sector handbook biofuels

8/13/2019 Sector Handbook Biofuels

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SECTOR HANDBOOK

BIOFUELS

Prepared by the CrossBorder

Bioenergy Working Group

on biofuels

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Swedish Bioenergy Association (Svebio)

Lena Dahlman

Torsgatan 12

SE-11123 Stockholm

Tel.: +46 (0)8 77441 83/80

Fax: +46 (0)70 6211 955

Email: [email protected]

URL: www.svebio.se


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Cross Border Bioenergy Project

SECTOR HANDBOOK

BIOFUELS

Prepared by the CrossBorder Bioenergy Working Group on biofuels


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1.INTRODUCTION TO MARKETSECTOR


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The main commercially available biofuels

are bioethanol and biodiesel, mostly usedas low-grade blend. A few EU-27 nationshave a high-grade blending alternative(i.e. E85, ED95 or B100).

This sector handbook is focused on avai-lable and commercially viable biofuel te-chnology on the European market, butalso provides information for stakehol-ders interested in establishment of newtechniques. The main focus of the hand-

book is places on bio-ethanol and biodie-sel. Both biofuels can be used in heavyand light vehicles. The fuels can usedas a low-blend in gasoline or diesel but

there are also available engines that canbe run on high blends (E85;ED95) andas pure fuels (B100;E100). This makesboth fuels very versatile and attractiveas their market potential is not as limi-

ted as other biofuels. Both fuels can also

be produced by various production me-thods and various feed-stocks, both inlarge-scale and smale-scale plants. The

versatility makes the fuels attractivefor an export market as production canadjusted according to region conditionsand market structure.

According to EU 20:20:20 targets this

sector will grow rapidly. New feed-stockand production methods based on more

cellulosic biomass are on the verge of

commercialization, so called secondgeneration biofuels. Todays marketand the market on a foreseeable futu-re will be based on 1 generation sugar

and starch rich feed-stock. The marketwill be affected by the development ofdomestic biofuel production, global tra-de patterns as well as the phase of thecommercialization of new fuels and pro-duction methods.

Discussions on the climate and environ-

mental effect combined with an un-clearlegal and policy situation is reducing the

investments in the sector. Low-gradeblending is the easiest way forward forthe sales of large quantities but high-grade is needed for vehicle and marketinnovations.

The sector handbook provides informa-

tion mainly for biofuel producers, con-sultants and providers of productionplants. But also provides informationto other interested stakeholders in the

development of the biofuel market seg-ment in EU27.

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2.1 Biofuel technologies

Today the development in the biofuelmarket is very interesting with quickimprovements in production techniques

and available feed-stocks. There is alsoa multitude of available turn-key produc-tions on the market and both light and

heavy trucks that can be run on bothhigh-blends and low blends. The majori-ty of production is today based on agri-cultural products providing farmers withan increased market for their productsand bi-products from the food industrythereby sustaining a active and prota-ble agricultural sector. This handbook is

focused on biodiesel and bioethanol pro-duction.

2.1.1 Bioethanol

Ethanol is a colorless liquid that is a vo-

latile, ammable. The most commonlyknown type of alcohol found in alcoholicbeverages. But it is also used in thermo-

meters, as a solvent, and as a fuel.Ethanol is a straight-chain alcohol, and

its molecular formula is C2H5OH. Etha-

nol is often abbreviated as EtOH. Theuse focused on in this report is as a mo-tor fuel, mainly as a biofuel additive forgasoline.

Feed-stock

Ethanol is produced via fermentation ofsugar rich or starch rich crops. The ma-

jor crops are sugar beets, sugar cane,

corn, potatoes or cereal crops, mostly

wheat in Europe.The use of different feed-stock requiresdifferent production processes leadingto that production plants cannot easily

substitute its feed-stock. The chose ofproduction- processing-method is there-

fore dependent of the feed-stock suita-ble for the specic production site. Feed-

stock analyses on availability and pricerange is therefore crucial in the establis-hment of bioethanol production site.

Main production methods

Ethanol production can be achieved

through a multitude of path-ways, thebelow is a very general generic descrip-

tion of the process. The production nor-

mally begins with drying and milling ofthe feedstock. After this the sugar is ei-ther dissolved out of the material, or thestarch is converted into sugar. The sugaris then fed to yeast in a closed, anae-robic chamber. The yeast secretes en-

zymes that digest the sugar (C6H12O6),yielding several products, including lac-

tic acid, hydrogen, carbon dioxide (CO2),and ethanol (C2H5OH). The main focuson development of improved ethanolproduction both with regards to; cost,increased yields, and use of more cellu-losic feed-stock is on enzyme improve-ments.

2.1.2 Biodiesel

Biodiesel is a vegetable oil- or animal

fat-based diesel fuel consisting of long-chain alkyl (methyl, propyl or ethyl) es-

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2. CHARACTERISATION OF MARKETSECTOR


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ters. Biodiesel is a liquid that varies incolor depending on the feedstock usedto produce it. It is incapable of mixingwith water, has a high boiling point andlow vapor pressure. Biodiesel can beused alone, or blended with petrodiesel.Biodiesel can also be used as a low car-bon alternative to heating oil.

Feed-stock

Most vegetable or animal oils can be usedto produce biodiesel. The feed-stock canbe subdivided into three categories:Primary oils pure vegetable oils collec-

ted from oil-rich agricultural crops thatare crushedResidual oils oils that are produced as

by-products by other rening processesof the feed-stock.Waste oils oils that are collected aswasteThe feed-stocks chemical properties willaffect the chemical properties of the bio-diesel, particularly in regards for tem-perature tolerance and corrosion. The

choice of feed-stock is therefore veryimportant when choosing the market foryour product.

Main production methods

Biodiesel is produced, through eithertransesterication or alcoholysis. Biodie-sel is typically made by chemically reac-

ting lipids (e.g., vegetable oil, animal fat(tallow)) with an alcohol.The production varies depending on sca-

le of production and feed-stock but can

generically be described as: The feed-stock is pre-treated, i.e. seeds are crus-hed, water is removed and the material

and ltered to produce a suitable materialfor biodiesel production. The oil is thenchemically changed trough estericationinto biodiesel. The production also gene-rates by-products such as, soap, glyce-rin, excess alcohol, and trace amountsof water. All of these byproducts mustbe removed, though the order of remo-val is process-dependent, to purify the

end product.

2.2 Biofuel policy, incentivesand targets

Within EU 27 there is two directives that

have an imminent effect on the deve-lopment of renewable energy. The REDdirective with its target of 10 percent re-newable energy in the transport sector2020 is the front driver of developmentin many EU 27 countries. The fuel qua-lity directive also has an potential of be-coming an additional driver for the deve-lopment, with a market development ofmore and more energy and climate ef-cient biofuels used to reduce the GHGimpact of fossil fuels. Mostly by blendingbut also through the sales of pure bio-fuels by oil companies.

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The full implementations of the two di-rectives are not in place within EU 27leading to that the markets are affecteddifferently dependent of country specicimplementations. However there is anactive process to harmonize the sustai-nability demands within the EU 27. Sothe main drivers will most probably the

political ambitions within each countryon how fast the development shall beand if the 2020 targets should be excee-ded.

2.3 Biodiesel markets

Biodiesel can be used as a low-blend indiesel but there are also available en-

gines that can be run on pure diesel

(B100). This makes the fuel versatileand attractive, as the market potentialis not as limited as other biofuels. Bio-diesel (FAME) can also be produced byvarious production methods and various

feedstocks, both in large-scale and sma-le-scale plants. The versatility makes itattractive for an export market as pro-duction can be adjusted according to re-gion conditions and market structure.

According to EU 20:20:20 targets in

combination with the targets of increa-

sed energy efciency in vehicles thisfuel will grow rapidly. New feed-stockand production methods are on the ver-ge of commercialization, so called se-cond generation biofuels. The marketwill be affected by the development ofdomestic biofuel production, global tra-de patterns as well as the phase of thecommercialization of new fuels and pro-duction methods.

2.3.1 Biodiesel low blend

In most EU 27 countries theyre a dis-cussions regarding implementation of a

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low blending of biodiesel (FAME) into ga-soline or there is already a practice ofblending in FAME in the diesel. With the

implementation of the fuel quality direc-tive it is now allowed to sell B7 (Diesel

with a 7 percent blending of FAME).Within the EU 27 countries there are two

major strategies for implementation of

B7:Quote system, where fossil fuel provi-ders are forced to blend in biofuel intheir products otherwise a ne is placedon the economic operator.Tax subsidies, biofuels are subsidizedand fuel tax is not placed upon renewa-ble fuels.

2.3.2 Biodiesel high blend

The market for B100 has risen and fallenover the years due to unstable targetsand incentives, this has lead to that theproduction capacity of biodiesel in Euro-pe exceeds the market. There are howe-

ver a few regional B100 markets left wi-thin EU 27.

2.4 Bioethanol markets

Bioethanol can be used in both heavy

and light vehicles. The fuel can used asa low-blend in gasoline but there are alsoavailable engines that can be run on highblends (E85;ED95). This makes Ethanolvery versatile and attractive as its mar-ket potential is not as limited as other

biofuels i.e. biogas or DME. The fuel canalso be produced by various productionmethods and various feed-stocks, both

in large-scale and smale-scale plants.This versatility makes the fuel attractivefor an export market as production canadjusted according to region conditionsand market structure.According to EU 20:20:20 targets this

sector will grow rapidly. New feed-stockand production methods based on more

cellulosic biomass are on the verge ofcommercialization, so called secondgeneration biofuels. Todays marketand the market on a foreseeable futu-re will be based on 1 generation sugarand starch rich feed-stock. The marketwill be affected by the development ofdomestic biofuel production, global tra-de patterns as well as the phase of thecommercialization of new fuels and pro-

duction methods.

2.4.1 Bioethanol low blend

In most EU 27 countries theyre a dis-cussions regarding implementation of alow blending of ethanol into gasoline orthere is already a practice of blending inethanol in the gasoline. With the imple-

mentation of the fuel quality directive itis now allowed to sell E10 (Gasoline witha 10 percent blending of Ethanol or upto 3 percent of Methanol and 7 percentEthanol). However the companies stillneed to provide a protective grade forolder cars (E5).Within the EU 27 countries there are two

major strategies for implementation ofE5 and E10:

Quote system, where fossil fuel provi-ders are forced to blend in biofuel alco-

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hol in their products otherwise a ne isplaced on the economic operator.Tax subsidies, biofuels are subsidizedand fuel tax is not placed upon renewa-ble fuels.

2.4.2 Bioethanol high blend

There are two commercially availablehigh-blends today that have vehiclesthat are available on the open market.However, the fueling system and pumplogistics are not available on a large sca-le. ED95 is mostly sold to vehicle eetswith a xed distribution system i.e. forcollective transport or regional productdelivery services.

In a few countries there is a developed

E85 pump system for private vehiclesbut in most countries the introduction ofE85 is still on a trial bases.

2.5 Trade Patterns

Global trade of biofuels is still under arapid development and the number ofexporting countries is increasing stea-dily. The trade is believed to continue

its development however the patterns oftrade will change over time as new pro-

ducing countries enters the arena.

2.5.1 Bioethanol

The percentage of traded Bioethanol isrelatively small, compared to its produc-

tion, only 13 percent (FO Licht 2010).The main reason for this is ethanol is aglobal commodity that can be produced

almost any where in the world and most

installation are targeted on the domesticmarket. The trade of bioethanol is alsorestricted by trade barriers such as cus-toms for imported ethanol and incenti-ves for domestic production and farmingof feed-stock.The bioethanol production is relativelysmaller compared to the EU 27 biodieselproduction, 2009 the domestic bioetha-nol production was 3599 000 m3 com-

pared to the domestic biodiesel pro-duction of 10016 000 m3. The usageof bioethanol 2009 was 4480 000 m3,given that approximately 20 percent ofthe bioethanol use was from non-EU27sources. EU27 consumed in 2009 6 per-

cent of the global consumption and pro-duced 5 percent of the production.On the global markets USA and Brazilproduced almost 90 percent of the glo-bal production, other major producers

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are China, Canada, Germany and Fran-ce. The global production has increasedsteadily and doubled between 2005-2009.

2.5.2 Biodiesel

The biodiesel production is larger com-

pared to the EU 27 bioethanol produc-tion, 2009 the domestic biodiesel pro-duction was 10016 000 m3 comparedto the domestic bioethanol productionof 3599 000 m3. The usage of biodie-sel 2009 was 10016 000 m3, given that

approximately18 percent of the bioetha-nol use was from non-EU27 sources.EU27 consumed in 2009 70 percent ofthe global consumption and produced 60

percent of the production. The Europeanbiodiesel market is there for of higherglobal relevance relative to the bioetha-nol market.

2.6 Vehicle development

There are several dedicated vehicles on

the market for Ethanol and pure Bio-diesel. The dedicated private small cars

are mostly Ethanol-Gasoline Flexi-fuelcars. On the other side the B100 carsare heavy-duty vehicles for the regionaldistribution markets.

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1. Country prole (geography, demographics, logistics, etc.)

1.1 Geography and Climate Total land area

What is the average summer temperature across regions in targetcountry over the last 10 years?

Total number of inhabitants Population density

Total number of personal transport vehicles

1.2 Wealth/economic status of population What was the average GDP real growth rate between 2008 - 2010? GDP per capita for 2010

1.3 Logistics - road and rail network

What is the density of rail-network? What is the density of road-network? What is the density of water ways-network?

What is the density of the electricity transmission and distributionnetworks?

What is the density of the gas transmission and distributionnetworks?

2. Energy Policy (political will, nREAP, etc.)

2.1 The nREAP is ambitious and proposes appropriate measures

There are high-volume targets for RES There are high-volume targets for biofuels Proposed measures for biofuels in nREAP are appropriate and

convincing

2.2 A political will to develop the RES-sector is clearly recognisable andstable

Does the government provide an appropriate budget for the targetedmarket growth for Biofuels?

Have the support schemes/framework conditions for investments inbiofuels changed within the last 2-4 years?

Is a revision of the framework conditions announced, which couldaffect the biofuels market development?

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3. CRITERIA AND INDICATORS FORMARKET ATTRACTIVENESS


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2.3 Proximity of elections What is the period of time before the next general (national)

elections.

3. Feedstocks

3.1 The agricultural structure is benecial for biogas and/or biofuel projects What is the available farmland per inhabitant?

3.2 Feedstocks are available for biofuel production Amount of oil seeds produced nationally in 2010

Amount of organic wastes and residues (waste vegetable oil + fats)in 2010

3.3 The solid biomass potential is sufcient to realisesmall scale heat/CHP/DH projects?

Amount of domestic demand for cereal for biofuels in 2010 Amount of domestic demand for oil grain for biofuels in 2010

Share of oil grain demand for biofuels compared with total domesticproduction Did the cereal production of 2010 exceed the domestic demand?

Did the oil seed production of 2010 exceed the domestic demand? Area of fallow/abandonned land available for agricultural expansion

4. Economic instruments (prices, support schemes/guarantee, subsidies, etc.)

4.1 Financial support schemes can be claimed for investments What proportion of the investment in biofuel production plants can

be claimed in subsidies (cumulative, including tax advantages)?

When does the scheme end granting funding for biofuel productionplants?

Subsidies for investments in logistic/Infrastructure for high blend/pure biofuels are in place

Investment subsidies for green vehicles procurements are in place

4.2 Financial support schemes can be claimed for operation Tax is reduced for bioethanol in high blends (E85)

Tax is reduced for bioethanol in low blends (E5,E10) Tax is reduced for biodiesel in pure/high blends (B30 - B100)

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Tax is reduced for biodiesel in low blends (B5,B7)

4.3 Prices of fossil fuels are high and heavily taxed What is the average end customers price for petrol fuel over the last

year (2010)?

What is the average end customers price for fossil diesel over thelast year (2010)?

How high is the total energy tax on petrol fuel to the end consumer?

How high is the total energy tax on fossil diesel to the endconsumer?

5.Market aspects (volume, access to grid, etc.)

5.1 The energy sector is large and expected to grow

Amount of diesel used for road transport Expected growth in diesel use from 2009 to 2020

Amount of petrol fuel used for road transport Expected growth in use of petrol fuel from 2009 to 2020

5.2 Access to the electricity grid is guaranteed

Is there in general an electricity grid available with sufcientcapacity?

Is there in general an electricity grid available with regulated gridaccess?

Is there in general an electricity grid available with regulated costsfor grid connection?

Is there in general an electricity grid available with priority for RES? Is the grid operator obliged to connect all renewable energy

installations?

5.3 The Framework conditions for fossil fuels do not impair marketdevelopment

What is the contribution of imported oil to primary energy supply inreal terms?

What is the percentage contribution of imported oil to primaryenergy supply?

5.4 Availability of energy to supply a biofuels plant is not problematic How reliable is the electricity supply?

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Supply of excess electricity classed as green from biofuel plant ispossible

Electrical distribution networks can cope with increased energy feed- in from biofuel plants

What is the share of biofuels compared to total road fuels How does the national total amount of ethanol consumed compare to

the target for 2020 (NREAP)? How does the national total amount of bio-diesel consumed compare

to the target for 2020 (NREAP)? What is the ethanol consumption growth rate in the last 4 years

(CAGR) What is the biodiesel consumption growth rate in the last 4 years

(CAGR)

5.5 Biofuel has access to competitive downstream ow Logistics available for high blend / pure biofuels (e.g. B100 or E85

lling stations)?

5.6 An intense competition is not recognisable Number of competitors providing (already building or selling) ethanolproduction plants

Number of competitors providing (already building or selling)biodiesel production plants

Number of established distributors already (re-)selling biofuel boughtin national and international markets

Total amount of bioethanol capacity sold (by existing competitors)over the last 4 years

Total amount of biodiesel capacity sold (by existing competitors)over the last 4 years

6.Regulations (laws/mandatory targets for bioenergy, permitting, emission

thresholds, etc.)

6.1 Regulatory instruments to support bioenergy markets have successfullybeen introduced

Obligation for inclusion of biofuel as proportion of all transport fuelsin market

Obligation for inclusion of a specic quantity of biofuel (per litre) intotal fuel consumptoin is in place


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Obligation for inclusion of biodiesel as a proportion of total dieselconsumption is in place

Obligation for inclusion of a specic quatity of biodiesel in total dieselconsumptoin is in place

Obligation for inclusion of bioethanol as a proportion of total petrolconsumption is in place

Obligation for inclusion of a specic quatity of bioethanol in totalpetrol consumptoin is in place

6.2 The approval procedure by the authorities is adequate in terms of time How long does the approval process last in average for biofuel

production plants

6.3 Specic regulations are favourable for bioenergy market developments National biofuel standardisation and certication schemes for

Sustainability in place

National biofuel standardization allows for low blends (e.g. E10:B7) National biofuel standardization allows for pure blends (E85:B100)

6.4 Existing emission thresholds can be fullled with the applied technology Extra information Biofuels

7. Project nancing context (economic situation, loan, banks, etc.)

7.1 The country has a solid nancial position Standard and poors rating

7.2 Export friendliness Euler Hermes rating

7.3 Level of transparency in the market Corruption perception index

7.4 Country risk

Country risk as reected by the @rating country of COFACE

7.5 Ease of doing business Ranking of feasibility of starting a business in the IFC-World Bank

Doing Business Index


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Ranking of Feasibility of getting credit in the IFC-World Bank DoingBusiness Index

7.6 The banks are familiar with bioenergy technology and support itsdevelopment

Is the support of bioenergy projects highlighted in ofcial papers ofthe banks, like annual reports etc.?

Are Governmental guarantees for loans for bioenergy investements

in place?

7.7 Foreign investments are supported in the target country Are there any programmes implemented in the region to attract

foreign investments?

7.8 The banks in the target country provide attractive conditions forbioenergy projects

Can bioenergy plants benet from interest rates for credits lowerthan usual in the market?

Are the support conditions feasible in an adequate scope?

7.9 The market is liquid and transparent Extra information Biofuels

7.10 The value of the investment is stable due to a low currencyexchange risk

Is the market part of the Euro Zone? Was the ination rate of the coutry more or less stable within the

last 4 years (CAGR)?

8.Readiness for uptake (public acceptance, stakeholder networks, etc.)

8.1 Efcient networks and information are accessible National and regional agencies are providing effective help to foreign

companies wishing to invest

Is there a biofuels association (with a minimum of 10 companymembers) assisting the market?

Public web sites/ information/market reports on bioenergy


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8.2 Public acceptance/knowledge of technology Are biofuels known to and well-regarded by general public? Have any biofuel prodcution project permissions been declined due

to public opposition in the last four years?


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Participating companies of the biofuels working group

Werling Consulting

Kenneth WerlingPersgatan 139B, 602 30 Norrkping, SwedenPhone: +46 (0) 76 / 773 1139www.wercon.se

Enbio AB

Kristian ErikssonSdra Grytsgatan 4, 60233 Norrkping, SwedenPhone: +46 (0) 70 / 970 94 35www.enbio.se

COWI AB

Karin van der Salm, Business Development Manager BioenergySkrgrdsgatan 1, SE-402 41 Gothenburg, SwedenPhone: +46 10 / 850 10 00www.cowi.se

Benet Ltd

Dan AsplundAsko OjaniemiPiippukatu 11, 40100 Jyvskyl, FinlandPhone: +35 (0) 8400 / 640460

www.benet.fi

Nordisk Etanol & Biogas AB

Mikael RunesonBiblioteksgatan 4 37435 Karlshamn, SwedenPhone: +46 (0) 454 12006www.nordisketanol.se


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CTS Engtec Oy

Kirsi Juura Manager, Marketing and Corporate CommunicationsKaikukatu 7, FI-45101 Kouvola, FinlandPhone: +358 (0) 207 / 567 268www.ctse.fi

Sustainable SystemsKristian Fex, Senior Sustainable ConsultantDrottninggatan 120, 113 60 Stockholm, SwedenPhone: +46 (0) 72 / 328 25 16www.sustainablesystems.se

SEKAB E-Technology AB

Jan Lindstedt, Market & CommersializationBox 286, 891 26 rnskldsvik, SwedenPhone: +46 (0) 660 / 751 93

www.sekab.com

BDI BioEnergy International AG

Martin Krenn, Regional Sales ManagerParkring 18, 8074 Grambach, Graz, AustriaPhone: +43 (0) 316 / 4009 100www.bdi-bioenergy.com

CHOREN Industries GmbH

Ines BilasFrauensteiner Str. 59, 09599 Freiberg, GermanyPhone: +49 (0) 3731 / 2662-226

www.choren.com


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21Acknowledgements:

Special thanks are expressed for their contriburions to all industry stakeholders of thebiogas working group who took part in the discussions during the elaboration of the listof criteria and indicators.

Photos: Flickr.

www.CrossBorderBioenergy.eu


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