a cyclical problem or does it mark a more permanent change in climate? And what lessons should agriculture and, more particularly, the bio-based economies and biofuels take from it?

While half of California’s residential water is for outdoor use, particularly lawns (which a switch to drought-tolerant shrubbery and desert plants could address), even a large drop in residential water use will not make much of a dent in water consumption levels.

This is because agriculture accounts for about 80% of California’s water use.

Indeed, globally, agriculture accounts for some 70% of all water consumption. While agriculture feeds the world, the World Wildlife Fund estimates that agriculture wastes 60% or 1,500tr litres of the 2,500tr litres of water it uses each year through leaky irrigation systems, wasteful field application and cultivation of thirsty crops not suited to the environment. As well as directly addressing these issues, what role can science play in solving the drought problem?

Re-use, re-purpose, reduce According to the Biofuels Digest, there are three areas of focus in this field – re-use, re-purpose and reduce.

Examples of re-use include technologies that can produce fuels, feed, fibre and more from residues such as food and municipal solid wastes; and animal, forests and agricultural residues. Neste Oil announced at the start of March that it had become the world’s largest producer of renewable fuels from wastes and residues, supplying 1.3M tonnes of fuel in 2014. Its raw materials include animal and fish fats, used cooking oil and various residues generated during vegetable oil refining, such as palm fatty acid distillate and technical corn oil. These accounted for 62% of Neste Oil’s renewable inputs in 2014. In Texas, CleanTechnica has reported one project growing algae in municipal wastewater for conversion to fatty acid methyl esters or biodiesel. The algae also provides an energy-efficient form of wastewater treatment, removing nitrates and phosphorus.

Re-purposing focuses on shifting from water-intensive crops to drought-tolerant crops such as NexSteppe’s high biomass sorghums in Brazil or salt-tolerant halophytes which can be grown in arid locations and watered with sea water.

Reduction includes technologies or breeding programmes that increase yield compared to water usage or increase resistance to drought, such as the CoolTerra ‘biochar’ soil treatment, water-saving membranes or Monsanto’s DroughtGard gene.

But will all this be too little too late?

The United Nations says water use has been growing at more than twice the rate of population increase in the last century. By 2030, almost half the world’s population will be living in areas of high water stress including between 75-250M people in Africa. In addition, water scarcity in some arid and semi-arid places will displace between 24-700M people.

Droughts in high-profile areas are a wake-up call for action now.

Serena Lim

7% first-generation biofuel cap approved T

he European Parliament (EP) agreed a new rule on 28 April finalising a 7% cap on first-generation biofuels.

Currently, EU member states must ensure that renewable energy accounts for at least 10% of energy used for transport by 2020. The new rule requires that no more than 7% of this will be able to come from first-generation biofuels (from crops grown on agricultural land) although member states can set a lower target. They will have to include the new rule – a revision to the Fuel Quality and Renewable Energy directives – in national legislation by 2017.

Additionally the new rule requires fuel suppliers to report to EU countries and the European Commission (EC) the estimated level of greenhouse gas (GHG) emissions caused by indirect land-use change (ILUC). The EC must publish data on ILUC-related emissions and report back to the EU on the scope for including ILUC emission figures in existing sustainability criteria.

Once the new directive has come into force, members states will have 18 months to set an advanced biofuel target. Although a guide of 0.5% has been set, a member state can set itself a lower target on the grounds that it is restricted in its ability to meet the target, such as limited production potential, technical or climate constraints, or existing national policies. ePure, the European ethanol

industry association, said that while the deal lacked ambition, it was a much needed first step in re-establishing market stability.

Robert Wright, secretary general of ePURE, commented: “The vote amends the existing EU biofuels legislation and is expected to be ratified by the Council of the EU in June, putting an end to a threeyear legislative procedure that has fundamentally undermined investment and stability in the EU biofuels market.

“The absence of binding targets for advanced biofuels and renewable ethanol use in petrol – key measures promoted by the Parliament to differentiate between better biofuels – is a missed opportunity to amend the biofuels legislation in an ambitious and meaningful manner. Once adopted in Council, it is now up to member states to implement the revised directives in a way that does not fragment the internal markets for biofuels.”

The European Biodiesel Board said the vote “puts an end to long and protracted negotiations” but the compromise was “far from perfect”.

“The new text fails to fully protect, with a grandfathering clause, the huge investments undertaken by our industries in the past decade. It also imposes disproprotionate reporting obligations on all operators based on ILUC factors, which are not cohesively supported by the international scientific community.”

Cosan predicts sugar high C osan, Brazil’s largest sugarcane crusher, is predicting an increase in sales of sugar rather than ethanol despite many analysts’ predictions to the contrary as a result of Brazil raising its blend mandate by 2% to 27% in March, reported Agrimoney.com.

The group has forecast that its sugar and ethanol division – Raízen Energia – would crush 57-60M tonnes of sugarcane from April, up from 57-58M tonnes last season.

It also forecasts sugar sales to rise to 4.2-4.4M tonnes, up from

4.1-4.3M tonnes, with ethanol volumes remaining at 1.9-2.1bn litres.

In contrast, agribusiness consultant Safras e Mercado had estimated that sugar output from the centre-south region of Brazil would fall by 1M tonnes to 31M tonnes in 2015/16, Agrimoney said. This was against estimates that ethanol output would grow by 2.9bn litres to 25.6bn litres.

Agroconsult was also forecasting centre-south sugar output rising by 2.5% to 33.5M tonnes but ethanol production growing by 9.5% to 28.7bn litres.

2 OFI – MAY 2015, BIOFUELS ISSUE www.oilsandfatsinternational.com

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NEWS

EPA announces volume requirement timeline T

he US Environmental Protection Agency (EPA) finally announced on its website in April that it would be finalising volume requirements for the 2014, 2015 and 2016 renewable fuel standard (RFS) by 30 November 2015. It will propose volume requirements for 2015 and 2016 by 1 June.

In addition, the EPA plans to propose and finalise the RFS biomass-based diesel volume requirement for 2017 on the same schedule.

The 2014 volume requirements, which have still not been announced, will be re-proposed by 1 June and will reflect the volumes of renewable fuel that were actually used in 2014.

This announcement is, in part, due to a proposed consent decree in litigation brought

against the EPA by the American Petroleum Institute (API) and the American Fuel and Petrochemical Manufacturers (AFPM), according to Biomass Magazine. The API and AFPM had filed a lawsuit against the EPA on 18 March alleging that the EPA violated a nondiscretionary duty under the Clean Air Act to establish renewable fuels obligations for 2014 and 2015.

Bob Dinneen, president and CEO of the Renewable Fuels Association, released a statement in which he said: “We applaud EPA and API for reaching an agreement that will provide all stakeholders some certainty with regard to the RFS. No one has benefited from the delays in setting annual renewable volume obligations; and while we are sympathetic

to the difficulty EPA faces in promulgating annual targets, the statute is clear about the volumes required and the Agency simply has to do a better job moving forward. This consent agreement is a good start. We are particularly pleased that the Agency has committed to addressing the 2016 RVO in the same timeframe even though that is outside the scope of the consent agreement.”

The Advanced Ethanol Council (AEC) also released a statement confirming their support.

“Now that we have a better idea of when it will happen, we look forward to working with EPA to make sure that the new RFS proposal supports the commercial deployment of advanced biofuels as called for by Congress.” said Brooke Coleman, executive director of the AEC.

Total to convert site to produce biodiesel F rench oil and gas multinational Total SA will invest €200M to transform its La Mède crude oil refinery to produce biodiesel, the company announced on 16 April.

Total said the new 500,000 tonnes/year biorefinery would be one of the biggest in Europe and manufacture biodiesel primarily from used oils, as well as renewable feedstock. The hydrotreated vegetable oil (HVO) process selected by Total is a French technology developed by Axens.

The site will continue to produce hydrogen needed for biorefining at existing units but the processing of crude oil will stop by the end of 2016.

“There are three possible responses to the crisis in the European refining industry,” said Total CEO Patrick Pouyanné. “The first is to throw in the towel.

The second is to do nothing and perish. The third is to innovate and adapt to meet shifting demand trends.”

In its decision, Total cited the EU target of 10% renewables in transportation fuels by 2020 and a draft bill in France calling for increasing the share of

biofuels to 15% in 2030 from 7.7% currently.

Total said European demand for petroleum products had declined 15% since 2008.

“This underlying trend stems from pursuit of energy efficiency and improved vehicle fuel economy ... The European market is steadily contracting, a situation aggravated by the shale oil and gas revolution in the USA, which gives the US refining industry an advantage, and competition from refineries in Asia and the Middle East.”

Three of Total’s five petroleum refineries in France – Gonfreville, Grandpuits and Feyzin – had been able to withstand the deteriorating economic environment in 2013 and 2014 but the other two, Donges and La Mède, were loss-making.

At Donges, Total would invest €400 million to upgrade the refinery to produce low-sulfur fuels.

Other plans for La Mède include expanded production of jet fuel for civil aviation with a 30% target share of the overall European market; a logistics and storage hub dedicated to refined product trading operations; and an 8 MW solar farm to meet 50% of the site’s power needs.

Fresh raids in EU biomass usage for fuel to rise programme has a budget of €80M of biomass the EU benchmark probe Theusesamount for the period covering 2014to produce liquid biofuels

N

ew raids on ethanol companies, including an Abengoa SA unit and a Tereos SA unit, were conducted by EU antitrust regulators investigating the falsifying of fuel-price benchmarks, reports Bloomberg.

These fresh probes follow raids last year targeting Swedish producer Lantmaennen Agroetanol AB and Alcogroup’s Alcodis unit.

The investigation was first made public in May 2013 after EU officials inspected oil-price publisher Platts, BP, Statoil ASA, Royal Dutch Shell and Argos Energies, who all deny violating anti-trust rules, the report said.

is set to rise from 32M to 48M tonnes by 2020, according to a report by the USDA Foreign Agricultural Service’s Global Information Network. There is also a significant demand for solid biofuels, 17.5M tonnes were used by the EU in 2013. Demand is expected to rise to 20M tonnes this year and, by 2020, would have risen to as much as 80M tonnes.

In addition, the report offered an explanation of the Horizon 2020 programme, through which the European Commission funds biorefinery research and commercialisation. The

2020. As part of Horizon 2020, the Public-Private Partnership on Bio-based Industries (PPP) came into force last June. The PPP is a partnership between the EU and the Bio-based Industries Consortium, with 70 industrial members and over 100 related organisations.

Finally the report promotes the possibility of future transatlantic cooperation in order to develop a bioeconomy. This could only be achieved through the exchange of resources and strategic partnerships through either the technical level or vertically through the supply chain, the report said.

IN BRIEF CHINA: Hainan Airlines completed mainland China’s first ever commercial shorthaul flight powered by biofuel on 21 March, the South China Morning Post reported. The flight from Shanghai to Beijing carried 100 passengers on a Boeing 737. A mixture of Sinopec produced biofuel and waste cooking oil was used.

Boeing China president Ian Thomas called the flight “a significant milestone” in China’s commercial aviation industry.

Boeing and Commercial Aircraft Corp of China launched a joint venture to develop jet fuel from used cooking oil last October.

USA: The US advanced energy market grew 14% in 2014 and is now valued at US$200bn, according to a reported published recently by the Advanced Energy Economy (AEE). The 14% growth is more than five times that of the US economy overall. In particular, fuel production (the fourth largest division within the advanced energy market in 2014) experienced a 34% increase between 2011 and 2014. It is estimated that fuel production had a global revenue of US$148.1bn last year.

Ethanol and butanol sales rose from 23.4bn gallons in 2011 to 25.8bn in 2014.

In the USA, sales of ethanol alone rose to an estimated 14.2bn gallons, or US$39.1bn in revenue.

3 OFI – MAY 2015, BIOFUELS ISSUE www.oilsandfatsinternational.com

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NEWS

IN BRIEF ARGENTINA: Biodiesel exports jumped 40% to 1.6M tonnes in 2014, an increase from 1.15M tonnes in 2013, Biofuels Digest reported. Domestic biodiesel production also increased nearly 30% last year to 2.58M tonnes. Ethanol production experienced a 43% increase in 2014 with a total of 533,978 tonnes – nearly the entire total went towards satisfying the E10 blending mandate.

COLOMBIA: The head of the national ethanol producers association, Fedebiocombustibles, has claimed that US ethanol imports are threatening Colombian expansion and could jeopardise the whole sugarcane industry in the country, Biofuels Digest reported in April. He has urged the government not to re-open imports.

CHINA: The National Energy Administration issued a biodiesel industry development plan in January this year, its aim being to improve the biodiesel sector by encouraging renewable fuel use and the production of cleaner fuels, the BRAG Biobased and Renewable Products Blog reported. The plan proposed this could be achieved through the participation of foreign companies; mergers, acquisitions and restructuring of domestic companies; and fuel blending.

THAILAND: The country’s ethanol usage goal of 9M litres a year by 2021 will be revised due to the low cost of crude petroleum oil affecting the popularity of biofuel, The Nation reported in April.

VIETNAM: Authorities are preparing to distribute E5 and E10 biofuels in response to a government decision made in 2012, Tuoi Tre News reported in March. Many provinces in the country have to meet a 1 December deadline to begin selling E5 and E10 – alongside the gasoline that they are due to replace in time. State agencies have been drafted in to assist with educating the public.

New formula for biodiesel price

I

ndonesia introduced a new formula at the end of March to lower the cost of biodiesel in a move to support its domestic industry and reduce imports of petroleum products.

Under a new formula introduced by the Energy and Mineral Resources Ministry, the biodiesel index price will be calculated based on the crude palm oil (CPO) base price plus US$125/tonne, the Jakarta Post said. The added US$125 is the cost of converting CPO into fatty acid methyl ester (FAME), which is lower than the previous US$188/tonne level.

“Producers have agreed to lower the conversion cost,” said Rida Mulyana, the ministry’s director general for new and renewable energies and energy conservation.

This would help users, such as state-owned oil and gas company Pertamina, as it would be able to buy FAME at a cheaper price, resulting in lower biodiesel prices.

The move would help distributors comply with the government’s mandatory biodiesel blending policy amid the ongoing decline in the price of crude

petroleum oil, which makes fossil fuel more attractive than biofuels.

The government also plans to increase the mandatory biodiesel blending rate from 10% to 15% this year.

The Jakarta Post report said several advantages were expected from the implementation of the 15% mandatory mix, including savings of up to US$2.5bn in foreign currency and the additional employment of around 300,000 people. If the 15% rate was fully implemented, the country would need to blend 5.3M kiloliters of biodiesel, equivalent to 4.8M tonnes of CPO. Apart from lowering the biodiesel price, the government was also considering imposing a levy of US$50 on every tonne of CPO shipped, with the funds used to help the biofuel industry, the report said. Technical details of the levy scheme were still being discussed.

Indonesian palm oil producers association GAPKI said the country produced 31.5M tonnes of CPO last year, of which 21.7M tonnes were exported.

EIA increases ethanol forecasts

T

he US Energy Information Administration (EIA) has predicted a rise in 2015 and 2016 ethanol production in its April Short-Term Energy Outlook. A record monthly average of 1,002,000 bbl/d was reached in December, according to the report, however production is estimated to have fallen in February 2015, to an average of 948,000 bbl/d. In 2014 ethanol production averaged 935,000 bbl/d.

The EIA expects production of ethanol to average 944,000 bbl/d this year, which is an increase from a prediction in February of 938,000 bbl/d. Production is expected to drop in 2016, the EIA has decreased its previous prediction in March from 942,000 to 937,000 bbl/d.

In addition, the report stated that biodiesel production averaged an estimated 83,000 bbl/d in 2014, with a predicted 82,000 bbl/d to be produced in 2015 and 84,000 bbl/d in 2016.

ABF takes £98M hit on joint venture

A

ssociated British Foods PLS (ABF) announced in February that due to low oil prices and the weakened euro, it has written down its investment in the joint venture bioethanol business Vivergo Fuels Limited.

In a statement, the company explained: “…in light of the continuing fall in crude oil and bioethanol prices, and the further weakening of the euro against sterling, it [ABF] has taken the decision to impair its investment

in Vivergo Fuels Limited, its wheatfed bioethanol joint venture with BP and DuPont in the UK.” Results for the 24 weeks ending 28 February included a non-cash exceptional charge of £98M (US$143M).

Foodmanufacture.co.uk reported that a spokesman for Vivergo added that the company was receiving the full support of its shareholders during the “extremely challenging” market conditions.

USDA releases 10-year projection

T

he Unites States Department of Agriculture (USDA) released its 10year projection for the food and agriculture sector in February. The report covered corn and biofuel predictions. It has been projected that approximately 35% of corn grown in the US will be used to produce ethanol. Furthermore, ethanol production in general is predicted to remain at current production levels for the next decade, with the majority feedstock continuing to be corn.

It is presumed that domestic ethanol production will continue to be constrained by the blend wall and projected declines in overall US gasoline production. Finally US ethanol exports are predicted to experience moderate gain in the next decade.

Pemex plans sales of ethanol

M

exico state-run oil company Pemex has told Reuters that it will be launching sales of its first gasoline and ethanol mix, in an effort to cut greenhouse gas emissions by as much as 35%. The company’s ethanol will be produced from local sugar cane and sorghum. A US$58M investment will be used to build new infrastructure to produce the ethanol at Pemex’s Ciudad Madero and Minatitlan refineries.

Last year, President Enrique Pena Nieto supported comprehensive energy reforms, which ended Pemex’s retail monopoly enjoyed by its 11,000 franchise gas stations, the Reuters report said. The reforms mean that, from 2017, start-up non-Pemex stations will be able to import gasoline from outside Mexico, and the government will not set gasoline and diesel prices from 2018.

US petition on Argentine imports

T

he US National Biodiesel Board (NBB) filed a petition in March calling for the US Environmental Protection Agency to reverse its decision to streamline biodiesel imports to the US from Argentina.

The NBB said there was not enough transparency on the plans used by Argentinian producers to demonstrate their compliance with the RFS.

4 OFI – MAY 2015, BIOFUELS ISSUE www.oilsandfatsinternational.com

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NEWS

Raízen and Ceres sign multi-year ethanol collaboration A improvements in performance,” Antonio Stuchi, Raízen’s agro industrial director said in a statement. “We remain optimistic that sweet sorghum can be used to rapidly scale up

multi-year collaboration was agreed between Brazilian ethanol producer Raízen, and California-based agricultural biotechnology company Ceres in March. The deal will see the two companies work together to grow sweet sorghum with the aim of complementing existing feedstocks for ethanol production.

Sweet sorghum has the potential to extend Brazil’s ethanol production season by up to 60 days; and has been recognised by the Brazilian government as a strategic crop, according to a report in Biofuels Digest.

Raízen has conduced evaluations of Ceres’ hybrids since 2011. “During the past seasons we have made significant and measurable

E

thanol producers in the USA are being forced to cut output as they face the biggest drop in gasoline prices since 2008, Bloomberg reported.

The US shale boom caused the price plunge, where production outpaced demand; this in turn caused a 42% drop in ethanol cost.

Valero Energy Corp and Green Plains Renewable Energy Inc, which represent approximately 15% of US capacity, have reduced their production.

AgTrader Talk, an Iowa based consulting company, told Bloomberg in February 2014 the profit obtained per gallon of corn ethanol was US$1.33.

However, in February this year the profit on the same product was down to virtually nothing.

More cutbacks appear to be on the horizon as inventories of gasoline totalled 21.6M barrels in February, according to the US Energy Information Administration.

49 2014

Gas prices squeezing US output of ethanol

SWEET SORGHUM HAS BEEN RECOGNISED BY THE BRAZILIAN GOVERNMENT AS A STRATEGIC CROP (PHOTO: JENSLPHOTOGRAPHY/DOLLARPHOTOCLUB.COM)

feedstock supplies following the current downturn in the sector.” The collaboration will mean that Raízen gets access to Ceres’ most innovative seed products and experts.

Each company will contribute in-kind services and resources and share in the revenue from the ethanol produced above certain levels.

Ceres president and CEO Richard Hamilton said: “The ethanol industry in Brazil has a history of successfully competing against low-priced oil and we believe that sweet sorghum, which has lower production costs than sugarcane, can be further developed and scaled up as an integral part of the industry’s feedstock supply.”

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Audi fuel from CO2

G

erman car maker Audi has started producing its first batches of a CO2 based diesel fuel at a pilot plant in Dresden, the company reported in April.

Energy technology corporation Sunfire is Audi’s project partner and plant operator. The CO2 is supplied by a biogas facility. In addition, part of the CO2 is extracted from the air via direct air capturing technology from Climeworks.

Production involves heating water to form steam, which is broken down into hydrogen and oxygen via hightemperature electrolysis at more than 8000C. The hydrogen reacts with CO2 in synthesis reactors under high pressure and temperature, to produce a liquid of long-chain hydrocarbon compounds, known as blue crude, which can be refined to yield Audi’s e-diesel.

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DIARY OF EVEN TS

1-4 June 2015 International Fuel Ethanol Workshop & Expo VENUE: Minneapolis Convention Center, Minneapolis, Minnesota, USA CONTACT: BBI International, USA Tel: +1 866 746 8385 E-mail: service@bbiinternational.com Website: www.fuelethanolworkshop.com

1-4 June 2015 EUBCE 2015 – 23rd European Biomass Conference and Exhibition VENUE: Messe Wien, Exhibition and Congress Center, Vienna, Austria CONTACT: Maddalena Grassi, ETA-Florence Renewable Energies, Italy Tel: +39 055 5002280 ext 221 E-mail: registration@etaflorence.it Website: www.conference-biomass.com

2 June 2015 Algae Event 2015 VENUE: Messe Wien, Exhibition & Congress Center, Vienna, Austria CONTACT: Anna Salimbeni, ETA-Florence Renewable Energies, Italy Tel: +39 055 5002280 (int. 218) E-mail: anna.salimbeni@etaflorence.it Website: www.algae-event.com/cms/index. php?page=contact

3-5 June 2015

OFI North Africa in Marrakech

O

FI North Africa 2015 will be held in Marrakech, Morocco on 3-4 December 2015, in conjunction with the three-day 7th biennial Journées Internationales d’Etude sur les Lipides (JIEL) conference, organised by the Société Marocaine pour l’Etude des Lipides (SMEL) and the Société Francaise pour l’Etude des Lipides (SFEL) of France.

OFI North Africa will be the first event of its kind in the region, bringing all players involved in the North Africa/West African oils and fats supply chain under one roof, including: t Importers and exporters of oilseeds and oils t Refiners and producers of oil, ingredients and products t Suppliers of technology and services to the oils and fats industry t Scientific and technical experts in oils and fats nutrition and processing t Expert speakers on oils and fats prices and trends Delegates and visitors are expected from Morocco, neighbouring Tunisia and Algeria, French-speaking West Africa (Mauritania, Senegal, Mali, Ivory Coast, Burkina Faso, Benin, Niger) and French-speaking countries in Europe such as France and Spain.

Morocco produces approximately 420,000-430,000 tonnes/year of edible oils and imports some 400,000 tonnes/

year. Morocco is the hub of North Africa and the gateway to Europe in the north, French West Africa in the south and the Middle East towards the east.

For further information, contact:

Sales & sponsorship

Mark Winthrop-Wallace Sales Manager E-mail: markww@quartzltd.com Tel: +44 (0) 1737 855 114 Anita Revis, Sales Consultant E-mail: anitarevis@quartzltd.com Tel: +44 (0) 1737 855 068 Erik Heath, Sales Executive E-mail: erikheath@quartzltd.com Tel: +44 (0) 1737 855 108

7th JIEL Prof Ahmed Adlouni, President, SMEL

Mobile: +212 0663636455 Tel: +212 0522704672 Fax: +212 0522704675 E-mail: adlounia@yahoo.fr

Fabrice Turon, President, SFEL (for French participants) Tel: + 33 567 339 206

E-mail: fturon@fat-associes.com

www.ofievents.com/north-africa

11th International Conference on Renewable Resources & Biorefineries

25-27 August 2015

26-28 October 2015

VENUE: Park Inn Hotel, York, UK CONTACT: Els Vertriest, Medicongress, Belgium Tel: +32 9 218 85 81 E-mail: els@medicongress.com Website: www.rrbconference.com

International Congress and Expo on Biofuels & Bioenergy

IEA Bioenergy Conference 2015

7-10 June 2015 The 5th International Conference on Algal Biomass, Biofuels and Bioproducts VENUE: Paradise Point Resort & Spa, San Diego, USA CONTACT: Website: www.algalbbb.com

10-11 June 2015 Oleofuels 2015 VENUE: Frankfurt, Germany CONTACT: Cheryl Williams, ACI, UK Tel: +44 203 141 0623 E-mail: cwilliams@acieu.net Website: www.wplgroup.com/aci/conferences/ eu-eaf8.asp

For a full listing of oils and fats industry events, go to: www.ofimagazine.com

VENUE: Valencia, Spain CONTACT: OMICS Group Conferences, USA Tel: +1 888 843 8169 E-mail: biofuels.conference@omicsonline.us Website: www.biofuels-bioenergy. conferenceseries.com

VENUE: Ramada Hotel Berlin-Alexanderplatz, Berlin, Germany CONTACT: Fachagentur Nachwachsende Rohstoffe e.V (FNR), Germany Tel: +49 3843 6930 165 E-mail: v.pelikan@fnr.de Website: www.ieabioenergy2015.org

22-24 September 2015

2-5 November 2015

8th Biofuels International Conference VENUE: Porto, Portugal CONTACT: Shemin Juma, Biofuels International, UK. Tel: +44 20 3551 5751 E-mail: shemin@biofuels-news.com Website: http://biofuels-news.com/ conference/

F.O. Lichts World Ethanol and Biofuels VENUE: InterContinental Budapest, Hungary CONTACT: Informa Agra Customer Services, UK Tel: +44 20 3377 3658 Fax: +44 20 3377 3659 E-mail: registrations@agra-net.com Website: www.worldethanolandbiofuel.com

26-28 October 2015 2015 National Advanced Biofuels Conference & Expo VENUE: CenturyLink Center Omaha, USA CONTACT: BBI International, USA Tel: +1 866 746 8385 E-mail: service@bbiinternational.com Website: www.advancedbiofuels.com

30-31 December 2015 ICBB 2015: XIII International Conference on Biofuels and Bioenergy VENUE: Holiday Inn, Paris Montparnasse, Paris, France CONTACT: Website: www.waset.org/ conference/2015/12/paris/ICBB

6 OFI – MAY 2015, BIOFUELS ISSUE www.oilsandfatsinternational.com

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THE CURRENT SHARE OF RENEWABLES IN THE NETHERLANDS’ TOTAL PRIMARY ENERGY CONSUMPTION WAS 4.5% IN 2013, HAVING INCREASED FROM 2.4% IN 2005 AND 3.5% IN 2008

The Netherlands’ bright biofuel future The Netherlands is attempting to reduce its greenhouse gas (GHG) emissions by focusing on research and development in the biofuels sector. The International Energy Agency (IEA) Bioenergy Task 39 (Commercialisation of liquid biofuels) provides a round-up of the country’s plants and programmes. Elke van Thuijl, Oliver May and John Neeft write

A

fter petroleum, the largest source of energy in the Dutch energy matrix is natural gas and the Netherlands is the second-largest producer and exporter of natural gas in Europe. Natural gas fields are located off-shore in the North Sea, but also onshore, with Groningen boasting one of the 10 largest natural gas fields in the world. As a result, natural gas is the major fossil fuel for production of electricity and heat.

The national energy policy aims to secure energy supply for the future and reduce emissions from the energy sector. The current share of renewables in total primary energy consumption was 4.5% in 2013, having increased from 2.4% in 2005 and 3.5% in 2008.

Future targets for renewable energy are governed by the European Directive on the promotion of the use of energy from renewable sources (Renewable Energy Directive, EU-RED, 2009/28/EC), which sets an obligatory target for renewable energy sources for the Netherlands at a 14% share of final energy consumption by 2020. In September 2013,

as part of a national energy agreement in which a broad range of stakeholders was involved, this target was extended to 16% by 2023.

Following the EU-RED, a specific target for a 10% share of renewable energy in transport is to be achieved by 2020. This target will mainly be met through the use of liquid biofuels, such as biodiesel and bioethanol. The main drive for biofuel policies in the Netherlands is to decrease greenhouse gas (GHG) emissions from transport.

For the Dutch government, guaranteeing the sustainability of biofuels for transport and biomass for electricity and heat production is an important condition of promoting the use of bioenergy in the Netherlands.

As of January 2007, a biofuel obligation has been in place in the Netherlands with the obligation on the oil companies that bring petrol and diesel from excise warehouses onto the Dutch fuel market. The legislation implementing the EU-RED and building upon the existing biofuels obligation scheme came into force on 1 January 2011. Table 1 (following page) shows the biofuel

obligation targets for the period 2007 until 2020.

As of January 2011, biofuels had to be in compliance with the sustainability requirements set by the EU-RED in order to count towards the obligatory percentages. Biofuels produced from wastes, residues, non-food cellulosic material and cellulosic material under certain conditions may be double-counted in meeting the obligation. In addition to liquid biofuels, from 2011 onwards, biogas (provided it is sustainable, as demonstrated by the use of a sustainability scheme) and renewable electricity may also be counted towards the targets if they have been supplied to road transport. Biofuels applied in aviation also comply for fulfilling the obligation for renewable energy in transport. In this way, the Dutch government promotes the application of biofuels in the aviation sector.

Biofuels policy and legislation are the responsibility of the Dutch Ministry of Infrastructure and the Environment. As of 2011, the administration, inspection and enforcement of this legislation are the responsibility of the Dutch Emissions Authority (NEa).

NEa publishes a yearly report on the amount, type and origin of biofuels supplied to the Dutch market. In 2015, NEa will start operating an electronic register to keep track of the use of renewable energy in transport to assist companies to demonstrate compliance with the obligation.

The register will also facilitate the reporting on sustainability characteristics of biofuels consumed by the Dutch transport sector. v

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Biofuels production

TABLE 1: BIOFUEL OBLIGATION IN THE NETHERLANDS (PERCENTAGE BY ENERGY)

In 2013, a physical volume of 478,000 tonnes of biofuels was consumed in the Netherlands. A large part of this (around 60%) consists of double-counted biodiesel produced from wastes and residues. Total national production of biofuel in the same year amounted to around 1.789M tonnes, consisting of 1.375M tonnes of biodiesel and hydrotreated vegetable oil (HVO, also called renewable diesel) and 414,000 tonnes of bioethanol and biomethanol.

The Neste Oil HVO facility produces 800,000 tonnes/year.

For both biodiesel and bioethanol/biomethanol, the national production is much higher than the national consumption and a large volume of the biofuels produced are exported. This also applies to HVO, for which a large production facility is operated in Rotterdam by Neste Oil. Most biofuel facilities in the Netherlands use feedstocks that are eligible for double counting under the biofuels obligation, mainly used cooking oils (UCOs) and animal fats, but also other residues (pentosane stream and process water).

Research, development, innovation The Netherlands has a strong academic network with many of the universities ranking among the top 300 universities worldwide. Top institutes in life science, agriculture science and engineering include the University of Utrecht, Leiden, Groningen, Nijmegen, Amsterdam, Wageningen, Eindhoven and Delft. This strong fundamental knowledge base and the traditionally close collaboration with and between Dutch companies contribute to a long history of life science, material science and agriculture science innovations.

Based on a solid foundation of the chemical, life science as well as the agro industry sector and fostered by national and European public private partnerships, the Netherlands is strongly engaged in developments to enable and capture the innovation potential offered by the bio-economy.

Next to the development of bio-based chemicals and materials, biofuels developments play an important role, not only for enabling technology

Year Petrol Diesel Petrol & diesel 2007 2.0% 2.0% 2.00% 2008 2.5% 2.5% 3.25% 2009 3.0% 3.0% 3.75% 2010 3.5% 3.5% 4.00% 2011 ≥3.5% ≥3.5% 4.25% 2012 ≥3.5% ≥3.5% 4.50% 2013 ≥3.5% ≥3.5% 5.00% 2014 ≥3.5% ≥3.5% 5.50% 2015 6.25% 2016 7.00% 2017 7.75% 2018 8.50% 2019 9.25% 2020 10.0% Source: Task 39 Newsletter, December 2014

developments, but also their implementation in the aviation industry. The following are some examples of R&D activities aimed at biofuels innovations.

Programmes and partnerships BE-Basic started in 2010 with an R&D budget of €120M, of which half is funded by the Ministry of Economic Affairs, Agriculture and Innovation as part of the Economic Structure Enhancement Fund (FES). The other half is funded by industry and knowledge institutions. A total of 10 flagships cover the research fields needed for the transition to a bio-based economy. Several of the flagships deal with enzyme, strain and bioprocess development related to biofuels, such as cellulosic ethanol, isobutanol and jet fuels. In 2012, the BE-Basin programme became part of the new established BEBasic Foundation that has an actual R&D budget of €45M (around US$60M/year).

STW is a foundation that supports proposals from any field of applied research, with the aim to enhance the utilisation of research results. The budget of STW is approximately €44M from the Dutch Organization for Scientific Research (NWO), €22M from the Ministry of Economic Affairs (EZ), and €10M in-kind from co-financing partners in research projects. STW is currently supporting

approximately 600 projects. Recent biofuels-related demonstration projects include, for example, the catalytic upgrading of pyrolysis oil based on research at the University of Twente.

Catch-Bio is a public private partnership of 21 partners from Dutch universities, research institutes and industry operating in the field of catalysis research. With a budget of €21M, this eight-year programme (starting in 2007) focuses on the development of clean and efficient processes for biomass conversion into low-cost and sustainable biofuels, chemicals and pharmaceuticals. Given the catalysis focus, biofuels related R&D projects are focusing on thermo catalytic conversion technology, including the conversion of biosyngas to liquid biofuels at TU Delft, or catalytic conversion of ethanol to hydrocarbons used as alternative fuels based on research done at Leiden University.

International collaboration programmes In Canada, on 14 May 2014, a three-year collaboration between the Dutch Biobased Delta foundation and Bioindustrial Innovations Canada was signed. This initiative aims to accelerate the international commercialisation of biofuels and materials based on pyrolysis of lignin and sugarderived chemicals. v

TABLE 2: BIOFUEL PRODUCTION CAPACITY IN THE NETHERLANDS (KTON/YEAR) Company Location Feedstock Biodiesel Bioethanol Methanol Biodiesel Kampen Kampen UCO 120 Biopetrol AG Industries Rotterdam Rapeseed and soya oil 400 Eco-Fuels Netherlands Eemshaven UCO 66 Ecoson/Vion Son Animal fats 5 Electrawinds Greenfuels Sluiskil UCO, animal fats and 250

vegetable oils Greenmills/Biodiesel Amsterdam UCO 100 Amsterdam Sunoil Biodiesel Emmen UCO, animal fats 72 Vesta Biofuels Amsterdam Vegetable oils 200 (rape/soya) Abengoa Bioenergy Rotterdam Grains and maize 385 Netherlands Cargill Bergen op Pentosane stream and 32

Zoom process water BioMCN Delfzijl Crude glycerine 200 Neste oil Netherlands Rotterdam Vegetable oil, waste

residues, non-edible oils v

HVO

800

Source: Task 39 newsletter, December 2014

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In Brazil, on 4 April 2014, representatives of the scientific community of Brazil and the Netherlands, interested in the bioenergy industry and the use of biofuels in aviation, participated in a workshop about the Brazil-Netherlands programme on Advanced Integral Sustainable Biofuels Systems (BASIS). The initiative proposes the creation of infrastructure to boost cooperation between the two countries, which started in 2010 between FAPESP and BE-Basin Foundation investigating the sustainability of ethanol production, the impacts of biofuel production and sustainable soil management in biomass production, among other topics.

There have also been European collaborations.

The 7 European framework programme supported various collaborations with Dutch academic and industrial participants. For example, the Kacelle project led to a successful demonstration of cellulosic ethanol at Dong energy in Denmark using yeast and enzyme technology developed by the Dutch company DSM. Under Horizon 2020, a variety of biofuels projects with Dutch academic and industrial participants will be supported.

Industrial biofuels programmes In the framework of the renewed partnership with WWF Netherlands, KLM has declared its intention to strive for a 1% mix of sustainable biofuel throughout the entire fleet by 2015. On 23 November 2009, KLM operated the world’s first biofuels demonstration flight with passengers on board, followed by the first commercial flight on

bio-kerosene in 2011. KLM, together with partners such as Schiphol airport and its Amsterdambased supply chain partner SkyNRG, is supporting various bio-jet fuels innovation initiatives such as ITAKA (Initiative Towards sustainable Kerosene for Aviation) and the RenJet Fuels Climate-KIC funded project.

DSM is a global science-based company active in health, nutrition and materials. Its Biobased Products & Services unit is dedicated to the development of Bio-based Chemicals and Materials as well as Bioenergy solutions. The latter include the development of enzymes for biogas applications, biodiesel production from microbial oil, as well as C5 sugar converting yeast and enzyme technology for production of cellulosic bio-ethanol. The latter programme has reached commercial demonstration phase at various partners and lead to the formation of a joint venture (POET-DSM), which opened its first commercial 25M gallons cellulosic bioethanol plant on 3 September 2014.

Dyadic Netherlands is a subsidiary of Dyadic International and its R&D centre. This team of approximately 30 scientists is dedicated to the development of enzymes and enzyme production processes, including cellulases for biofuels applications that have been licensed to Abengoa and Codexis.

Pilot plants TNO in Zeist are operating a multi-purpose pilot plant including hydro-thermal-upgrading (HTU)

to ‘biocrude’ and pre-treatment (superheated steam) with a capacity of around 10kg/hour input.

In addition, TNO recently launched a mobile pilot plant to refine algae biomass.

Energy research Centre of the Netherlands (ECN) in Petten operates a variety of pilot facilities for biomass pretreatment, combustion, torrefaction, pyrolysis, (staged) gasification, gas clean-up, gas conditioning and product separation.

Algae Park in Wageningen is led by Professor René Wijffels, a public private partnership piloting different reactor concepts for cultivating microalgae. Available pilot-scale cultivation systems are open raceway pond, flat panel photobioreactor, horizontal tubular photo-bioreactor and vertically stacked 3D tubular photo-bioreactor.

Bioprocess Pilot Facility (BPF) in Delft is an open access pilot facility integrating biomass handling, bench (4kg dry matter/batch) and pilot pre-treatment (40kg/hour dry matter), hydrolysis, fermentation (from 10 litres up to 42m³) and a large variety of DSP unit operations. The pre-treatment section is currently under construction and was due to be operational in the first quarter of this year.

Biomass Technology Group (BTG) in Enschede is operating a variety of biomass conversion technologies at bench/pilot scale. Technologies include pyrolysis, torrefaction, gasification and w supercritical gas reforming.

This feature is republished with permission from the IEA Bioenergy Task 39 December 2014 Newsletter.

See www.task39.org for more information

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Italy held back by EU policy

ITALY IS PUSHING TO DEVELOP ADVANCED BIOFUELS, WHICH INCLUDES FUELS THAT UTILISE BIOMASS SUCH AS RICE HUSKS (PICTURED), STRAW, ANIMAL MANURE, CRUDE GLYCERINE, OENOLOGICAL BY-PRODUCTS AND CORN COBS (PHOTO: MATES/ DOLLARPHOTOCLUB.COM)

Italy is moving to green its biofuels sector by increasing sustainability, however uncertain EU policy is impeding growth. Brenda Dionisi writes from Milan

T

he Italian government has been breaking ground in its attempt to make its biofuels sector more sustainable, but ongoing discussions at the European Union (EU) on how much member states can subsidise biofuels are impeding Italy’s progress.

National blending targets In 2014, Italy became the first EU member state to set national blending targets for conventional and advanced biofuels. Introduced by Italy’s ministry of economic development, a 14 October 2014 legislative decree obliges national fuel suppliers to blend 5% of conventional biofuels in petrol and diesel in 2015; 5.5% in 2016; 6.5% in 2017; 7.5% in 2018; 9% in 2019; and 10% in 2020, 2021 and 2022.

The Italian legislation also sets blending minimums for the use of advanced or secondgeneration biofuels in the overall fuel mix.

Starting on 1 January 2018, at least 1.2% of advanced biofuels must be blended into petrol and diesel; the blending rate rises to 1.6% starting 1 January 2020 and to 2% starting 1 January 2022.

Debate in Europe The move is one in a series of green biofuel reforms framed by the Italian government but Rome is having to keep half an eye on Brussels.

EU discussions on decarbonising and reducing greenhouse gas emissions in the transport sector beyond 2020 are ongoing. Notably, MEPs and EU ministers continue to discuss potential amendments to the EU fuel quality (98/70/EC)

and renewable energy (2009/28/EC) directives that would take account of indirect land use changes (ILUC) prompted by biofuel production.

These rules will effectively control the extent to which member states can subsidise the production and use of biofuels, especially those made from food crops.

In the latest vote on 24 February, the European Parliament’s environment committee backed a draft rule that would insist first-generation biofuels (from food crops) should not exceed 6% of the final energy consumption in EU transport by 2020.

Annalisa Zezza, researcher at Italy’s National Institute for Agricultural Economics (INEA) comments: “While EU policy still seems very much up in the air, the legislation from Italy does appear to encourage more innovation in biofuels production. But it’s hard to say as the debate in Europe seems very political and uncertainty is high.”

Advanced biofuels According to the October national decree, biofuels that are considered ‘advanced’ are those that utilise the following types of biomass: cultivated algae; urban organic and biodegradable waste (that does not include used cooking oils or animal fats); non-food biomass residues from the agro-food sector; straw; animal manure and sewage sludge; tall oil (a by-product of wood pulp manufacturing); crude glycerine; bagasse; oenological by-products such as grape stalk, grape marc, wine lees and winery sludge; animal shells; rice husks; corn cobs (cleaned of its grain); forest residues; certain cellulosic materials taken from non-food biomass, including straw and wheat residues and dedicated low-starch, non-food crops, such as arundo donax, and any vegetable oil, sugar, starch and protein residues from industrial processes; certain lignocellulose materials composed of lignin, cellulose and

hemicellulose, such as woody biomass and forest waste; and renewable liquid and gaseous biofuels derived from non-biological origins.

New legislation The October 2014 Italian decree came one year after a ministerial decree 9 October 2013, N.139, presented by the Italian ministries of economic development and the environment, aimed at removing red tape restricting the construction of new biorefineries in Italy. In a statement, the then Minister of Economic Development Flavio Zanonato said: “This decree greatly simplifies the bureaucracy and has the dual purpose of promoting biofuel production in Italy and encouraging investment in the sector.”

That same year, the Italy-based renewable chemicals producer and world leader in PET plastics, Mossi & Ghisolfi Group (M&G Group) opened a state-of-the-art second-generation bioethanol production facility in northern Italy in October.

Spokesperson for M&G Sandro Cobror welcomed the latest legislation, telling Oils & Fats International: “The latest Italian legislation establishes for the first time blending targets – which are binding and increase year-on-year until 2022 – for advanced biofuels in the overall fuel mix and promotes the use of advanced biofuels in a decisive way, while also pushing current biofuel producers to adopt more efficient production technologies and utilise more sustainable raw materials.”

He stresses that the ILUC policy uncertainty in the EU continues to create an unfriendly environment for investors and is an obstacle to Italy’s nascent advanced biofuels sector: “The future belongs to advanced biofuels but this involves a large amount of investment to construct technologically advanced bio-refineries and further develop a new agro-industrial sector.

It is certain that the new [Italian] legislation v

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will stimulate supply by acting on demand, but it alone cannot solve certain problems like how to mobilise the large amounts of capital needed to finance this emerging sector.”

M&G has invested significant private capital in the production of second-generation cellulosic bioethanol in Italy. With subsidiaries Biochemtex and Beta Renewables, and with partner Novozymes from Denmark, the M&G Group opened in October 2013 the world’s first commercial-scale second-generation bioethanol production facility in the town of Crescentino, located roughly halfway between Turin and Milan.

The €150M, multi-feedstock facility utilises cellulosic agricultural waste, such as wheat straw and rice straw, as well as non-food energy crops including arundo donax (also known as giant cane), grown within a 70km radius of the facility, in an agriculture area where rice, wheat and maize are grown. At maximum output, the Crescentino facility utilises 200,000 tonnes/ year of dry biomass and can produce 40,000 tonnes of bioethanol annually. Cobror notes that production capacity is expected to reach 100% in the next few weeks.

This cellulosic bioethanol factory is competitive because it is able to transform sustainable biomass in a variety of bio-based products. “Our strategy is to create an advanced and integrated biorefinery that maximises biomass usage to produce not only biofuel but also other types of energy and chemical intermediates and by-products,” says Cobror. “This allows for a considerable reduction of production costs, thus making our bioethanol competitive in terms of end costs.”

While Cobror says it is still premature to speak of the construction details of the additional biorefineries being planned in Italy, the company has taken its Proesa technology abroad, signing agreements to open secondgeneration bioethanol facilities outside the EU, such as in China and Brazil (although it has also

struck a deal to open a plant in EU member state Slovakia).

Biodiesel struggling Italy’s latest push to encourage further development of advanced biofuels comes at a time when the country’s conventional biodiesel producers seem to be struggling. This can be seen by the drop in production levels compared to previous years and the stable level of imports for biodiesel, the most commonly used biofuel in Italy. Data from Assocostieri Produttori Biodiesel, the national association of biodiesel producers, shows that Italy produced 459,000 tonnes of biodiesel in 2013, compared to 620,000 tonnes in 2012, while it imported 980,000 tonnes in 2013 compared to 1.1M tonnes in 2012. It also exported slightly less in 2013, at 44,000 tonnes compared to 55,000 tonnes the previous year. Consumption levels were also lower in 2013, at 1.33M tonnes, compared to 1.42M tonnes in 2012. Data also shows that national production capacity in 2011 was 2.39M tonnes, yet production output was just 620,000 tonnes that same year.

What it comes down to is competitiveness, Zezza notes: “To be competitive in biofuels means being able to produce on a large scale; the only countries in the EU that meet these criteria might be Spain or Germany and the eastern European countries. Even from a climatic point of view, the cultivation of rapeseed is not convenient in Italy. With the rise in production costs and the end of national tax breaks [in 20089], it is no longer convenient to produce biodiesel in Italy and evidently production has slowed,” she explains.

Although the production of first-generation biodiesel in Italy seems to be lagging, multinational oil and gas producer ENI has nonetheless invested heavily in the sector, transforming in June 2014 one of its petroleum

refineries in Venice into a €100M biorefinery producing traditional biodiesel from vegetable oils, mainly palm oil, with its patented Ecofining technology, designed and developed with the American company UOP. ENI’s Porto Marghera biorefinery will, in the future, also feed on products from the agricultural sector and second- and third-generation biomasses, such as lignocellulose biomass as well as urban waste (transformed into fuel).

In November, ENI also announced that it would convert one of its oldest refineries located in Gela, Sicily into a €2.2bn biorefinery producing biodiesel and second-generation biodiesel.

Indeed, an already existing pilot project there involves the cultivation of third-generation microalgae biomass in which oil will be used to produce biofuel.

EU policy deterring production However, continued uncertainty over the EU’s energy policy may scare off some of Europe’s most innovative companies. In its 2014 ‘State of the Industry Report’, the ePure association, the European renewable ethanol industry at the EU level, warned that Europe’s most innovative companies would start taking their technology to more favourable markets: “The EU needs to urgently help ventures move from R&D to the commercial deployment of advanced biofuels to avoid this ‘innovation leakage’.”

The Secretariat of the European Biofuels Technology Platform (EBTP) also stressed the importance of an effective and forward-thinking energy policy in the EU, telling Oils & Fats International that “EU policy has a significant influence on national policies, and consequently on the funding and development of advanced biofuels.

Any uncertainty is seen as an obstacle.” w Brenda Dionisi is a freelance writer based in Milan

PHOTO: STOCKSOLUTIONS/DOLLARPHOTOCLUB.COM

CONVENTIONAL PRODUCTION OF BIODIESEL, SUCH AS FUEL UTILISING RAPESEED, IS FALLING IN ITALY

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RAPESEED

Risk or opportunity?

Highly versatile rapeseed can meet food, fuel and protein needs. However, questions remain on its use as a biofuel and whether this interferes with food production or helps or hinders greenhouse gas (GHG) reduction targets in Germany and the wider EU. The Union zur Förderung von Oelund Proteinpflanzen (UFOP) of Germany writes

PHOTO: PICTUREPARTNERS/DOLLARPHOTOCLUB

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hen it comes to the many ways it can be used, few crop cultures can surpass rapeseed. It is the source of raw materials for cooking oil, margarine, mayonnaise and many other products. With a fatty acid composition that is unique from a nutritional standpoint, rapeseed oil is the best-selling cooking oil in Germany today.

Rapeseed oil packs an energy density roughly equal to that of diesel fuel. Processed further into biodiesel, it is mixed with fossil diesel at rates of up to 7%. While that may sound insignificant, it is today – and will continue to be in the near future – the most important renewable fuel alternative in the European Union (EU). Its fatty acid composition makes it a valuable raw material for the lubricant and chemical industries.

About 60% of the harvest volume following the pressing for oil becomes, in the form of rapeseed meal, a high-quality protein feedstuff that reduces soyabean imports from overseas. Rapeseed is the most important non-genetically modified (GM) protein source in Europe. This feature is proving profitable for milk and meat producers, given the market demand for products labelled ‘GM-free’.

Rapeseed has its critics One would think that, with these versatile characteristics, rapeseed would be considered a ‘high-flyer’ among crops. Success, however, has its shadowy side, as the cultivation of rapeseed for biofuel production has come under heavy criticism. Here, too, rapeseed must prove itself in terms of its environmental efficiency and benefits.

When, in the 1990s, about five million ha of arable land in the EU had to be taken out of production because of Common Agricultural Policy (CAP) reforms, rapeseed became the ‘problem solver’

that would, under force of circumstances, open up new markets beyond the market for foodstuffs.

The allegation in particular that the ever-growing cultivation of rapeseed for biodiesel promotes ‘monoculture’ does not stand up to detailed scrutiny.

The acreage planted with rapeseed, which has increased from approximately one million ha in 1993 to about 1.4M ha today, is not significant. A monoculture is also not possible because rapeseed is itself incompatible with that kind of agriculture.

Crop rotations with rapeseed should observe a three-year break in cultivation of the crop. Only then can rapeseed yield its full genetic potential.

While, in 1993, about three tonnes/ha were harvested, in the record-breaking year of 2014, the yield had risen to an average of around 4.5 tonnes/ ha. The total harvest volumes were 2.9M tonnes and 6.3M tonnes, respectively.

In former East Germany, in particular, rapeseed as a ‘leaf crop’, with its deep tap root, replaced the leaf crops that broke up the cereal crop cycle before 1989, such as sugar beet and potatoes.

The state pulls back The CAP set-aside obligation to idle arable land has, in the meantime, been done away with, for good reason; farmers grow rapeseed without knowing how it will ultimately be used. Only further down the trade and processing chain is it decided whether the rapeseed oil will be processed into biofuel. German and European rapeseed producers have had to withstand international competition for some years now. This is because the EU has liberalised the European agricultural markets through CAP reforms, which has opened up the European market to developing countries.

The reverse side of this market policy or orientation is that the agricultural prices on the international markets and exchanges can swing wildly, without the European Commission (EC) stepping in as it once did – for example, buying up grains and then selling them off to exert a pricedampening effect on the world market.

The state has withdrawn from its role as an active wholesale buyer, warehouse keeper and marketer.

These roles today are assumed solely by farmers, the agricultural trade and the oilseed mills.

In the 1980s and 1990s, the EU was accused of using its export policy to keep prices low on world markets, which was hurting developing countries.

Today, the market mechanisms of supply and demand govern the price and therefore also the purpose for which rapeseed or other biomass raw materials are processed.

Fuel tank or dinner plate?

Is it ethically defensible to grow rapeseed or, in principle, any renewable raw materials in Germany for producing biodiesel, if this squeezes the supply of foodstuffs, raises agricultural prices and, in the worst case, causes hunger elsewhere?

Some critics make it too easy to put the blame on the biofuels policy. The policy is confronted with a dilemma. It must, in the worst case, fear being denounced publicly when it has to seek a balance between the contribution biofuels make to the security of energy supply – and to climate and resource protection – as well as the argument that foodstuffs are filling up the petrol tank instead of v

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v the dinner plate. The following facts must be taken into account or acknowledged here: t Only about 5-8% of the world’s produced and traded agricultural commodities go into biofuel production. t About one billion tonnes of food or foodstuffs, however, never reach the plate. Causes are bad/inefficient harvest methods, high regional storage losses due to mould and pest infestations and large losses around transport. In Germany alone, around 11M tonnes of food ends up on the rubbish heap every year. t Regional prices in developing countries are not necessarily determined by the world market.

The cause of this is that the local food supply often determines quantity and price. In many developing countries, foods are grown (manioc, cassava, for example) that are not traded on the international markets. t Moreover, questions of land ownership and access to, or the availability of, water are unresolved. t In many poor developed countries, there are governments in power that neglect the country’s needs, particularly in rural areas. The result is that the rural population in many poor regions is threatened by poverty and hunger. t The question of security of supply is an important political issue and should be reflected in the responsible commitment of developed countries to development aid. Worldwide, migrations away from poverty are on the rise.

However, politics are powerless if famines are the result of military conflicts.

Nevertheless, biofuels could be just the stimulus for opening up new perspectives in rural areas and also as a contribution to the local energy supply. With new kinds of crops or new varieties developed by breeders that are adapted to local site conditions, arable land that is so far unused in these countries could be brought into cultivation.

In comparison with the huge investment sums driving the search for new sources of fossil fuel raw materials, the research funding for agriculture is very modest, even though it should be clear to all that the fossil era is coming to an end and new fossil fuel sources can only buy more time, at the expense of climate protection.

Attention must be paid to the discussion on biofuels and their impact on international raw material supply and price development, in view of the necessary acceptance by politicians and the population. Nonetheless, the politicians must grapple with the question of which approaches need to be pursued as a priority. The world agricultural market does have, after all, significant structural surpluses despite biofuel production.

Instead of putting biodiesel or biofuels produced from rapeseed under a general blanket of suspicion, development policies must be implemented concretely and promptly and adequately backed financially, mainly by the developed countries that share the responsibility. Success could be seen immediately in a better market supply and thus a fall in the number of hungry people.

Important for sustainable mobility Under the German presidency, the EU decided in 2007 that the binding target for all member states by the year 2020 was a proportion of renewable

IN 1993, 2.9M TONNES OF RAPESEED WAS HARVESTED IN THE EUROPEAN UNION. BY 2014, THESE VOLUMES HAD INCREASED TO 6.3M TONNES (PHOTO: TA

energies in the transport sector of at least 10%. The European politicians did not agree on a quantity goal, but left it to each member state to calculate the amount of fossil fuel energy (diesel, petrol) that would be used in the transport sector in 2020. At least 10% of that would then have to come from renewable sources.

This objective is part of the so-called ‘energy revolution’ in Germany and in the EU today.

The policy commits European states to develop biofuels as an important pillar for achieving climate protection targets and for the fuel supply in the EU. Billions of euros have been invested in the necessary biofuel production plants and in oil mills, and jobs have been created.

About 210M tonnes of diesel fuel is consumed in the EU. How can the 10% target be met? The member states had to provide the EC with so-called action plans that pointed out the national strategy and the biofuel volumes required to meet the target. Table 1 (following page) shows the amount of biodiesel needed for the respective member states.

In Germany and in the EU, around five million tonnes and around 21M tonnes of production capacity, respectively, have been created to produce biodiesel. This capacity is enough to reach the energy target (10%) in 2020.

This target has, in turn, had the consequences that the petroleum industry has promised to mix a certain minimum proportion of biofuels into fossil fuels. The maximum proportion that can be added is not only a political, but also a technical, question that is agreed upon by standards bodies at the European level, in which the motor vehicle, oil and biofuel industries are all represented.

The outcome of these deliberations can now be read at the fuel pumps of petrol stations: B7, E5 and E10. In accordance with the European diesel fuel standard, EN590, diesel fuel may contain a maximum of 7% biodiesel by volume and has been approved by vehicle manufacturers for old and new diesel vehicles.

Biofuels take the lead Where do the raw materials for biodiesel originate?

Only from countries in the EU? Following the liberalisation of its agricultural policy for oilseeds (rapeseed, soyabeans, sunflowerseed) and vegetable oils (including palm oil), the EU is no longer a closed market. This also applies to biodiesel as fuel.

This must also be taken into account by investors that have established production facilities in the EU. The raw materials and the biofuels themselves are produced and traded in a competitive international market. Thanks to their high energy density, biodiesel and vegetable oils are less costly to transport per calorific unit measured against other renewable energy sources. Especially in vegetable oils, there is a high incentive to supply the European market through imports of raw materials or biofuels.

The mandatory prescribed objective signals to operators assured minimum sales, as it were.

As expected, the policy questioned whether this incentive in Asia (palm oil), as well as in South and North America (soyabean oil) would encourage the cultivation of commodities to expand at the expense of areas that are needed to protect natural

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.3M TONNES (PHOTO: TAMAS ZSEBOK/DOLLARPHOTOCLUB)

ecosystems, such as the rainforest, and the climate.

The European Parliament and the Council of Ministers therefore agreed to adopt the directive presented by the EC “On Promoting the Use of Energy from Renewable Sources (2009/28/EC) – in short, the Renewable Energies Directive” (RED) in June 2009, and also the new ‘Rules of the Game’ embedded in the directive – with which all stakeholders must comply. What is special here is that it even includes stakeholders in countries outside the EU. A trend-setting legal structure of this kind, virtually passed overnight, impacting the agricultural commodity production of soyabeans, sugarcane and palm oil plantations in South and North America and Asia is, with the exception of the EU Eco-regulation, historically unprecedented.

The special thing about these legally-binding ‘Rules of the Game’ is that they must be implemented directly as a precondition for accessing the EU market.

These rules include requirements for a sustainably-orientated agricultural commodity production. At the centre is the question: what areas do the commodities come from? For evidence of this, the EC has currently approved 19 certification systems that include specific indicators on the verification of compliance with the sustainability requirements in the countries the commodities came from. This includes, in particular, proof that the biomass raw materials, such as soyabean, palm oil or even rapeseed, may not be taken from land cleared after 1 January 2008 – for example, forests cut down for plantations of soya or palm oil.

Through this, policymakers wanted to ensure

that only fields already under cultivation before that date are used to grow raw materials and to produce biofuels. The EC had already succeeded in using modern satellite technology to identify and draw up effective inventories of areas already under cultivation. This form of ‘monitoring’ has been state-of-the-art for European agriculture for many years.

It also must be demonstrated that the greenhouse gas (GHG) emissions associated with biofuel use throughout the entire process chain, from the growing of the raw material to the end use, are currently at least 35% of the emissions from fossil fuels and, from 2017, will be at least 50%.

These requirements are certified, so that the origin and GHG reduction of biofuels – such as those that are used in Germany and that are under the admixture obligation – are covered by the federal agency for agriculture and food (BLE).

Market participants must be registered for this purpose in the BLE ‘Nabisy’ database. The technical processing is similar to a bank account, but with the difference that biofuel amounts are credited only if they demonstrably meet certain sustainability criteria.

If this is the case, partial quantities can, for example, be booked from this account. The recipient, usually a company in the petroleum industry, then gets a so-called ‘sustainability proof’ of this amount. With this proof, the company can then be credited for the appropriate use of biofuel that goes towards fulfilling its obligation.

To ensure the legally required transparency, the BLE draws up an ‘evaluation and experience report’ each year. This report includes the evaluation of the origins of the biofuel quantities registered in its database. The individual links of the certification chain start with the cultivation of the raw material and encompass the processing in the oil mill and finally the production of biodiesel.

With the RED, the EU has established international criteria and certification systems that are also applicable outside the EU. These systems or the local certification bodies responsible for implementing them on site must be developed further, as a learning process.

What is to be stressed in particular here is that these certification systems provide for social standards requirements by recognising the criteria of the ‘International Labour Organization’ (ILO).

This is worth developing further in the spirit of fostering fair international competition, so that the added value triggered by the European biofuels policy is also reflected in better working conditions.

The biofuel industry has a special responsibility here, since results are easy to measure at this point and furnish a trend-setting basis for political and public acceptance.

The entire value chain is, therefore, in the light of the future discussion on the design of the funding policy framework for biofuels, advised to take the certification criteria seriously and to comply with, or to improve upon, the test criteria in the ‘checklist’ of certification systems.

There is, naturally, a great fear that immense bureaucratic costs and causes of fraud cannot be ruled out. The certification systems must therefore quickly address potential vulnerabilities and qualify certification bodies appropriately.

The experiences with the practical implementation already confirm that, not only do environmental groups take a critical stance on the

implementation, in particular in third countries (Asia, South America), but that the market players themselves judge the certification systems critically in terms of the documentation requirements and implementation quality if they fear a competitive disadvantage arising from them.

This ‘monitoring process’, accompanied by criticism, is both desirable and necessary to improve the test criteria and the ‘on-site inspection’ in the practical implementation of the certification.

It must also be noted that the EC must re-approve the certification systems after five years. This does give it the power to further develop the quality of sustainability certification in parallel, thus allowing any competitive differences caused by it to be excluded.

Cutting greenhouse gases Germany was the first country in the world to introduce the GHG emission commitments into the fuels sector, starting on 1 January 2015. The petroleum industry will thus be forced to reduce its associated GHG emissions initially by 3.5%, from 2017 by 4%, and finally from 2020 by 6%, as measured by the fossil fuel volumes sold in a calendar year.

New regulations will govern the biofuel supply chain, including biomass raw materials producers and the petroleum industry. The certification systems and their certification bodies must also expand their checklists and take into account additional training needs.

Of particular significance is the fact that the GHG efficiency, as a new competitive factor among the biofuels being sold, will determine market access in the future. This means that the petroleum industry is interested not only in certified sustainable biofuels that – commencing in 2017 – must demonstrate GHG savings over fossil fuels of at least 50%, but that the company will attempt to meet its targets with a minimum of biofuel and thus, at the same time, as economically as possible.

There are no competitive conditions like it in any other sector of the economy.

Does rapeseed impact ILUC? If rapeseed is grown in the country for biodiesel production, the question naturally arises of whether the corresponding amount of rapeseed oil is missing from the world market for use as food or as market supply. The conclusion suggests that, to balance out needs, additional areas would have to be brought under cultivation or, in the worst case, forests in Asia would have to be cleared and thus lead to an indirect land use change (ILUC).

These newly created areas, such as palm oil plantations, could then produce the vegetable oil to compensate for the missing amount of rapeseed oil that went into the production of biodiesel owing to the EU biofuel policy.

However, additional GHG emissions would emerge from this new acreage, for example, through humus removal. Following the ‘polluter pays’ principle, these emissions would then have to be charged against the rapeseed biodiesel for the deforestation as a GHG penalty (also called the ‘LUC’ factor). To the detriment of rapeseed oil/ vegetable oil, the EC assumes that forest areas in particular are affected by this indirectly triggered land-use change. In consequence, the ILUC factor v

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v for biodiesel from vegetable oil compared to starches (corn) or sugar (sugarcane or beet) is correspondingly high.

Calculating the ILUC factors has, as expected, generated much criticism from the biofuel industry and especially the agricultural industry regarding the verification of this theoretical model and the factors that are derived from it. Even highly critical experts make it clear that a calculation is not possible and that these factors could, in any case, be derived solely from model calculations.

As part of an extensive network project, a new attempt will be made in the EU to re-examine these factors. It is doubtful that this will succeed without opposition from scientific circles as well, especially since the factors, depending on world market conditions, must be constantly recalculated at certain time intervals. Whether these can then stand up in court may therefore be in doubt.

The precondition is verifiability, including the verifiability of all the supporting data.

Does ILUC concern only biofuels?

The above cause-effect principle is, however, very general and can in practice be transferred to all political measures that lead indirectly to a land-use change or to a lowering of the existing management efficiency, such as: t Organic farming subsidy policy. t ‘Greening’ as a result of the reform of the CAP. t Prohibition of a previously approved and revenueassurance measure such as rapeseed treatment. t Designation of conservation or extensification areas/farming requirements.

As such, the ‘ILUC question’ remains the subject of environmental debate and must, in future, also include production or policy areas that trigger the above effects owing to legal demands. Environmental policy will therefore have to navigate this dilemma.

The key question, rather, is: does introducing ILUC factors help prevent deforestation?

The policy also overlooks the fundamental problem that, in the event that biodiesel is sanctioned by the introduction of a GHG penalty (ILUC = 55gCO2/MJ), this biodiesel can no longer be counted on to help meet the EU objectives and any marketing of the biodiesel is, in practice, ruled out. The bulk of the European biodiesel industry will then have no economic future.

As far as environmental protection is concerned,

this sanctioning will achieve nothing because the actors in the international market will search for alternative markets.

In short: the deforestation would continue unabated because there are customers around the world that are not interested in sustainability certification but merely in the cheapest plant-oil imports they can get. By introducing mandatory sustainability certification in third countries as well, the underlying conditions for the cultivation of raw materials and the social standards of the farm workers can be influenced directly.

The EU is, in principle, required to solve these environmental issues in the short-term through bilateral negotiations and binding agreements.

The European rapeseed cultivation for biofuel production is bound up with questions that will be crucial for the orientation of the future resource and energy policy. In this environment, it must be proved that the cultivation, processing and utilisation of rapeseed intended for use as fuel makes a noticeable contribution to climate protection – that is, that the environmental and CO2 balance is as positive as possible. Rapeseed must, therefore, exploit not just its economic advantages but its ecological advantages as well.

The oilseed has a ‘high rotation value’ because it: t Extends the crop rotation as the so-called leaf crop in cereal crop rotation; t Enriches the soil humus content with its postharvest residues; t Prevents soil erosion, as it covers the ground quickly following sowing in August and protects it until the harvest in July the following year; t Leaves behind a good soil structure and reduces the cost of soil preparation for the succeeding crop.

Extensive research confirms the rotation value of rapeseed for the yield of the winter wheat that follows it. If winter wheat is sown following rapeseed, the wheat yield is, on average, around 10% higher than when a second crop of winter wheat follows on from the first and, at the same time, fertiliser expenses for the wheat are lower.

Over an area of one million hectares planted with rapeseed for biodiesel production, the value of this rotation works out to around 0.7M tonnes of additional wheat yield that depends on the effect of the preceding crop. The rapeseed is not only crucial to breaking up continuous cropping for environmental reasons, but also leads to higher

TABLE 1: NATIONAL ACTION PLANS IN THE EU TRANSPORT SECTOR (MILLION TONNES)

Germany Spain France Great Britain Italy The Netherlands Czech Republic Portugal Finland Austria Total

2005 2010 2015 2020 1.873 2.420 3.255 5.184 0.170 1.716 2.530 3.616 0.382 2.526 2.770 3.325 0.060 1.004 2.136 2.872 0.209 1.012 1.603 2.193 0 0.162 0.407 0.643 0.003 0.225 0.405 0.577 0 0.327 0.472 0.525 0 0.174 0.349 0.501 0.040 0.322 0.360 0.478 2.737 10.723 13.452 19.914

EU27 Total

2.753 11.225 14.613 21.83

Source: Dutch Energy Research Center, ECN

grain yield.

If it were taken into account in the models, the effect of the rotation would help to reduce the previously described ‘ILUC effect’. The compensating effect of the by-products from rapeseed processing still has not been appropriately evaluated to this day. Put briefly, one million hectares of rapeseed for biodiesel production correspond to a soyabean acreage of about 1.1M ha that, in consequence, need not be imported.

Numerous questions abound Questions being intensively discussed today, not only in expert circles but also by policymakers, include: how good is the GHG balance of rapeseed for biodiesel production? What factors must be taken into account when making the calculation?

For biofuels to be recognised within the framework of the sustainability certification, the legislation stipulates – as shown previously – that the lifecycle GHG emissions they produce must currently be at least 35% lower than the equivalent emissions from fossil fuels and at least 50% lower in 2017. Can rapeseed meet this demand in 2017 or will the GHG savings be even higher?

The EU RED also attempts to answer this fundamental question. This directive also requires the method for calculating the GHG emission value of the respective biofuel types (such as bioethanol and biodiesel) based on the respective biomass raw materials including rapeseed, soyabean, sunflowerseed, wheat and sugarcane.

The problem is that the crop types are compared with each other, but effects of preceding crops and hence the higher yield for the crop succeeding the rapeseed are left out. Advantages specific to crop type are therefore not taken into account.

Extensive feeding trials show that rapeseed meal can completely replace soyabean meal for feeding cows, cattle and fattening bulls. Rapeseed meal can also supplement pig feed as a protein source (for sows, piglets and fattening hogs).

The cultivation of one million ha of rapeseed and the production of the 2.28M tonnes of rapeseed meal associated with it again corresponds to an acreage of about 1.1M ha of soyabeans planted to generate an equivalent amount of soya meal.

Foodstuffs could be grown on these 100,000ha instead.

This side-effect also applies to commodities such as grain and sugar beets. In the case of rapeseed, it is therefore clear that the public discussion over whether the crop should fill up the petrol tank or dinner plate can be resolved. The words should therefore be: “Petrol tank and dinner plate” – both can be filled.

Rapeseed is the ideal crop culture for expanding crop rotations in Germany and the EU. As a source of raw materials, rapeseed opens up a multitude of possibilities for uses and end uses in the food and feed industry and also in the energy and material use sectors. Rapeseed makes a considerable contribution to climate and resource protection.

w This feature is reprinted from the Union zur Förderung von Oel- und Proteinpflanzen EV (UFOP)’s December 2014 publication titled ‘Rapeseed – Opportunity or Risk for the Future?’

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Plant and technology round-up Oils & Fats International reports on some of the latest projects, plant and technology news and developments around the world

Greenergy acquires Harvest biodiesel manufacturing assets

Buriram Sugar opens second biomass plant

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uriram Sugar Plc (BRR), the Thai cane sugar production company, which generates power from bagasse, started its second US$21.5M biomass power plant on 11 February with an additional production capacity of 9.9 megawatts, the Bangkok Post reported.

Anan Tangtongwetchakit, managing director of BRR, was reported as saying that 80% of the total power produced from the second plant (approximately eight megawatts) would be sold to the Provincial Electricity Authority (PEA).

Although the biofuel industry is currently struggling to make a profit due to falling crude oil prices, Tangtongwetchakit told the Bangkok Post that BRR would be diversifying into the renewable energy sector.

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K oil blending and supply company Greenergy announced in January that it had acquired Harvest Biofuels’ biodiesel manufacturing facility at Seal Sands, Teesside, UK (pictured). The acquisition has given Greenergy additional capacity for biodiesel production, enabling it to meet its own biofuel blending obligations under the UK’s Renewable Transport Fuel Obligation.

Greenergy’s other waste-based biodiesel facility in Immingham, UK is not currently producing sufficient quantities to meet the company’s growing biodiesel blending requirements. The shortfall has been met partially though imported biodiesel, however, this recent acquisition will reduce reliance on imports and allow obligations to be met through

Greenergy’s own production.

As part of the agreement with Harvest, Greenergy has taken on the company’s biodiesel storage contract at Dordrecht in the Netherlands.

Andrew Owens, Greenergy chief executive, said: “The acquisition of the Harvest biodiesel plant will help bring our own production and blend requirements into balance. Most of the biodiesel that we blend into diesel in the UK will now be manufactured and quality assured in our own facilities.” He added: “There are great opportunities to further improve the performance of both manufacturing sites by making best use of feedstock, through technology transfer and the v sharing of best practice.”

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Blends with benefits

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IN BRIEF PHILIPPINES: A PHP17bn (US$379.6M) ethanol plant is due to be built by a consortium on the islands of Limaong and Tumitus, a district rep, Nuno, told the Manila Standard Today. Nuno said that investors from Metro Manila expressed a desire to construct the plant in the two villages after their representatives found the areas to be particularly suitable for ethanol production.

Initially the investors want to plant almost 80ha of sorghum to convert to ethanol.

Following this the full PHP17bn will be invested for the plant, sorghum seedlings, and land.

JAPAN: Japan is going to be the first country in Asia to have a jet biofuel refinery, after Euglena and Chevron Lummus Global (CLG) agreed to construct and operate the plant, according to a report by the Nikkei Asian Review in February. Euglena focuses on the use of oils derived from cultivated algae, in particular euglena – freshwater unicellular organisms. Costing in the region of several dozen billion yen, the plant should be operating by 2018. It is hoped that the refinery will process other algae and plant-based oils. Plant-based biofuel is essential if airlines are to fall within the 2020 CO2 emissions cap as set by the International Air Transport Association.

UGANDA: A 4,000 litre/day cassava-based ethanol plant has received a US$1.8M investment courtesy of Ugandan, Saudi Arabian and Lebanese investors, Biofuels Digest reported. Increased cassava yields have caused prices to fall, but it is hoped that the facility will boost prices again.

Although the yield has increased, demand has not. However, the project should result in crop price increases of 14 cents/kg – up from the current 8 cents/kg, the report said.

AUSTRALIA: The Australian Renewable Energy Agency (ARENA) has awarded a grant of AUS$5.2M (US$4M) to local firm Renergi for the design and construction of a biofuel production facility in Perth. The plant will produce advanced biofuel and bio-oils from agricultural waste, and would result in simple, cost effective production of renewable energy, ARENA chief executive Ivor Frischknecht said in a press release.

The technology could potentially lower the cost of bioenergy by using innovative conversion and refining processes.

Furthermore the facility would operate at low temperatures and close to atmospheric pressure, increasing safety and reducing costs. “ARENA is working with Renergi to develop a rigorous strategy aimed at increasing scale and ultimately making the technology commercially competitive.”

Frischknecht added.

The AUS$12.9M (US$10M) project is scheduled for completion in October 2017.

BDI receives multi-million order

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pecialised plant manufacturer BioEnergy International AG (BDI) has been commissioned by Argent Energy (UK) Limited to build a plant for processing difficult wastes as a preliminary stage of biodiesel fuel production.

The new €12.4M contract will involve the construction of a plant for the conversion of commercial and industrial waste fats with a very high free fatty acid (FFA) content into a biodiesel intermediate.

A multi-feedstock biodiesel plant, which is currently in the planning and design stage,

will then convert the intermediate into highquality second-generation biodiesel fuel. The processing of difficult wastes required the use of complex esterification technology, BDI said.

“This contract enables us to lay another successful milestone in BDI’s history with our trend-setting new technology for recovering and utilising the most difficult fatty wastes.” said Markus Dielacher, CEO and member of the management board.

Argent Energy has used BDI in the past to expand its existing biodiesel plant.

Roxas Holdings seals deal with First Pacific

Aviation biofuel plant to be built in UAE

hilippine sugar refiner Roxas Holdings Inc (RHI) is expanding in Southeast Asia, and is hopeful that it can seal a deal with Hong Kong-based First Pacific Co Ltd this year for a joint venture in Indonesia, Business World Online reported in February.

According to Renato Valencia, RHI president and chief executive officer, the plans are for an integrated sugar operation including a sugar mill refinery, ethanol plant and cogeneration plant.

Up until February, First Pacific owned 34% of RHI after buying shares last year. However, in February First Pacific purchased RHI’s 241.78M treasury shares, taking its control to 50.9%. The partnership “will strengthen RHI and prepare it for the industry consolidation that will take place with the advent of the ASEAN integration in 2015,” Valencia said in a statement.

Pedro Roxas, RHI’s chairman, was quoted by Business World Online as saying that, ideally, in the next three to five years the revenue would be “40% for sugar; co-generation, 30%; and ethanol, 30%”, which would diversify the revenue stream. Currently revenues from ethanol are only 15%.

A feasibility study is being undertaken by RHI for the development of a 30 megawatt, co-generation facility; the study is due to be completed in three to four months.

RHI executive vice president and chief finance officer Armando Escobar told Business World Online that PHP1.2bn (US$26.8M) is going to be spent on upgrading its plants.

deal has been signed between UAE’s Sustainable Bioenergy Research Consortium (SBRC) and building contractor the International Mechanical & Electrical Company (IMECO) to construct an aviation biofuel plant on a 20,000m² plot at Masdar City, UAE, the Greentech Lead reported in March.

It is expected that the facility will be operational by late next summer.

The project will aim to solve both the food import dependency problem, and reduce aviation pollution levels by proving that biofuel production can be combined with food production.

In Abu Dhabi, where the water supply is extremely restricted, the project will aim to make minimal environmental impact by using the region’s available resources such as sun, sand and sea water. The project will use six bulk liquid containers filled with seawater from farm fish and shrimp. The nutrients producerd during this process will be circulated into eight crop fields in which salt-tolerant crops will be grown.

Halophytes with a high fat content will be used as the raw material for biofuel production.

The scientists will research the optimal temperature and salinity thresholds for the plants and animals; furthermore they hope to find out if the nutrients being produced by the aquaculture plants will be enough to negate the need for fertiliser. The UAE hopes to prove that biofuel and food production can be combined.

The project’s aim is to eventually increase the site to cover 200ha. This scale of plant production will enable more intensive fuel production.

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ASIA

Powering China

Poor air quality in China is a matter of serious concern in the country and transportation has been identified as a key pollution source. While the use of ethanol could reduce pollutants, production is constrained by the lack of non-grain feedstocks and a ban on imported ethanol, according to the US Department of Agriculture

D

eteriorating air quality in China has attracted widespread public attention and concern in recent years. The government is under pressure to improve air quality by measures such as reducing coal use, improving fuel quality for vehicles and reducing industrial- and constructionrelated pollution.

The transportation sector has been identified as a key pollution source in urban areas and the biofuel industry is advocating the use of ethanol to reduce emission pollutants. However, current ethanol production capacity is constrained by a lack of non-grain feedstocks and would have trouble servicing additional provinces or cities. In addition, current regulations and policies tightly control the production, sale and distribution of ethanol and do not allow for the use of imported ethanol.

Evolving policy China implemented fuel ethanol programmes in the early 2000s in response to abundant grain supplies, but switched course in 2008 when increasing domestic grain prices triggered concerns over possible shortages. Since then, government policy has dictated that biofuel developments must not

compete with crops intended for human or animal consumption. This policy has spurred research in alternative crops, such as sweet sorghum and cassava, which can grow on marginal land. However, these crops are unable to support large-scale industrial ethanol production at this time.

There is currently only one cassava and one sweet sorghum plant producing fuel ethanol in China. The government reportedly approved an additional two plants in 2012 to be built in Zhejiang and Guangdong, but these plants would depend on imported cassava due to limited domestic supplies.

It is unclear when, or whether, construction of these plants will begin.

The National Energy Administration (NEA), under China’s National Development and Reform Commission, oversees the development of China’s energy sector. For biofuels, the NEA’s main responsibility includes developing China’s overall energy strategic plan, drafting laws and regulations, contributing to industry and technology regulations and standards, and providing guidance on science and technology research.

Bioenergy is viewed as one of the nation’s strategic emerging industries. China’s 12th Five Year Plan (2011-2015) set goals for increasing biomass and biofuel production and prompted the

development of cellulosic ethanol and algae-based biodiesel. However, the government is expected to fall well short of its targets due to limited feedstock supplies and a desire to maintain self-sufficiency in grains.

China’s complex ethanol sector The government tightly controls grain ethanol production and has reduced financial support for its production. China’s Ministry of Finance announced that, by 2015, it will remove the Value Added Tax (VAT) rebate of 17% and impose a 5% consumption tax for grain-based ethanol production. The mandatory blend rate for gasoline in designated markets remains unchanged at 10%. In practice, the blend rate ranges between 8-12%, according to industry sources. Ethanol is not allowed to be blended into fuel outside the designated markets.

Construction of fuel ethanol plants is subject to approval from central or provincial governments. In provinces with a mandated blend for fuel ethanol, the provincial government issues regulations on the production and distribution of the fuel ethanol.

By regulation, each of the seven fuel ethanol plants has a designated distribution market in one or several provinces. As of 2014, the mandate blend programme fully covers six provinces and covers another 30 cities in five other provinces.

Regulations require state petroleum companies in these provinces to purchase and blend fuel ethanol from the designated plants.

There continues to be no national or provincial mandate for biodiesel usage due to limited production. In 2010, China removed a 5% consumption tax to stimulate biodiesel production. v

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Fuel ethanol production

TABLE 1: CHINA FUEL ETHANOL PRODUCTION

China’s 2014 fuel ethanol production is estimated at 2.8bn litres (2.20M tonnes), up 6% from the previous year, in response to increased fuel consumption in provinces with blend mandates.

The mandated blend in designated provinces is 10% while, in practice, the blend rate for ethanol in gasoline is between 8-12%. According to industry sources, the blending rate falls to 8% if ethanol production is lower than expected.

China currently has seven plants licensed for fuel ethanol production (including corn, wheat, cassava, sweet sorghum and corn cobs). Corn accounted for 76% of fuel ethanol production in 2014 and another 14% came from wheat. The government is encouraging development of nonfood grain feedstocks, such as cassava and sweet sorghum. However, these crops still compete with food crops for land and only one cassava and one sweet sorghum plant are approved for production by the government. Currently, 8% of fuel ethanol is produced using cassava and less than 1% is produced from sweet sorghum. An additional 1% of fuel ethanol production is cellulosic ethanol based on corn cobs. Fuel ethanol production accounted for less than 1% of China’s liquid fuel production in 2014.

The 11th Five Year Plan (2006-2010) set goals for expanding non-grain-based ethanol production, targeting cassava and sweet sorghum. The world’s first cassava ethanol plant was built in Guangxi in 2007 with a production capacity of 200,000 tonnes/year. A sweet sorghum ethanol plant (50,000 tonnes/year capacity) was completed in Inner Mongolia in 2012. In June 2014, the plant started to supply fuel to three cities in the province.

Based on the fuel market size and the 10% blending rate for the three cities, the plant is expected to supply 20,000 tonnes/year of fuel ethanol by 2015, according to industry sources.

Overall ethanol production China’s 2013 ethanol production was estimated at 7.85bn litres (6.2M tonnes). Ethanol used for beverages and hard liquor accounts for 35%, with ethanol for fuel and other industrial chemicals accounting for the other 65%, or 5.07bn litres.

While fuel ethanol production grew 5% in 2013, other industrial use of ethanol is estimated down 2% due to China’s economic slowdown. Ethanol use for beverages and hard liquor is estimated to have declined 5% from the previous year due to the government’s anti-corruption campaign that targeted banquets.

China has a reported 160 ethanol plants nationwide using a variety of feedstocks such as

Year Production (M litres) % increase 25.3M – 2003 2004 380.1M 1400% 2005 1,165.6M 206% 2006 1,647.1M 41% 2007 1,736M 5% 2008 2,002M 13% 2009 2,179M 8% 2010 2,128M –2% 2011 2,255M 6% 2012 2,509M 11% 2013 2,635M 5% 2014 2,787M 6% 2015 2,914M 5% Source: NEA and industry sources

grains (corn and wheat), tubers (cassava and sweet potatoes) and molasses. Corn and cassava are the main feedstocks, accounting for 70% and 25%, respectively. Molasses (from cane or beet sugar plants) account for the remaining 5%.

Ethanol trade in China The tariff structure for ethanol was unchanged in 2014. For undenatured ethanol, the import tariff remains at 40%. There is a VAT for imports of 17% and a consumption tax of 5% for both denatured and undenatured ethanol.

There continued to be a 5% temporary import tariff on denatured ethanol in 2014. This tariff has been lowered over the past few years (it was 30% in 2009) to encourage additional imports of byproducts and raw materials. Imports of denatured ethanol are only allowed to be used in the chemical processing sector. The government tightly controls fuel distribution and does not currently allow imported denatured fuel ethanol to be used in the transportation sector.

In January 2014, Chinese media reported that a shipment of US denatured ethanol had arrived in Zhenjiang port, Jiangsu province. The imports totalled 13.3M litres (10,500 tonnes). According to trade contacts, the estimated cost for the fuel ethanol was RMB 7,318/tonne (including a 5% tariff rate, 17% VAT and 5% consumption tax).

This import price was higher than the price for anhydrous ethanol in the domestic market (RMB 6,250-6,750/tonne in February 2014), but lower than the government set price for fuel ethanol.

Under current regulations, only the 7% fuel state designed ethanol plants are allowed to sell fuel ethanol to state oil monopolies, such as Sinopec or PetroChina, at a fixed rate of 91.1% of the current gasoline price.

According to trade contacts, the ethanol imported in January 2014 was part of a trial to study the economics and trading channels for ethanol. The trial proved that imports are feasible and economically viable, but resulted in scrutiny from the government as current regulations prevent the use of imported ethanol in the transportation sector. Future imports will require changes in both national energy policies and current rules and regulations governing China’s biofuels market. The government has been reluctant to change course, despite the need for imported fuel and pressing air pollution challenges, citing a desire to protect domestic ethanol, which is currently operating at only 40% capacity. High domestic corn prices and sluggish industrial and beverage demand for ethanol have hurt ethanol producers in China in recent years.

Government officials also cite concerns over possible price and supply volatility as a reason not to utilise imported ethanol.

Ethanol and biodiesel tax and tariffs Biodiesel production for 2014 was forecast to rise 5% to 1.13bn litres (one million tonnes). The rise in biodiesel imports in 2014 is lowering the profit margin for domestic producers and leading to slower production growth. Biodiesel production in 2013 is estimated to have increased 18% year-onyear (YOY) due to the government crackdown on the illegal use of recycled cooking oil for human consumption. The crackdown contributed to a rise in additional feedstock supply for biodiesel producers. Most biodiesel production is based on waste cooking oil.

Biodiesel production capacity is estimated at four billion litres, unchanged from the previous year. The number of biodiesel plants stands unchanged at 53. The capacity utilisation rate for the sector is estimated at only 28% due, in part, to the lack of large-scale collection of waste cooking oil. There is still a large market for waste cooking oil (also known as ‘gutter oil’) for illegal food use, despite government efforts to crack down on the practice. This creates competition for waste oil, making it more difficult for biodiesel facilities to obtain feedstock.

There is no official mandate for biodiesel use in transport fuel and biodiesel cannot be sold to stateowned gas stations. A trial biodiesel programme for transportation fuel started in Hainan in 2010, but the trial programme was only applied to two counties due to inconsistent feedstock supplies (primarily waste cooking oil). Most biodiesel for road transportation is sold at private gas stations in small cities or the countryside. Biodiesel use for road transportation is estimated to account

TABLE 2: CHINA BIODIESEL IMPORTS (1,000 LITRES)

2009 2010 2011 2012 2013 2012-13 % change World World 0 0 0 19,691 159,288 709% Indonesia Indonesia 0 0 0 19,674 156,437 695% Malaysia Malaysia 0 0 0 0 1,667 Singapore Singapore 0 0 0 0 1,138 Others Others 0 0 0 0 45 China biodiesel exports in 1,000 litres World World 0 0 0 66 85 29% Netherlands Netherlands 0 0 0 0 70 Source: USDA GAIN report

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TABLE 3: BIODIESEL IN CHINA (MILLION LITRES) Calendar year 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Beginning stocks 0 0 0 0 0 0 0 0 0 Production 273 352 534 591 568 738 909 1,079 1,133 1,190 Imports 0 0 0 0 0 0 909 1,079 100 500 Exports 0 0 0 0 0 0 0 0 0 0 Consumption 273 352 534 591 568 738 929 1,129 1,233 1,340 Ending stocks 0 0 0 0 0 0 0 0 0 0 Production capacity Number of biorefineries 65 96 84 62 45 49 52 53 53 54 Nameplate capacity 1,761 3,124 3,351 2,670 2,556 3,400 3,600 4,000 4,000 4,250 Capacity use (%) 15.5% 11.3% 15.9% 22.1% 22.2% 21.7% 25.3% 27.0% 28.3% 28.0% Feedstock use (1,000 tonnes) 267 344 522 578 556 722 889 1,055 1,108 1,164 Used cooking oil Market penetration (M litres – specify unit) Biodiesel, on-road use 82 106 160 177 170 221 273 324 340 357 Diesel, on-road use 76,996 84,489 89,956 92,810 100,179 111,546 126,150 133,718 141,742 150,246 Blend rate (%) 0.1% 0.1% 0.2% 0.2% 0.2% 0.2% 0.2% 0.2% 0.2% 0.2% Diesel, total use 139,193 146,932 159,136 161,771 172,096 183,868 199,520 211,491 224,181 237,632 Source: USDA GAIN report

for 30% of overall production. An additional 50% is used in the industrial sector and 20% is used for agricultural machinery and fishing boats.

Overall diesel use for the transportation sector is estimated at 142bn litres for 2014, up 6% from the previous year. Diesel for transportation accounts for 63% of total diesel use. Biodiesel production accounts for 0.2% of total diesel use. China is unlikely to start any mandated use of biodiesel for transport fuel in the near future, given the limited scale of biodiesel production at this time.

Biodiesel imports exploded in 2013, growing over 700% to 159M litres. The increase was caused by a fall in palm oil prices and the elimination in 2013 of China’s 0.8 RMB/litre consumption tax on biodiesel imports. The vast majority of biodiesel imports have come from Indonesia and this trend is expected to continue in 2014.

Imports of petroleum oil containing up to 30% biodiesel surged in 2013 as a result of the elimination of the consumption tax for biodiesel.

Trade contacts reported that most imports under this tariff had very low biodiesel content (around 1-2%) and that this was added in order to avoid consumption taxes. The government cracked down on this practice in 2014 and imports under this tariff line have fallen as a result.

China exported 85,000 litres of biodiesel in 2013. The biodiesel was reportedly processed from gutter oil by a manufacturer in Shandong province and used for jet fuel by the importing country.

Vehicle and fuel use The number of civilian vehicles in China reached 126.7M units in 2013, up 15.8% YOY, according to China National Statistical Yearbook data. Passenger vehicles in 2013 reached

105.62M units, up 18% YOY. The China Auto Industry Association forecasts that vehicle sales in 2014 will grow at a rate of 8-10% as the economy expands and vehicles become more affordable for Chinese households. Sales of civilian vehicles (passenger vehicles, trucks and ‘other’) reached 11.68M units during the first half of 2014, up 8.4% YOY. Truck sales have been hurt by the economic slowdown, while passenger vehicle sales continue to show strong growth.

The government encourages the purchase of electric vehicles and other ‘new energy’ vehicles to reduce fossil fuel use and improve air quality.

The State Council announced in July 2014 that the purchase tax (10% or more) for new energy vehicles will be removed to promote their use.

The State Council also announced that month that at least 30% of new vehicles purchased by the central government and certain select municipal governments and institutions, must be new energy vehicles. New energy vehicles must account for 15% of purchases in 2014 in Beijing, Tianjin, Hebei, Yangtze River Delta (Shanghai region) and Pearl River Delta (Guangzhou region) as part of a campaign to tackle heavy air pollution in these regions. For all other government agencies and institutions, new energy vehicles must account for at least 10% of new vehicle purchases in 2014.

This requirement increases to 20% and 30%, respectively, in 2015 and 2016.

Total diesel consumption in 2013 is estimated at 211,491M litres, while gasoline consumption is estimated at 119,775M litres. It is forecast that

gasoline and diesel consumption will increase by 6% in 2014 due to a steady, but slower, economic growth. There are no official growth projections for fuel use.

Advanced biofuels in China Cellulosic ethanol production is forecast to reach 42M litres (33,000 tonnes) in 2014, up three percent from the previous year. China’s only commercial cellulosic ethanol plant has a capacity of 63.4M litres (50,000 tonnes)/year and uses corn cobs. The plant has supplied ethanol for seven cities in Shandong province since October 2012.

Other ethanol plants are reportedly preparing to build demonstration-scale cellulosic ethanol projects using a variety of feedstocks, such as corn stover and wheat straw. Planned production capacity exceeds 10,000 tonnes/plant. It is unclear when these demonstration projects will be w completed.

This feature is reprinted from the United States Department of Agriculture (USDA)’s Biofuels Annual Global Agricultural Information Network (GAIN) report published on 4 November 2014, titled ‘China’s 2014 Fuel Ethanol Production is Forecast to Increase Six Percent’, prepared by Andrew Anderson-Sprecher and Jiang Junyang.

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The Canadian renewable fuels industry is coming close to reaching its medium-term domestic production capacity, according to a USDA GAIN report. Any growth in market penetration of biofuels will have to be imported, but new strategies are being explored

I

n Canada, environmental objectives rather than energy security have been the driver behind the development of federal and provincial policies and programmes designed to encourage the development of a domestic renewable fuels industry. To a lesser extent, renewable fuel policies were also seen as a means to encourage rural economic development and help diversify risk of agricultural producers who depend highly on export markets.

Energy is a joint federal and provincial responsibility in Canada. It is for this reason that programmes and incentives are found at both levels of government. In Canada, many provincial governments introduced provincial biofuel blend mandates well ahead of the federal strategy for the development of a domestic renewable fuels industry, which was put into place in 2006/07.

Reaching capacity

Federal biofuel policy structure At the federal level, blend mandates and production incentives are the cornerstone of the federal strategy to grow the domestic biofuels industry.

Based on discussions with federal agencies, the federally mandated blend rates are not expected to increase beyond current levels in the short- or medium-term.

The main reason for this is that a significant portion of the federal mandates for ethanol and biodiesel are filled through imports. Regulations under the Canadian Environmental Protection Act (CEPA 1999) require a 5% renewable content in the Canadian gasoline pool and a 2% renewable content in the distillate pool, excluding heating oil. The overall structure of the regulations is similar to the Renewable Fuel Standard (RFS) in the USA, with the point of compliance being the point of production or importation. The RFS regulations fall under the CEPA. An offence under this act is a criminal offence.

Federal production incentives are scheduled to end on 31 March 2017 and federal agencies are doubtful that they will be extended beyond that date. The exception may be the production subsidies afforded to cellulosic or secondgeneration ethanol producers. The rationale for extending the production subsidies would be the fact that the time horizon to get this type of ethanol commercialised is longer.

Provincial biofuel policies In Canada, provincial policies are significant as they have been the forerunners of what eventually was developed at the federal level. In its notice

of intent to implement a federal renewable fuels blend mandate, the federal government stated that it viewed the federal mandate as a means to harmonise provincial mandates and eliminate inter-provincial trade barriers. Most inter-provincial trade distortions that exist are in the form of provincial incentives that may have a requirement that the biofuel be produced and/ or consumed in the province. As the provincial production and/or consumption incentives end in the next one to three years, these distortions will disappear.

Canada’s western provinces, as well as the province of Ontario, have blend mandates in place.

The provinces of British Columbia and Alberta have sustainability requirements attached to their blend mandates. The province of Quebec has an aspirational mandate of 5% but has concentrated most of its support on the development of cellulosic ethanol. The provinces of Alberta, Saskatchewan, Manitoba, Ontario and Quebec have in place production incentives and/or consumption incentives (tax credits) for renewable fuels.

Provinces have also taken the lead in cap and trade incentives. In Alberta, a Green Fund and an Offset System already exist to allow large emitters to purchase carbon credits from farmers, and a law enacted in Saskatchewan in late April 2010 (The Environmental Management and Protection Act 2010) would allow the purchase of carbon credits from farmers within the province.

Provincial and state governments in Ontario, Quebec, Manitoba, British Columbia and California have discussed a protocol under the

Western Climate Initiative (WCI). Quebec and California officially implemented the WCI’s capand-trade regulations on 1 January 2012 and carbon emitters were given until 1 January 2013 to make necessary adjustments. British Columbia, Ontario and Manitoba have not yet named a start date for implementation but previously mentioned joining after the programme starts.

Canadian energy situation According to the US Energy Information Administration (IEA), Canada has the world’s third largest proven petroleum reserves (estimated at 180bn barrels), behind Venezuela and Saudi Arabia. Canada is one of the world’s top 10 oil exporters and is one of the world’s five largest energy producers.

The National Energy Board has published a report that provides the agency’s energy supply and demand projections from 2013 until 2035.

The report states that Canada has enough energy supplies to meet Canada’s growing energy needs for the foreseeable future and that energy production levels will continue to be increasingly greater than its domestic needs, resulting in growing amounts of energy available for export.

With regards to the petroleum demand for the transportation sector, like the USA, this demand is expected to slow from historical growth rates. This is largely a result of high fuel prices, recent and forthcoming freight vehicle emission regulations that have resulted in improved vehicle efficiencies, as well as some demographic changes that suggest younger people are becoming licensed drivers

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growth rate of 1.2%/year.

A breakdown of energy use by fuel type reveals that gasoline and diesel fuel account for an average of 38% and 28%, respectively, of the fuel type used in the period 2009-2012 and dominate as the transportation sector’s main energy sources.

Future policy directions With the federal and provincial programmes to provide support to the biofuels industry ending in a few years, the policymakers and regulators are considering new policy directions. With federal and provincial budgets being tightened, a continuation of production incentives is unlikely. The Canadian Renewable Fuels Association, which represents the Canadian biofuel industry at the federal level, is lobbying for an increase of the renewable content in the diesel blend mandate to a 5% inclusion rate by 2020, believing this will encourage domestic production. It endorses a federal policy platform for emerging technologies that exempt cellulosic fuel from federal and provincial fuel taxes. It also supports policy measures that maximise the economic value of renewable fuels and their products by monetising reduced carbon emissions.

Ethanol demand exceeds supply

later than in the past.

Canada has adopted the same vehicle fuel efficiency standards as the USA and, as a result, it is expected that future growth rates for diesel fuel

will be higher than the growth rate for gasoline.

The report projects that Canadian energy demand for transport will grow at average rates of 0.8%/ year, which is significantly lower than the historical

The ethanol industry has consolidated, leaving only the bigger players, and those that remain are producing at capacity. Canadian ethanol plants, for the most part, have operated at maximum capacity since 2008. Demand for fuel ethanol has generally exceeded domestic supply due to the implementation of provincial mandates and the federal blend mandates. The availability of the federal and provincial support programmes has been sufficient for the plants to operate positive cash flows, despite spikes in feedstock prices and v

TABLE 1: BIODIESEL (MILLION LITRES) Calendar year 2006 2007 2008 2009 2010 2011 2012 2013 2014 (e) 2015 (f) Beginning stocks 0 5 10 10 10 19 19 4 20 15 Production 25 70 95 110 115 120 100 140 300 395 Imports 5 10 20 15 100 170 260 304 277 280 Exports 20 65 95 105 110 80 85 123 305 320 Consumption 5 10 20 20 96 210 290 305 277 350 Ending stocks 5 10 10 10 19 19 4 20 15 20 Production capacity Number of biorefineries 1 2 5 7 13 9 8 8 8 8 Nameplate capacity 35 100 131 162 258 225 223 400 400 400 Capacity use (%) 71.4% 70% 72.5% 67.9% 44.6% 53.3% 44.8% 35% 75% 98.8% Feedstock use (1,000 tonnes) Canola 0 0 2 3 3 7 7 35 152 240 Animal fat 24 68 85 78 78 63 26 30 36 37 Recycled oils 0 0 3 20 27 46 65 65 84 84 Soyabean 0 0 0 1 1 1 0 1 0 0 Market penetration (M litres) Biodiesel, on-road use 5 10 20 20 96 210 290 305 277 350 Diesel, on-road use 13,352 14,722 15,499 15,634 16,823 17,339 17,070 17,568 17,570 17,580 Blend rate (%) 0% 0.1% 0.1% 0.1% 0.6% 1.2% 1.7% 1.7% 1.6% 2% Biodiesel use 5 10 20 20 96 210 290 305 277 350 Diesel use 29,961 31,590 31,523 28,964 31,750 33,478 32,125 33,147 33,151 33,170 Blend rate (%) 0% 0% 0.1% 0.1% 0.3% 0.6% 0.9% 0.9% 0.8% 1.1% Diesel, total use 29,961 31,590 31,523 28,964 31,750 33,478 32,125 33,147 33,151 33,170 Source: USDA GAIN report 2014, Canada

e: estimate

f: forecast

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TABLE 2: MARKET PENETRATION OF BIODIESEL AND RENEWABLE DIESEL (MILLION LITRES) Calendar year 2006 2007 2008 2009 2010 2011 2012 2013 2014 (e) 2015 (f) Beginning stocks 0 5 10 10 10 19 19 4 20 15 Production 25 70 95 110 115 120 100 140 300 395 Imports – biodiesel 5 10 20 15 100 170 260 304 277 280 Imports – HVO 0 0 0 0 30 65 183 274 290 280 Exports 20 65 95 105 110 80 85 123 305 320 Consumption 5 10 20 20 126 275 473 579 567 630 Ending stocks 5 10 10 10 19 19 4 20 15 20 Market penetration (M litres) Biodiesel & HVO, on-road use 5 10 20 20 126 275 473 579 567 630 Diesel, on-road use 13,352 14,722 15,499 15,634 16,823 17,339 17,070 17,568 17,570 17,780 Blend rate (%) 0% 0.1% 0.1% 0.1% 0.7% 1.6% 2.8% 3.3% 3.2% 3.6% Biodiesel use 5 10 20 20 126 275 473 579 567 600 Diesel use 29,961 31,590 31,523 28,964 31,750 33,478 32,125 33,147 33,151 33,170 Blend rate 0% 0% 0.1% 0.1% 0.4% 0.8% 1.5% 1.7% 1.7% 1.9% Diesel, total use 29,961 31,590 31,523 28,964 31,750 33,478 32,125 33,147 33,151 33,170 Source: USDA GAIN report 2014, Canada

v competition from US imports. Only one older plant has closed since 2008.

Bioethanol production in Canada will increase by a marginal 1% in 2014 to 1,745M litres from 2013 levels of 1,730M litres. This increase is attributed to increases in operational efficiencies.

There is no increase in domestic production capacity expected between 2014 and 2015.

Production is forecast to remain at 1,745M litres in 2015. Factors most affecting changes in production will include gasoline prices and technological improvements.

Domestic production capacity will likely remain at 1.8bn litres unless economics change substantially. Canada, unlike the USA, has not reached a domestic production capacity that makes it possible to meet its blend mandates with domestic production alone and will, therefore, continue to import the balance. To meet the blend mandate, Canada requires over 2.2bn litres of fuel grade ethanol.

As domestic production has increased, so has the production of co-products. Corn oil production has not followed the trend in the USA due, in large part, to the fact that Canada Feed Regulations require that the dried distillers’ grains (DDGs) have a minimum amount of energy content that requires more oil remain in the DDGs. Feedstock choice for ethanol plants has been driven by the availability of feedstock. Corn and wheat are the main feedstocks for bioethanol production in Canada. At this time, there are no official statistics for the amount of corn and wheat directed into bioethanol production.

Ethanol plants in Ontario, Quebec and Manitoba process corn as it is available in the vicinity of the ethanol plants. Ethanol plants in Saskatchewan and Alberta process mostly feed wheat as there is limited corn production in these regions.

There has been an increasing interest in developing corn varieties that can be grown in Western Canada. As more corn varieties are developed with lower heat unit requirements, it is expected that corn use for ethanol production in Saskatchewan and perhaps Alberta will increase.

There has also been increasing research on wheat varieties for industrial use. Currently, the need for high-yielding, low-protein wheat by the livestock industry and bioethanol plants put the industries in conflict with each other when supplies of

feed wheat are low. This will not be the case in 2014 or 2015, as poor weather has resulted in a downgrading of the wheat harvested in 2014, which will mean abundant supplies of feed wheat in 2014 and into 2015.

In 2014, it is estimated that 77% of the domestic production of ethanol will be derived from corn and 24% will be derived from wheat. This will likely remain relatively stable throughout 2015. There are ample supplies of corn from the USA, as well as domestic feed wheat, which will allow plants more flexibility.

Overall, Canada’s limited biofuel production capacity, both in the short- and medium-term, suggests that Canada’s entry into the global bioethanol market is still quite distant.

The federal mandate of 5% renewable fuel content requires an estimated minimum of 2.2bn litres of ethanol production for 2014. However, statistics suggest that the national blend rate is above the federally mandated level and is estimated to reach 7.1% of the gasoline pool in 2014. A similar national blend level is forecast for 2015. Based on industry discussions, abundant fuel ethanol supplies make ethanol a cheaper fuel than gasoline and this is driving blend levels above the federal blend level requirement.

Biodiesel not as great a success There has been a great deal of consolidation in the Canadian biodiesel industry over the last 10 years. Canadian biodiesel plants have not been as successful as ethanol plants at operating at capacity in Canada. Only the two largest plants have consistently been able to operate at capacity in the past five years. At the outset, Canadian biodiesel plants tended to be smaller and therefore were unable to capture economies of scale. In addition, there was a mismatch in the timing of incentives and the start-up of the federal mandates (the biodiesel mandate came into full effect more than three years after the bioethanol mandate). Also, the smaller plants tended to use feedstock types that were not able to meet the internal specification of some obligated parties.

Additionally, domestic biodiesel faced competition from imports of B99, which lowered the selling price by C$1/gallon below the Canadian price of production. The two largest biodiesel plants in

e: estimate

f: forecast

Canada that ran at full capacity exported most of their product to the US market.

Biodiesel production is estimated to have more than doubled in 2014 due to a new 265M litre capacity biodiesel plant in southern Alberta coming online using canola feedstock. In 2015, production is forecast to increase to reach 395M litres, assuming the three main producers are producing at the maximum capacity with no increase in capacity expected.

The majority of biodiesel produced in Canada is exported to the USA, due to its blenders’ credit.

Biodiesel quality standards are not generally feedstock-specific; however, the cloud point of biodiesel is feedstock-specific and so there is concern about the cold weather properties of B2 and B5 among the obligated parties. Some have feedstock requirements in their internal purchasing specifications (often requiring that the feedstock be canola-based). Many of the Canadian biodiesel plants were not built taking this into account and so the supply chains were not optimised for the feedstocks that the market is looking for.

Also of note, Ontario Greener Diesel requirements are introducing a new carbon intensity requirement into the decisions over what renewable diesel fuel to use. In this case, the feedstock choice will have a large influence over the final carbon intensity of the product and may favour feedstocks such as used cooking oil and tallow products. It remains to be seen if this will have a major influence on the purchasing habits of obligated parties.

Canola, largely due to the abundance of Canadian production, has proven to be the natural feedstock choice. Key competitors facing canola oil for use in biodiesel are rendered animal fats (tallow), rendered oils (yellow grease), imported palm oil and soyabean oil. Canola and soyabeans are high-priced feedstock for biodiesel, since they are priced as food oils in the international markets. Palm oil and rendered fats are priced at feed and industrial use levels.

With the new canola-based biodiesel plant coming online mid-year in 2014, canola now accounts for 56% of the feedstock used in 2014 compared to 26% in 2013. For 2015, with the plant operating for the full year, canola use is to account for 66% of the feedstock going into biodiesel.

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Canola production has reached record high levels in recent years. Increased demand for canola oil from the food retail industry has resulted in higher prices. Despite the supply response of recent years, some industry observers suggest that canola could remain too expensive and that a 2% blend must be met with cheaper feedstock. As demand for the feedstock increases, it is likely that canola prices will also increase.

While canola use for biodiesel by itself may be expensive, the co-products from biodiesel production may make economic sense. Coproducts include meal to be used in animal feed.

There are limits on the profitability of using canola as a feedstock if by-products are part of the every day production process. For example, off-seed canola may not be a suitable feedstock, since this meal may not meet quality standards.

Despite these limitations, co-products and the production capacity of the plants (these plants could potentially supply the vast majority of the federal 2% biodiesel mandate), combined with provincial biodiesel mandates, may make the industry profitable despite higher commodity prices.

Despite the current growth, future growth of the Canadian biodiesel industry may be limited, due to the industry’s inability to secure cheap feedstock.

Most of the current and forecast increase in biodiesel comes from canola and strong world demand for vegetable oils may hinder Canada’s ability to take advantage of the growing biodiesel market opportunities.

The federal mandate is being met by a combination of renewable diesel (HVO) and conventional biodiesel. To have a true picture of biodiesel/renewable consumption in Canada, and whether or not the federal mandate is being met, consumption of biodiesel and HVO renewable diesel must be looked at together.

It is forecast that Canada will consume 567M litres of biodiesel/renewable diesel in 2014, increasing to 630M litres in 2015. By the end of 2014, the temporary exemptions for eastern Canada and Quebec will have been lifted, the compliance period will have ended and the full federal mandate should be in force.

The blend mandate requires that the 2% of the distillate pool be met with biodiesel or renewable diesel; however, there are exemptions for which there is limited consumption data. From just onroad diesel use statistics, in 2014 the blend rate was above the federal mandate of 2% and this trend is forecast to continue in 2015.

Based on statistics for total diesel use and not taking into account the exemptions, blend rates are at an estimated 1.8% in 2014 and a forecast 1.9% in 2015. This would suggest that the federal mandate is being met. Blend rates are likely higher than the federal mandate of 2% due to significant over-blending in British Columbia, which blends up to 20% biodiesel to meet environmental GHG reduction. In 2014, Ontario also introduced a biodiesel mandate that can reach up to 4% based on GHG emission reduction requirements.

Advanced biofuels

operation plants. In 2009, Enerkem – a Quebecbased gasification and catalysis technology company – opened a demonstration biofuels and biochemicals facility; in spring of 2012, this plant began production of cellulosic ethanol via treated wood as feedstock at a five million litre capacity.

Enerkem has also completed its construction of a 38M litre cellulosic ethanol plant in Edmonton, Alberta. Edmonton will provide 100,000 dry tonnes of municipal solid waste (MSW) to the plant as feedstock.

Future plans for a full-scale, cellulosic ethanol plant in Varennes, Quebec, have also been announced. It would be a joint venture of Enerkem and GreenField Ethanol Inc and the Varennes plant will use Enerkem’s proprietary thermochemical technology to convert non-recyclable waste into 30M litres/year of cellulosic ethanol.

There is also interest in the Atlantic Canadian region producing cellulosic ethanol from wood waste or other advanced feedstock.

Fuels produced from other biomass Currently, HVO production in Canada is less economic than biodiesel, resulting in less Canadian demand.

There are no domestic HVO production facilities and any intensions to start up such facilities are not expected to be fulfilled in the near future. w This feature is extracted from a United States Department of Agriculture (USDA) Global Agricultural Information Network (GAIN) report published on 24 November 2014, titled ‘Canada: Biofuels Annual 2014’

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While Canada is still not a significant producer of advanced biofuels, over the past few years it has been making progress towards beginning full-scale 27 OFI – MAY 2015, BIOFUELS ISSUE www.oilsandfatsinternational.com

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WASTE OILS

Last December saw the official launch of Novozymes’ ‘Eversa Transform’, the first commercially available enzymatic solution to make biodiesel from waste oils.

Per Munk Nielsen of Novozymes writes

T

he idea of producing biodiesel from waste oils is not new, but existing technologies experience difficulties in handling oils containing high free fatty acids (FFA) and different impurities, meaning that waste oils need to be refined before processing.

Last December, Novozymes officially launched its ‘Eversa Transform’ enzymatic process to produce biodiesel, which thrives with high FFA waste oils and can work with a broad range of fatty materials as feedstock. Initial focus has been on used cooking oil (UCO), dried distillers’ grains (DDGs) corn oil and fatty acid distillates.

Viesel Fuel in Florida has worked with the solution since 2012 to help perfect the enzymatic biodiesel process and has already successfully processed more than 2,500 large-scale batches.

Stu Lamb, president and CEO of Viesel, explains: “Up to 90% of our costs were feedstock-related. In this industry, you need to be able to work under any market conditions and traditional feedstocks are certainly price volatile. Low-cost feedstocks are key to becoming a lower cost biodiesel producer – and these lower grade oils cost about 50% less than conventional feedstocks.”

“We’ve been producing diesel from brown grease – that is cooking waste from restaurant grease traps – and oil by-products from fish and meat processing. And these waste products can suddenly become valuable biodiesel feedstocks”, says Lamb.

“We’re even in the process of evaluating the grease from municipal waste water plants as a potential feedstock.”

From batch to continuous operation The enzymatic biodiesel batch process consists of

PHOTO: NOVOZYMES A/S

Perfecting continuous operation THE CSTR PILOT PLANT USED AT VIESEL

an enzyme reaction step followed by polishing, as shown in Figure 1 (following page).

The intensive work resulting in the production of more than 1,500 batches of enzymatic biodiesel by the summer of 2014 led to the question of creating a continuous operation process (CSTR).

The pre-requisite of CSTR was fulfilled at Viesel, namely achieving success with consistent reaction operation from batch to batch. The foundation for progressing to CSTR technology was laid out in a workshop in August 2015 with Viesel, Tactical Fabrication, Blu Sun, Novozymes and Denmark’s Technical University to settle the design basics for the plant. Working with Tactical Fabrication, Viesel transformed the input from the workshop into reality by building a four-stage CSTR with 1,000 gallon reactors. This has now been operating effectively using UCO and brown grease.

The CSTR process is easier to manage as the steady state operation is significantly easier to handle and control when compared to the filling/ reacting/emptying cycles required for batch operation. Another benefit is that the enzyme only needs to be used once, due to the present price/ dosage. The value of the enzyme in the reactor is at all times relatively low and, should an error occur and cause enzyme de-activation, the cost of enzyme loss will be small. Figure 2 (following page) shows the CSTR set-up, which is simpler than a batch operation.

Many different oils have been produced successfully and the key to this success is: t Efficient enzyme solutions operating at low cost. t Pre-treatment of oil to secure that no mineral acid is left without neutralisation. t The use of waste oil is possible. t Temperature control of the reactor. t Dosage control of the methanol addition.

The critical parameter is the neutralisation of the mineral acids but it is sometimes difficult to measure the acid content in the oil. This difficulty

arises from the fact that these unwanted acids can be confused with the FFAs in the oil, which can be converted to biodiesel, and it is not possible to distinguish between the two by a chemical method such as titration.

Securing effective pre-treatment The problem of acid neutralisation can be overcome by adding enough sodium hydroxide (NaOH) to secure the neutralisation of the acids. Through experience, 100ppm NaOH is sufficient in almost all oil samples. The NaOH needs to be added in the correct way to work as required and this can be achieved by making a 2% solution of NaOH and adding during intensive mixing. Some soap will, of course, be formed from the excess NaOH but this does not disturb the reaction. The polishing step is required primarily due to the FFA content, which has to be reduced to <0.25%, according to ASTM specifications. This can take place as one of several alternative process steps: t Caustic wash: this is based on the refining concept that eliminates FFA by a NaOH wash of virgin oil. Recently, Novozymes and Blue Sun developed different patent pending variants of the caustic wash where the separation of the soaps from the fatty acid methyl ester (FAME) has been improved significantly. t Resin esterification: this is used today to eliminate FFA from oil as a pre-treatment to biodiesel production with Na-methoxide catalyst.

The concept is also applicable as a polishing step and used as a resin catalyst but this requires new resins and also a new way of operating the process. This has been successfully established on production scale at Viesel. One major benefit is that the FFA is now converted to FAME in the resin process, rather than being collected as soap and recirculated in the process.

Furthermore, the resin process also converts some residual glycerides to FAME.

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t Enzymatic esterification: this is technically the most advantageous of the processes mentioned. Aside from the FFA esterification, it also ensures the transesterification of the remaining glycerides. The cost of the enzyme needs to be considered in this case, as this is today shown to work only with the relatively expensive immobilised enzyme. There is still some development work required to lower the treatment costs to implement this technology.

Distillation of the final product is an option to secure against any carry-over from low quality oils, for example, to ensure that sulphur, waxes or metal ions are not found in the final biodiesel. An improved colour and cold soak quality can also be secured by distillation.

Data from the four-stage CSTR is documented in Table 1 (below). The values show the main number for the reactor content with respect to bound glycerin and FFA for conversion of UCO and brown grease. Samples were collected from the pilot system at Viesel Fuel’s headquarters in Stuart, Florida and were measured for bound glycerides (BG) by Eurofins QTA service and FFAs by manual titration.

FIGURES: NOVOZYMES A/S

WASTE OILS

FIGURE 1: BATCH PROCESS LAYOUT

FIGURE 2: CONTINUOUS PROCESS LAYOUT

Better process economy Making the change from a chemical catalyst to the enzymatic process requires retrofitting in existing plants. Biodiesel producers looking to utilise Eversa will, therefore, have to invest time and resources to make the switch to the enzymatic process.

Novozymes’ engineering partners estimate that the resulting improved process economy indicates a payback time of three years or less, depending on the plant set-up and feedstock savings potential in that region.

“The enzymatic process uses less energy and the cost of waste oil as a feedstock is significantly lower than refined oils,” says Frederik Mejlby, marketing director for Novozymes’ grain processing division.

“A small number of plants have been producing biodiesel from waste oils using existing technologies but this has not been cost-efficient until now as the waste oils have had to be refined before being processed using chemicals. We hope that our technology can unleash more of the potential in these lower grade feedstocks.”

Viesel Fuel, in collaboration with Novozymes and Tactical Fabrication LLC, utilising Purolite’s resinbased technology, has developed and implemented a biodiesel production process that uses enzymes to produce at a rate of 10M gallons/year. Furthermore, this process is easily scaleable to larger capacities.

Recovery and re-use of the enzymes to catalyse several batches makes the enzymes economically feasible – and simple resin-based technology is used to bring the crude biodiesel into ASTM specifications.

Additionally, this process requires a lower capital

investment, works at a production cost per gallon that is comparable to that of traditional biodiesel and, most importantly, allows the use of less expensive, more varied feedstocks with FFA content as high as 100%.

Safer and more sustainable The enzymatic process eliminates the need for sodium methoxide, one of the most hazardous chemicals in traditional biodiesel plants. The reduction of harsh chemicals and by-products ensures safety for personnel and the environment.

“Switching to Eversa can lead to a safer working environment for plant operators. The enzymatic process does not use high pressure or high temperature”, says Mejlby. “And, when it comes to the actual enzymes, their organic nature

TABLE 1: DATA FROM THE CSTR OPERATION Oil Feed Reactor 1 Reactor 2 Reactor 3 Reactor 4 UCO BG (%) 9.25 2.82 1.26 0.46 0.19

FFA (%) 12.9 3.90 2.50 2.30 2.10 Brown BG (%) n.d n.d n.d n.d n.d grease FFA (%) 97.0 8.72 7.10 6.00 5.70 Source: Novozymes A/S0 n.d = not detected

and mild process conditions do not generate toxic components as in some chemical biodiesel processes.”

The benefits of enzyme catalysts in the production of biodiesel have long been apparent but, until now, their adoption on a commercial scale has not been economically feasible.

With production exceeding 2,500 batches, Viesel Fuel’s process has demonstrated that enzymes are an exciting catalyst that requires less energy and fewer chemicals. When coupled with resin technologies specifically developed for this application by Purolite, aimed at further refining crude biodiesel to ASTM specifications, the process becomes cost comparable to traditional catalysts.

However, the true economic benefit of Novozymes’ new solution, Eversa Transform, comes in the ability to handle a variety of inexpensive feedstocks. This makes enzymes a financially prudent route for biodiesel producers, allowing them to thrive despite low RIN prices and the uncertainty of tax incentives.

The next step for Viesel is the CSTR processing of low quality oils such as brown grease and oils from sewage plants at a production scale of 15M gallons/year, pending plant upgrades scheduled for completion at the end of first quarter 2015. w Per Munk Nielsen is the senior science manager within Novozymes’ oils and fats division

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POLIC Y

TOCLUB)

PHOTO: OLGA GALUSHKO/DOLLARPHO

Challenges for Europe

GLOBAL PRICES OF PETROLEUM ARE FALLING WHICH IS AFFECTING THE BIOFUEL SECTOR’S ABILITY TO MAINTAIN PROFITS

The global energy market is becoming increasingly volatile, creating challenges for the EU biofuel sector. As an industry that was created to bypass the issues faced by the petroleum sector, the biofuels sector now faces fierce disagreement over its environmental credentials and an uncertain regulatory framework. Mark Rowe reports

T

he volatility of the global energy market is presenting several challenges to the European Union (EU)’s biofuel sector as it struggles to maintain profit margins in the face of low petroleum prices, recession and slumps in demand.

Promoted as an industry that was meant to mitigate environmental and energy security issues, the biofuels sector is now facing concerns over its use of agricultural land, adding to a hiatus over its refinery capacity.

In 2009, the EU adopted a target of increasing the share of renewable energies to 20% of energy consumption and to 10% in transport by 2020; but the geopolitical landscape has changed.

The problem for biofuels, according to a report ‘Oil: Medium-Term Market Report 2015’ by the International Energy Agency (IEA), is that priorities have shifted: “In 2008, sustainability – notably, mitigating climate change – was the key driver for EU energy policies. However, the context for EU energy policy has changed dramatically. Today, concerns of energy security and industrial competitiveness have become more pressing.”

In a paper written for the European Biofuels Technology Platform, Jerkko Starck, project engineer at Green Fuel Nordic, in Finland, outlines the timescales of how biofuels can be rolled out commercially. While biofuels performing as industrial fuels and drop-in fuels for transport are already available, he forecasts that within three to five years, biofuels will be commercially applied

to coating composite materials, such as acetic acid and furfural; and within five to 10 years, biooil based cosmetics and food supplements will be widely available. He also gives a seven- to 10year time frame for biochemical compounds that will be applied commercially to wound care and cancer treatments.

Commercial use To achieve this, refineries and manufacturing installations are needed, but refining across the EU appears depressed. According to the International Energy Agency (IEA)’s 2014 EU energy review, the restructuring of refining capacity and the EU’s manufacturing base means that 15 conventional refineries closed in Europe between 2007 and 2013.

The European Biodiesel Board (EBB) notes that production capacity for biodiesel across the EU stood at 23.50M tonnes in 2012. The largest producers are Germany (five million tonnes), Spain (4.4M tonnes) and the Netherlands (2.5M tonnes). Yet, the German consultants ecoprog has calculated that EU biofuel capacity exceeds demand by 60%; 380 plants across Europe produce biofuel, with a combined production capacity of 1,050 petajoules (PJ).

In the Organisation for Economic Cooperation & Development’s (OECD) European country members (21 EU member states, plus Iceland, Norway and Switzerland), the IEA says that biodiesel production is still forecast

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POLIC Y

to increase to 225 kilobarrels/day (kb/d) in 2020 from 195 kb/d in 2014, with Germany, France and the Netherlands as key contributors.

Meanwhile, ethanol production is projected to rise to 110 kb/d from around 80 kb/d. The EU has indicated support for algae-based biofuels, which the European Algae Biomass Association sayswill lead to an economically viable biofuels production chain and supply new feeds, proteins and nutraceuticals.

Land use disagreements Another challenge is the pressure on food resources. The European Commission’s proposals to limit the effect of food-based biofuels on indirect land use is likely to discourage investment in biofuel refining “quite significantly,” according to Dr Michael Goldsworthy, a senior consultant at the UK-based bio-economy consultancy, the National Non-Food Crops Centre (NNFCC).

“Biofuel plants are threatened by these changes,” he adds.

The Commission disagrees: “The aim of the current proposal is to start the transition to biofuels that deliver substantial greenhouse gas savings when also estimated indirect landuse change emissions are reported,” says a Commission spokeswoman. “We hope that this will lead to more investments into advanced biofuel production capacity.”

Fighting incompatibility Another factor limiting the demand and refining capacity is the ‘blend wall’ – the extent to which biofuels and conventional fossil fuels are incompatible. Ethanol can only make up 10% of petrol blends, while biodiesel can only account for 5% of diesel blends. “The EU market is over-saturated; it’s treading water. There’s a lack of demand, so we’re not going to see any significant increase in refining as it stands,” says Goldsworthy.

The picture, according to Tomas Kåberger, chair of the European Biofuels Technology Platform (EBTF), for market conditions and

regulation of biofuels “are worse than ever....

Oil prices have fallen to less than half since last summer; policies and targets are unclear; and regulation contradictory, as set by the EU as well as by member states.”

In a survey last year of 14 EU member states, the EBTF found that biofuel producers felt that technological barriers were “unequivocally” being removed, or significantly mitigated. However, it also identified “an unclear regulatory framework where uncertainty about EU strategies and trends couples with inconsistencies at national level.”

As for shrinking refinery capacity, Giovanni Venturini Del Greco, CEO of Italy’s Agroils Technologies, whose company processes jatropha at a plant outside Florence in Italy, is not overly concerned. Sourcing seeds from Kenya and Ghana, Agroils’ demonstration refinery processes 8,000 tonnes/year. Del Greco says he saw no harmful impact from the closures of conventional refineries on the biofuel processing sector, largely on account of the differing scale of such operations. “These are completely different models,” he says. “There are economies of scale with a larger plant, you can easily ship huge quantities – 200,000 tonnes of material – and so you have refineries that can process millions of tonnes per year. The model for biofuel refineries is much smaller; it will never happen that you can ship such large volumes, and so they do not face the same impacts.”

Del Greco believes a model – whereby the jatropha refining process is begun outside Europe and completed within the EU – is viable.

“Essentially, I see a future where the semirefined product is exported to Europe. The value of the product is sufficiently high to justify the shipping. Then it can be refined further – you can hydrogenate it for bio jet fuel, oxidise it for epoxy resins or just generate biolubricants.”

Certainly, there is plenty of innovation and diversity in the sector. One potential customer of algae feedstocks is the huge biorefinery opened

by Neste Oil in Rotterdam in 2012, which has the capacity to produce one billion litres of renewable diesel a year. By 2016, it aims to produce 30,000 litres of bio-propane at the plant as a by-product,

NESTE OIL’S BIOREFINERY IN ROTTERDAM HAS THE CAPACITY TO PRODUCE ONE BILLION LITRES OF RENEWABLE DIESEL A YEAR (PHOTO: NESTE OIL)

which the company says could operate as a dropin fuel equivalent of liquid natural gas (LNG).

Methane and natural gas Meanwhile, at the end of 2014, methane produced

by GoBiGas, a Göteborg Energi initiative in Sweden, was injected into the natural gas grid.

The GoBiGas facility converts waste wood to synthetic natural gas via gasification, followed by gas cleaning and methane production and is the first in the world to combine large-scale gasification with methanation. The refinery has the capacity to supply about 15,000 cars or 400 buses a year with biofuels.

Another large-scale plant for the production of advanced biodiesel started commercial production in January in Finland: the UPM Lappeenranta biorefinery produces wood-based renewable diesel from forestry residue and has an annual capacity of 100,000 tonnes (120M litres).

Crude tall oil, a residue of the pulp making process, is used as a raw material from forests that are managed sustainably. A UPM note says it will not use materials from the food chain. The European Commission has also awarded UPM a grant of €170M for developing a solid wood-based biorefinery project in Strasbourg, France. The biomass-to-liquid biorefinery would turn logging residues, wood chips and bark into renewable diesel. However, a spokesman for UPM says the company has yet to make a final assessment of the investment in this Strasbourg biorefinery, which would be based on market conditions and pending EU legislation amendments.

Meanwhile, other companies are turning conventional refineries into biofuel-based operations: Eni (Italy) announced in August 2014 that it will target a 50% reduction in its refinery capacity from 2012 levels, but says that its Gela plant in Italy – idle since 2012 – is to be converted into a biorefinery in 2016.

Goldsworthy believes the key to changing the fortunes of biofuel refining is to enhance processing options, rather than to let them stagnate. “If we can improve our processing options then the market conditions would change. At the moment, biofuel is low value. I see the value of biofuels not necessarily in the fuels themselves but in developing the whole biorefining process. At the moment biofuel refining is a crude process, you get a fuel fraction and a protein fraction, which can be used as a low grade animal feed. There is a lot of high value to get out of the co-products – more high value chemicals and proteins.”

Indeed, the IEA mid-term report found that in the past year, the price of protein co-products from biofuel production, such as dried distillers grains, have risen, which has helped producers support production margins. Goldsworthy adds such co-products can make biorefining viable across several sectors. “It’s about the chemicals and materials market. In the chemicals sector, you don’t really have anything else you can use apart from oil or bio-based fuels. But I don’t see the EU stimulating investment. It’s going to come down to individual EU member states providing upfront capital to de-risk the initial w investments.”

Mark Rowe is a freelance writer

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STATISTIC S

BIODIESEL VS DIESEL PRICES (US$/TONNE)

STATISTICAL NEWS FROM MINTEC Biodiesel and diesel EU biodiesel prices have continued to fall since the start of 2015 due to low demand with crude oil prices significantly down year-on-year, close to their lowest level in over five years. However, diesel prices rose temporarily in February due to concerns of tight supplies following the short-term closure of a refinery in Germany for maintenance. Lower imports from the US Gulf Coast also caused prices to increase. Diesel prices then fell back in March.

Unleaded petrol and ethanol

PETROL VS ETHANOL PRICES (US$/TONNE)

US unleaded petrol prices have risen since January, driven by an increase in crude oil prices due to reduced drilling activity in the USA and lower capital expenditures by major oil companies. Petrol prices reached a peak recently as crude oil inventories increased by the smallest volume seen this year, up by only 1.3M barrels week-on-week to 483.7M barrels for the week ending 10 April.

Ethanol and maize Ethanol prices have risen since the start of 2015 due to an increase in Renewable Identification Number (RIN) prices. RINs are issued in the USA with each gallon of biofuel produced for blending into transport fuel to ensure compliance with its Renewable Fuel Standard.

RIN prices increase when the cost of the biofuel exceeds the cost of the fuel it is blended into. Petrol prices fell below ethanol prices, therefore the cost of RINs has risen. US maize prices remain low due to forecasts for a consecutive record harvest in 2014/15.

Production in the USA is expected to increase 3% year-on-year to 361M tonnes. Exports from the USA are expected to decrease by 7% year-on-year to 46M tonnes due to ample supplies in importing countries.

ETHANOL VS CORN PRICES (US$/TONNE)

PRICES OF SELECTED OILS (US$/TONNE) 2013

2014

Jan 15

Feb 15

Mar 15

Apr 15

Soyabean 1,052 897 787 750 737 738 Crude Palm 854 825 708 693 668 657 Palm Olein 803 762 649 651 625 603 Coconut 948 1,276 1,155 1,152 1,085 1,057 Rapeseed 1,080 906 776 754 740 736 Sunflower 1,108 905 843 808 802 833 Palm Kernel 904 1,120 1,015 1,042 998 960 Average price 964 INDEX 228

956 226

847 201

835 198

808 191

798 189

Mintec is the principal independent source of global information for commodities and raw materials. We specialise in helping supply chain professionals minimise risk. We provide services that range from detailed market reporting and consultancy projects to packages of sophisticated tools for analysing and interpreting market information. Mintec supports leading suppliers, processors, retailers, service providers and major end-users across a wide range of industrial and consumer goods sectors with statistical information and expert market analysis.

Tel: +44 (0) 1628 851313; E-mail: sales@mintec.ltd.uk Website: www.mintecglobal.com

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