UFOP position: The perspective of 2nd generation biofuels in the context of the amendment of the RED/FQD
Since its founding in 1990, UFOP (Union zur Förderung von Oel- und Proteinpflanzen e.V.) has been pursuing the target of making biodiesel made from rape into a more effective alternative in terms of volume – and hence also in terms of cultivated acreage. Within the framework of the first stage of reformations to the Common Agricultural Policy, farmers in the European Union (EU 15) had to leave an average of 10 per cent of their arable land unused. On condition that verification is provided of non-food utilisation, it was permitted to grow rape, among other things, on this land as a renewable resource for biodiesel production. Today, biomass raw material production is embedded in the general market situation – since expiry of the energy crop premium, market and sales differentiation (contract cultivation) no longer takes place.
However, UFOP has pointed out to policy-makers and the general public the limited volume potential resulting from crop rotation restrictions and land available for cultivation. Right from the start, UFOP propagated a substitution potential of max. 7 per cent measured against German diesel fuel consumption (2013: 34 Mio. Tons). With the inception of the Renewable Energy Directive (RED), international regulations were finally provided for sustainable raw material cultivation as a prerequisite for market entry and hence for set-off with respect to a target or funding framework (quota deduction or tax relief). In consequence, the available volume potential was drastically increased within the framework of international competition (imports from third-party countries: South America and Asia). The special situation here is that as a result, sustainability requirements in accordance with EU law also have to be introduced in third-party countries. This “level playing field” that has been created by the EU biofuel policy in the form of defined minimum sustainability standards for biomass cultivation is the real success story of the 1st generation biofuels.
The current suggestions of the Commission and ultimately the Greek Council Presidency will have to be evaluated against this historic and current situation if biofuels made from waste material are to determine the volume development in the biofuel market after 2020. One does not have to be an expert to realise that the potential of these raw materials is insufficient for a substitution policy, or that currently, in the case of the 2nd generation, such a potential is not economically feasible. With great “expectations”, press releases were communicated about the commissioning of small plants – generally with an annual production of 5,000 tonnes, max. 20,000 tonnes. Most of these were plants that produce bioethanol. Bioethanol can be cost-efficiently imported from third-party countries with a high potential for reduction of greenhouse gas – this new type of “race” will commence in Germany on 1st January 2015 with introduction of the greenhouse gas quota. With cessation of the sugar quotas in the EU from 2017, the direction in which sugar prices will develop cannot currently be estimated. However, it is clear that a new market price will quickly become established. In contrast, in the case of straw and other waste materials, e.g. from forestry management, comparably larger uncertainties have to be taken into account, especially as these energy carriers are in competition with direct energy use (heating oil substitute, biomass heating and power stations, etc.).
The development path is still comparatively long and up until now has focused on ultimately replacing petrol – the demand for which is also falling strongly. Therefore the question is interesting as to how the necessary venture capital is to be raised for production facilities which, measured against existing large production facilities for 1st generation biodiesel or bioethanol, will cost several times as much without production of an also economically-valuable protein foodstuff as a co-product, which is also of great importance in the sense of reducing the investment risk. The direction predominantly taken by the share prices of existing biofuel plants is likely to be known to all potential investors or shareholders. Would a call for investment grants be heeded? – Probably not, because even the member states are apparently taking a critical view of the level of development and at least the medium-term perspectives of 2nd generation biofuels. This is clarified by the current discussion about the suggestion by the Greek Council President, which has recently been discussed in Brussels by the permanent representatives committee (COREPER) – see biofuel international, industry news, 28th May 2014. As a compromise for mandating, the committee agreed upon 0.5 per cent as an indicative target, wherein no sub-targets at all have to be specified by member states if they supply appropriate justification (priority to eMobility).
It is clear that the 2nd generation biofuels do not represent a way out of the “iLUC discussion”. Ironically, it is agriculture itself that indicates the limited volume potential e.g. in the case of straw, and the inconsistency of including a waste material with a greenhouse gas standard value of “zero” in the raw materials scale (see Annex V RED) in the greenhouse gas balance whilst at the same time, according to the Commission’s suggestion, the biofuels produced therefrom are taken into consideration in terms of target attainment with a value of Factor 2. In connection with a climate and resources protection policy justification, a “waste material – resource policy” could not be more contradictory. Treating a biofuel made from waste material as if this waste material was “still there” contradicts the fundamental ecological balance regulations. On the basis of a mass balance, expenditure on fertiliser, fuel requirements for cultivation of the land, etc. have to be divided up. With a grain/straw ratio of 1:1, this means that 50 per cent of the greenhouse gas emissions occurring during biomass production result from the straw (see: https://www.ufop.de/english/news/dbfz-check-calculation-method-and-standard-values-of-the-greenhouse-gas-balancing-for-biofuels-from-residual-materials/). The Commission and the Joint Research Centre are currently evading this discussion. The economic situation of 1st generation biofuel producers should be seen as a warning that the low margins that are currently being attained and that will be attainable in the future are no incentive to invest in the 2nd generation. This is currently occurring in the form of individual projects to gauge options for processing technology, commercialisation of the plant technology in the same way as biodiesel and conventional bioethanol production is not foreseeable.
Moreover, the use of raw materials clashes with the “competitor” biorefinery strategy. In some member states, the subject of bio-economy – and in particular the question of alignment of the biorefinery strategy – is being promoted. Hence in the event of success, the use of biofuel would compete for the higher price segment of material utilisation of these raw materials. The subject of 2nd generation biofuels is being overrated in many specialist conferences. What essentially is missing is the implementation of a project with the goal of realising a large plant. Within the framework of this project, it is not a matter of technological development, but rather more about the readiness to secure, in the long term and above all sustainably, the appropriate biomass potential at appropriate prices from specific regions. In the case of the failed project undertaken by the German company Choren in Saxony some years ago, it became clear that the catchment area of the biomass required by the large plant was greatly underestimated. Inasmuch, it can be hoped that in this sense, policy-makers will develop an overall strategy together with the affected economic stakeholders and the Commission will also comprehend the regulations of the Renewable Energy Directive in this way and conduct dialogue with the affected business associations – there are enough subjects.