The following is from Octane Week, a trade journal in the fuels business. You
can get an idea about the impediments to growth of biofuels.
Dilip
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Worldwide Biofuels Production Capacity Could Triple, Study Says
If various worldwide schemes to mandate biofuels are put in place, then
total production capacity for biofuels could roughly triple, according to an
outlook published by Harts International Fuel Quality Center/Global Biofuels
Center.
In its Global Ethanol & Biodiesel Outlook released this spring, the IFQC
studied the biofuels policy and production developments of 30 countries around
the world. They estimated that the total proposed worldwide capacity for
biodiesel is almost 15 billion gallons/year, while current worldwide biodiesel
capacity is 5 billion gallons/year. As for ethanol, its total proposed
worldwide capacity is roughly 35 billion gallons, with current worldwide
capacity at 12 billion gallons.
What many of these countries share is the desire for energy security and
economic and social development, said IFQC, adding that protection of the
environment and the reduction of greenhouse gas emissions were additional
objectives.
While the countries seeking to implement biofuels mandates are at different
stages of development, they each have to fulfill three steps: developing or
implementing policies requiring biofuels use, whether that means 5 vol% or 25
vol%; pilot testing different biofuels blends in fleets and preparing for the
wide-scale distribution of biofuels; and assessing the potential for developing
and implementing an ethanol or biodiesel program in their country.
Furthermore, even if a country already uses biofuels extensively, such as
Brazil or the U.S., then the country must repeat the steps in order to bring
second- and third-generation biofuels online.
Either way, the report concedes that it would take years before biofuels use
is optimized. Each region is facing its own challenges in adapting to
widespread biofuels use.
In the U.S., infrastructure to transport biofuels from the Midwest to the
coastal regions is one major issue. A more obvious issue question is whether
the U.S. will be able to meet federal targets for biofuel use. The U.S. is
banking of cellulosic ethanol as a cost-effective solution to the impending
demand, but second-generation biofuels are still in the research and
development stage.
Like the U.S., Canada is facing issues of feedstock availability. Also, with
no pressing need for biofuels, Canada will need to drum up its biofuels market
if its to be successful.
The high cost of biodiesel production remains the greatest obstacle to
market penetration for biodiesel in blends or as a pure fuel in Canada, IFQC
said. The drivers that exist in other countries that are pushing toward
biodiesel simply do not exist in Canada: there are no large crop surplus, land
set-aside programs, high fuel taxes or serious air solution problems.
Therefore, at least for the time being, biodiesel fuel is unlikely to achieve
much, if any, market penetration in Canada under normal market conditions.
European countries are facing fears of a biofuels bubble, in which
countries are deciding how to achieve mandatory targets and create demand while
sustaining fiscal incentives. For instance, Germanys biodiesel industry was
thriving due to government tax incentives, but once the incentives were
removed, biodiesel ceased to become competitive with fossil fuel.
Latin American countries seeking to boost independence from crude oil have
challenges finding the significant investments needed to build modern
facilities to produce biofuels. Furthermore, in order to realize fully energy
security, higher blends will be needed.
A comparative analysis of gasoline/ethanol demand and diesel/biodiesel
demand shows that only a small dent will be made in petroleum product
consumption. Most Latin American countries are moving toward low-level ethanol
blends generally around 5 vol% to 10 vol%; for biodiesel, 2 vol% to 5 vol%.
Only when countries are able to move to higher-level biofuels blends will real
energy security benefits be seen, but this will not happen in most countries
until later years, perhaps not until 2020, IFQC said.
Like Latin America, many Asian countries have also set low blending targets,
which hinder full energy security. While individual countries have different
motives and conditions for encouraging biofuels use, the region overall is
active in implementing biofuels programs and utilizing abundance agricultural
resources to meet increasing demand in their domestic and export markets.
However, economic feasibility still remains a key issue.
Some Asian countries have not been able to meet ambitious targets in time or
are deliberate in commercializing biofuels because of key issues such as
biofuel pricing, long-term supply, logistics and infrastructure as well as
vehicle compatibility with biofuels, IFQC said.
To learn more about the study, contact Tammy Klein, Global Biofuels Executive
Director, at [EMAIL PROTECTED] or at 1-701-323-0417. Joanna Franco
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