Probably today’s top bioethanol crop
Editor’s Note: The biofuel sector is in its infancy, yet bioethanol production is already equal to one-half of one percent of total petroleum production in the world. Biodiesel lags far behind, only contributing one-twentieth of one percent compared to the world’s total petroleum fuel production.
In this cautionary, comprehensive assessment of biofuels, it is clear that in proper conditions they are economically viable today, and that worldwide biofuel production is poised to make a quantum leap. But when comparing the principal biodiesel crops, bioethanol versus biodiesel, the result is inconclusive. Complicating any attempt to assess the potential of biofuels are claims that “secondary treatment of cellosic waste” can yield quantities of bioethanol equal to the initial extraction of ethanol or diesel. But this secondary extraction of ethanol from cellulose is not yet a cost-effective process.
Biofuels, like all fuels, can be analysed using a net energy balance analysis, or a life cycle cost analysis which emphasizes economic factors. While both of these analyses are valuable, the relationship between the two of them, basically, is that the better the life cycle cost analysis is, the closer to 1.0 the net energy balance can fall while still yielding a viable biofuel.
How good biofuels are is highly subjective based on location and feedstock. Most research is either highly proprietary, or just getting underway, or both. Biofuel converts solar energy, at its best, at a rate of only around .15%. So while biofuels such as ethanol from sugar cane in Brazil and diesel from oil palms in West Africa are undoubtedly economically viable, they cannot replace petroleum. There isn’t enough land. Genetically engineered algae may change all of that, of course.
According to this authoritative review by EcoWorld Contributing Editor Louis Strydom, the commercial sector is just now getting interested in biofuel refining and biofuel crops. It is important to appreciate that innovative crops and technologies may be already developed to a scientifically or even commercially reliable stage, yet much data on these promising crops is not yet available in the public at large.
- Ed “Redwood” Ring
The biofuel component of the bioenergy sector is certainly an important one.
The International Energy Agency did an analysis and projection of oil consumption measured in Million tons of oil equivalent (Mtoe) from 1971 to 2030. Whereas in 1971 transport consumption of oil to total oil was roughly 50%, by 2030 transport will account for around two thirds of oil consumption. More concerning, total oil consumption is predicted to increase to 5,000 Mtoe, more than doubling the total consumption of 1971 (1). A significant portion of this increase in consumption is driven by the developing economies and is therefore very difficult to reduce due to their rapid economic growth. Both in terms of reduction of CO2 emissions from this increasing consumption as well as reducing the dependency on oil as the primary product the demand for viable biofuels will increase in the years to come. From the same analysis bioethanol production was estimated at around 30 million tons per year in 2004 and biodiesel at only an estimated 2,5 million tons per year as of 2004.
The demand is thus clearly there for a substitute to oil, and would be even more pronounced if this substitute could be “greener.” As regards biofuels however, the key imperative would seemingly remain the economic viability of the substitute. As Nobel prizewinner, Sydney Brenner, once noted “the only ‘omics’ that really counts in Biotechnology is economics. (2)
How then do you consider the viability of a project, whether it be biodiesel or bioethanol?
It should be noted from the outset, that there is a perplexing myriad of country, location, and project specific data that cannot possibly be covered in a short article such as this. Further, it may be quite possible that a specific project may have other factors specific to that project that completely erode the assumptions of this article. This is exacerbated by the lack of published and scientific data available. That is not in any way whatsoever saying that a huge a mount of scientific research has not been done on biofuels, but simply that a) the biofuel field is in itself a huge field of study, b) new technological advances have presented themselves (or are in the pipeline) that affect current assumptions, c) some advances are driven by economics and these will present themselves by way of company performances in the future.
This article focuses on environmental analysis of the biodiesel and bioethanol industries. Focus is mainly placed on a PEEST analysis (Political, Economic, Environmental, Social, and Technical). The Social and Technical factors are covered briefly. This analysis is not intended to be exhaustive and is intended only to highlight some of the salient points pertinent to such an analysis and reflect on some of the current thinking around these factors. Strategists might argue that there are a number of other environmental analytical techniques which should be applied to an environmental scan of the industry; again such an analysis would be so extensive that it falls outside the scope of this article. Further, the focus of this article is mainly on the external environment as it is far too complex a subject to cover internal environmental factors affecting a project, and even the external environment is only approached from a generic approach so as not to create undue complexity.
|The environmental benefits of
biofuel is especially important
in the European Union
The main political drivers for the biofuel industry in Europe is directed towards the environment, and therefore lowering carbon emissions as much as possible. As a secondary objective the Europeans aim to reduce their dependency on petro-energy (3). This perspective is closely related to the objectives and structure of the Kyoto protocol, which is endorsed by the EU. Interestingly, in terms of concrete actions in the EU, the focus seems more to be on developing biofuels in the member states to meet the objectives (4). The objectives include a 5.75% bio-to-petrofuels blend envisaged by the European Union by 2010.
|Americans view biofuel
as a way to help them achieve
In contrast, in the US the primary objective is to reduce dependency on imported oil. More specifically, the Department of Energy’s Office of Energy Efficient and Renewable Energy (EERE) invests in research to achieve the following goals:
- Dramatically reduce, or even end, dependence on foreign oil.
- Spur the creation of a domestic bioindustry. (5)
The two main political drivers therefore are energy independence and environmentally friendly energy. It should be noted that on both sides of the Atlantic these drivers concentrate on internal markets/projects. It follows therefore that development of the industries are directed to addressing local concerns and therefore feedstocks and technologies are directed towards that.
|Rapidly industrializing nations
such as India see biofuel as
a source of jobs and wealth
In the developing world it is worthwhile to note that an additional driver is the potential of job creation for the local economies, particularly where labor intensive feedstocks can be utilized such as harvestable nuts and crops for biofuels.
In short, as countries focus on developing their own biofuel industries, the direction of research and development for biofuels will be driven by the countries and their corresponding corporations and financial markets who invest the largest amounts of capital to these endeavors. Thus for example, the primary development in terms of economically viable research and studies in biodiesel and bioethanol centre around the first world countries. This significantly hampers assessment of projects which fall outside this scope as there is much more limited research available, and often the published research available centers more on developmental than commercial factors in contrast to similar research in the developed world.
In the particular case of biofuels, Economic and Environmental analysis are often intertwined. Under this heading some of the main measurement criteria to be covered are Life-Cycle Cost Analysis (LCA) and Net Energy Balance (NEB):
LIFE CYCLE COST ANALYSIS
Life cycle cost analysis covers the costs incurred “from cradle to grave of the project.” (6) It focuses mainly on the environmental impact, but the generic methodology could readily be applied to the economic cost-benefit of the project (although this is not done too frequently). LCA can often be complimented by other measurements such as external-cost analysis. The LCA does prove to be a beneficial tool to analyse projects. In terms of biofuels the main focus seems to be towards energy consumption – utilising it as a decision making tool to compare the owning and operating costs for energy using systems. There is relatively limited research still available in this field but most apply the LCA to automobiles, comparing using different fuels as inputs. These studies are however subject to academic limitations and a number of factors have the potential to change the outcomes of the studies such as price of fuel (and also which fuel is the baseline – petroleum or diesel), efficiency of the engine, cost of the vehicle, cost of manufacturing, service costs, fixed costs, end-of-life salvagability of the automobile, etc.
An example of this variance in research output due to varying underlying factors is an LCA conducted in 2000 on alternative biofuels (7). Essentially the article concluded that given the underlying factors at the time biofuels where not cost effective due to their high fuel price. Excluding subsidies, biodiesel from soybeans did prove about 20% more cost-effective than Ethanol (C2 H5 OH). Ethanol from corn was determined to be marginally more effective than herbaceous and woody biomass respectively. Similarly a research paper presented in 1998 utilising both LCA and an External Costs Analysis noted that: “The LCA analysis shows that the benefits in terms of greenhouse gas emissions are being compensated by higher environmental impacts, especially for eutrophication. The External Cost Analysis, shows that external costs of biodiesel and fossil diesel are in the same range and are dominated by the impacts of the use phase.” (8)
|Oil Palms in the Niger Delta
Probably the top biodiesel crop, but no study
can fail to take into account local conditions.
The main problem is that most research done using LCA is fundamentally linked to the economics of the country and region in which it is produced. Therefore, performing a study in the US and attempting to replicate that study in Europe could likely lead to different results. This variations could be attributed, but not limited, to the following factors – cost of input stock, type of input stock, planting, harvesting and processing of input stock, economic factors, subsidies, etc. In a nutshell, although LCA is highly relevant to a specific market or possibly project, it is not necessarily possible to use this data to extrapolate to other countries or projects.
It is important to note that the country conducting the research will typically focus on the crops that are viable within its location – thus for example a study in the UK would not consider a plantation of Palm Oil as input stock as although it is far superior in yields to crops available in Europe it is not suitable for the climate and would hence be disregarded from the specific country perspective.
For these reasons, comparisons of biodiesel vs. bioethanol should be done with extreme caution and the scientific principles behind such a study must be defensible. Furthermore, the LCA studies come with the additional caution that they are time sensitive – the studies referred to above, would quite likely have different outcomes in the year 2006 given changing oil prices, technological advances in agriculture of the input crops, refining, and the end use products (such as automobiles).
NET ENERGY BALANCE EQUATES TO ENERGY INPUT VS. ENERGY OUTPUT
The other factor predominant in literature is the Net Energy Balance (NEB). This represents an overview of production and consumption of primary and secondary biofuels for a specific project, area, country or region. Energy balances should cover all the primary and secondary energy sources, showing clearly the non-energy use of such sources. (9)
NEB is an interesting counterpoint to LCA analyses in that NEB purely focuses on energy input versus energy output of the production cycle and therefore does not take cost variables into consideration. This is helpful in that it focuses on efficiency throughout the energy crop to biofuel cycle. In this sense the main impact on the reliability of the NEB analyses is the development of technology both from an agricultural and refining perspective.
A report by the US Department of Energy comments that the NEB of ethanol is estimated at around 1.38 for ethanol from corn, but that cellulosic bioethanol (from plant mass) can reach 2.62. The same report anticipates an NEB potential of around 5.0 based on further research on cellulosic ethanol production. The same report notes that biodiesel NEB can reach around 3.2 from soybeans. (10)
|Low-tech biofuel for lamps and
stoves work now, as refining
methods and markets evolve.
MAKE BIOFUEL? – WHY NOT JUST BURN IT!
A study in the Netherlands noted that it is far more efficient to utilise the feedstock for electricity generation (bioenergy) than it is to use it for the production of biofuels. Further, this study indicated that given the input feedstocks compared (Sugar beet for bioethanol and rapeseed oil for biodiesel) and the country (the Netherlands) that biodiesel was more energy efficient and therefore had a more positive energy balance (11). A similar study focusing on rapeseed oil for biodiesel and wheat for bioethanol production also indicated that biodiesel was the superior fuel in terms of NEB – both crops however were found to be NEB positive (12). Bioethanol in particular has often been held to have a negative NEB, although recent studies do seem to indicate it is possible to produce bioethanol with a positive NEB (13).
The essence however is that it appears with current feedstock output biodiesel consistently has a higher NEB (14). Of course depending on the amount of research and development done on bioethanol, this may likely change if such R&D is invested in ethanol and the technology, processes, and crops are improved. Furthermore, the matter is highly subjective to location and feedstock, so for example, Brazil which has a very large sugar cane industry may prove much higher NEB’s if ethanol is consumed in country. Transport costs and energy consumption of feedstock plays a significant role, and therefore a high NEB crop in say a developing country producing sugar or palm oil may be eroded if such stocks are transported to a refinery in a developed country. Again, if research is not conducted on a sound scientific basis then comparing outside of the scientific parameters can result in incorrect assumptions of the merits of a biodiesel or bioethanol project.
It is reasonable then to expect the NEB’s of crops to improve in the future. The reasons for this are as follows. First, only existing commercial crops are used. These existing crop yields could be improved with further genetic engineering, crop selection, etc. Second, commercial activity has not been undertaken or materially developed yet for specialist biofuel crops such as Jatropha Curcas, Ponga Mia, etc. Large scale commercial activity will likely yield more energy efficient production of feedstocks, which will then improve the NEB. Third, current production primarily concentrates on annual crops. Particularly so in Europe and America where the crops have to be replanted each year to be harvested. If plantations are used less energy is expended to produce the crops because the plantation is harvested annually without having to replant the crop. Of course Palm Oil and to a lesser extent sugar do cater for this requirement and are therefore at a higher NEB level already.
There are of course a host of other measurement factors that should be considered in analyzing the economic and environmental factors, however the above two have been covered in some detail as they are often encountered in literature and do provide a sound basis for analysis.
A pertinent social factor affecting biofuels is that particularly in the developed world society has become increasingly environmentally conscious, and therefore it has become more important for the man on the street to consume greener energy. More importantly the increased public interest in greener energy has translated into political interest and “Green” parties have increasingly come to the fore in politics in some European countries.
|Faces of the future: Will biofuel become a
vital part of the eventual energy solutions
for huge emerging nations such as China?
In contrast to the already fully industrialized world, there are many countries which are experiencing population booms as well as growing economies. Specifically in India and China the population sizes coupled with strong growth is increasing demand for energy and fuels. In the developing world the demand for energy combined with the pressures of unemployment have made bioethanol and biodiesel popular areas of interest. This interest has been enhanced particularly for biodiesel crops such as Palm oil and Jatropha where manual labor is often utilized for harvesting and thus the development of these industries assists in job creation as well as energy independence.
Technical advances both in terms of actual crop yields and refining technologies have significantly improved in the past few years. For refining one only has to look at the refining technological improvements companies such as Lurgi (15) have made over the past decade to appreciate this. On the crop side research has improved crop yields for plants such as Palm Oil – see for example the research done by the Palm Oil Research Institute of Malaysia (16) and academic institutions (17) both on crop development as well as increased utilization of crop waste (18).
Again, as noted in the Economic/Environment factors, the research remains context specific, and it is important not to extrapolate data without a sound scientific base and due consideration for all factors influencing the research data. So, for example, a study was conducted for the UK Department of Transport using 2002 as a basis year comparing international resource costs for biodiesel and bioethanol, with extrapolations for 2020. The study was limited in scope to Europe, US and Brazil and concentrated on wood, straw, wheat and corn for bioethanol and oil seeds (soybeans and rapeseed oil) for biodiesel. For the 2002 year it indicated that given the feedstock and environment, that biodiesel produced more energy per investment than bioethanol as regards Europe and the UK, however when the US and Brazil were included bioethanol proved more effective. In their 2020 projections, accounting for technological improvements and using the same input factors, the study anticipated that the most cost-effective solution would be biodiesel produced from biomass (wood & straw) given the technologies anticipated by that time (19).
The importance of the UK study lies not in the predictions of the year 2002, but in the fact that it is realistic to expect significant technological improvements in both the agricultural and processing/refining productivity of biofuels. To this extent it is recommended that biofuels projects be approached on a case by case basis to determine viability and that a definitive position is not taken as regards viability of biodiesel versus bioethanol. There are a number of current views and comparisons drawn for the different feedstock crops for biodiesel and bioethanol, see for example a recent article on this site (20).
BIOFUEL PRODUCTIVITY DATA STILL HARD TO FIND
Current published and scientific data as regards to technological advances both in terms of crops (for example yields per hectare of different crops) as well as processing and refining advances are hard to come by. The main reason for this is that the biofuels field has only received serious attention from commercial investors in the last few years and to this extent it is seen as an exciting market to be entering. Consequently, this has lead to most research being proprietary, patented or not published and utilized for commercial purposes. This is not to say that some of the advances are not scientifically credible, only that they are not always accessible. The consequent risk is that a lot of unsubstantiated data is assumed, either over or under estimating the realistic yields of crops, efficiencies of processes and technologies, etc.
It is possible that the nature of the feedstocks themselves will allow the industry to change, for example, by-products that are now seen as waste or used for one purpose may change to be used for completely different purposes in the future. So for example certain tropical and sub-tropical crops may end up driving a wider bioenergy business rather than a solely biofuels business if the byproducts are converted into electricity. This could in turn effect how the LCA or NEB of a project is calculated and consequently change the economic viability of future projects.
The main issue constraining definitive comment on evaluating biodiesel vs. bioethanol is that both fuels are not fully developed yet. The reasons for this are as follows:
First, only limited existing commercial crops are have recorded data on their NEB. These existing crop yields could be improved with further, crop selection, genetic engineering, etc.
|Jatropha seedlings getting a start in India
There is much still to learn about this promising crop
Second, commercial activity has not been undertaken or materially developed yet for specialist biofuel crops such as Jatropha Curcas, Ponga Mia, etc. Large scale commercial activity will likely yield more energy efficient production of feedstocks, which will then improve the NEB.
Third, current production primarily concentrates on annual crops. Particularly so in Europe and America where the crops have to be replanted each year to be harvested. If plantations are used, less energy is expended to produce the crops when the plantation is harvested annually without having to replant the crop. Of course Palm Oil and to a lesser extent sugar do cater for this requirement and are therefore at a higher NEB level already.
Regardless of the seeming higher NEB viability in the developing world for biofuels, a number of firms have built or are in the process of building major biofuel refineries in the US, Europe and other developed countries (21).
Conclusion – Bioethanol & Biodiesel are a toss-up – they both work well depending on the crop and the planting environment.
Attempting to analyze an industry such as biofuels is a very complex task. Both bioethanol and biodiesel crops, processes and refining technology is constantly improving. Further, it is important to appreciate that crops and technologies may be developed to a scientifically reliable stage, yet data thereon is not yet available in the public domain. The purpose of this article was to extract and review some of the current data and drivers impacting on the biofuel sector within the conceptual construct of a PEEST analysis to thereby highlight some of the current factors, thinking and research in this field and thereby provide the reader with a basic construct for future analysis of biofuel projects.
Footnotes and Reference Sources:
1 Fulton, L. 20/21 June 2005. (back)
Assessing the biofuels option.
Presented at a conference in Paris – Biofuels for Transport: an International Perspective
2 Whelan, J. November 6, 2004. (back)
The Insider : European Biotech – No Pain, No Gain. New Scientist p54 – 55.
3 Anon. 17 August 2004. (back)
Greencars : Euractiv.com
4 British Associations for Bio Fuels and Oils (back)
5 Tyson, K.S. et al. June 2004. (back)
Biomass Oil Analysis: Research Needs and Recommendations.
National Renewable Energy Laboratory
6 De Nocker, N. et al. December 3-4, 1998. (back)
Comparison of LCA and external cost analysis for biodiesel and diesel.
Presented at 2nd International conference LCA in Agriculture, Agro-Industry and Forestry.
7 MacLean, H.L. et al. 2000. (back)
A Life-Cycle Cost Analysis of Alternative Automobile Fuels. Journal of Air & Waste Association (50:1769-1779).
8 De Nocker, N. et al. December 3-4, 1998. (back)
Comparison of LCA and external cost analysis for biodiesel and diesel.
Presented at 2nd International conference LCA in Agriculture, Agro-Industry and Forestry.
9 Food and Agriculture Organisation of the United Nations (back)
10 Food and Agriculture Organisation of the United Nations (back)
US Department of Energy – Net Energy Balance for Bioethanol Use.
11 Kampman, B.E. et al. November, 2003. (back)
Biomass: for vehicle fuels or power generation? CE: Solutions for environment, economy and technology.
12 Richards, I.R. June 2000. (back)
Energy balances in the growth of oilseed rape for biodiesel and of wheat for bioethanol.
British Association of Biofuels and oils – Levington Agricultural report.
13 Anon. January 29, 2006. (back)
New Study Makes case for Bioethanol. Euractiv.
14 Anon. April 4, 2006. (back)
Net Energy Balance for Bioethanol production and use.
U.S. Department of Energy – Energy Efficiency and Renewable Energy Biomass Program
15 www.lurgi.com/website/index.php?L=1 (back)
16 http://ecoport.org/ep?Plant=972 (back)
17 Corley, H. Est. 1999. (back)
New Technologies for Plantation Crop Improvement. Cranfield University.
18 Khalil, H. et al. 2000. (back)
The effect of various anhydride modifications on mechanical properties and water absorption of oil palm empty fruit bunches reinforced polyester composites. Polymer International. Volume 50, Issue 4 : 395 – 402.
19 AET Technologies (back)
International resource costs of biodiesel and bioethanol. UK Department for transport.
20 www.ecoworld.com/Home/Articles2.cfm?TID=380 (back)
21 Winnie, J. June 10, 2005. (back)
Major Biofuel projects.
About the Author: Louis Strydom is an expert in new venture creation and project finance with wide experience on projects in the developing world. One of Louis’ main projects for the last year has been conducting a pre-feasibility study and promotion of a 230,000 acre site for a Jatropha plantation and biodiesel refinery in Kenya. Previously he was Senior Vice President of Project Finance at Decillion – a company listed on the Johannesburg Stock Exchange. Other positions included Senior Economist managing the Credit Policy and Risk Management division of the Export Credit Insurance Corporation of South Africa. Prior to that he was a Director with Triumvirate responsible for Marketing and Consulting on Crisis Management. Louis also has extensive experience in short term insurance with American International Group on fire/casualty risks, niche products and political risks in Africa, Europe, the Middle East, UK and USA.