At the 24th of April 2008 and at the premises of the Dutch province of Noord Brabant a meeting was held with regional producers of biodiesel and transportation companies with their own filling facilities. It was an initiative of the provincial government and E-Energy Market. The goal was to investigate the obstacles to be removed for the transportation companies to start using second generation biodiesel. This is made of residues, side products and waste.The transportation companies operate in a business environment with fierce competition and costs are therefore important. The price difference of biodiesel with fossil diesel is the most important obstacle. Apart from this, also technical and operational issues and their cost consequences play a role. At the end of the meeting the biodiesel producers committed themselves to make an offer that can compete with fossil diesel. 

Introduction

Biofuels are available at ever larger scale. Several countries have opened refueling stations. This review will analyze the concept of a biofuel in more details and try to summarize the pros and cons objectively. Some consider biofuels the ultimate solution to fight climate change and high oil prices, but is this a realistic view?

Vegetable oil, made of e.g. rapeseed or sunflower oil, is an alternative for diesel. Gasoline can be substituted by bio-ethanol, produced from sugar cane or wheat. Both diesel and gasoline can be mixed with vegetable oil or bio-ethanol. For example, all Shell gasoline contains two percent bio-ethanol, while Argos' five percent is even higher. The European Union has mandated that by 2010 5.75% of all transport fuels should be biofuels. Most cars can handle a share of  7 -10% biofuels without any further investment. Some countries, such as Belgium, are ahead of the EU legislation and have mandated a 2.5 percent biodiesel share.

The use of biofuels was particularly popular in Brazil in the mid 1980s. Because of declining oil prices and rising prices of sugar cane, the market for biofuels disappeared quickly in the late 1980s. In recent years the consumption of biofuels has increased quickly. Over 50% of cars sold in Brazil could take bio-ethanol as well as gasoline.

Advantages of biofuels

There are definitely advantages of the use of biofuels. They do not contain sulfur and other pollutants. For the consumer, there are still important disadvantages. Current engines are not suitable for pure biofuels. Biofuels are more viscous than e.g. diesel, which requires a system that heats the fuel before the ignition starts. In Germany, the cost of this transformation is about € 800. However, the same mechanism for a gasoline car is much more expensive.

An alternative for this is the purchase of a flexifuel car. This is a car that is suitable for gasoline, pure bio-ethanol, or any mix of the two. Ford already sells two types of flexifuel models, at an additional cost of about € 900. In the Netherlands, quite a few people experiment with mixing biofuels and gasoline or diesel.

The extra cost for flexifuel cars is high, but the payback period is short. The main reasons are tax breaks for biofuels adopted by various governments. Many biofuels industry organisations call for higher or extended subsidies, claiming that the market for biofuels is much larger than most government programs can accommodate. In many European countries, the future of these subsidies is uncertain. In Germany, for instance, there are plans to reduce the current incentives.

Including subsidies, the cost of biofuels can be substantially lower than the price of diesel or gasoline. Let's take the Netherlands as an example. The subsidised price of vegetable oil or bio-ethanol ranges from € 0,70 tot € 1,00 per liter, as opposed to € 1,03 for diesel and € 1,38 for gasoline. A price difference of € 0,50 per liter implies that the € 900 price difference between a traditional and flexifuel car can be earned back after 1800 liters of fuel. At a fuel efficiency of 15 kilometers per liter, it takes 27,000 kilometers to break even. A major disadvantage is the limited availability of biofuels at refueling stations. Germany is an exception with 700 biofuel stations.

Disadvantages of biofuels

Biofuels are heavily debated at the moment. At the gas station, the fuel looks nice and clean, but one has to consider the entire production chain to judge its environmental and economic soundness. We highlight the three main issues with current biofuel production: limited CO₂ reductions, land and water use and destruction of wild habitats.

Limited CO₂ reductions

Many people believe that the production of biofuels is a CO₂-neutral process in which organic matter grows (absorbing CO₂ from the atmosphere), is turned into a fuel, and combusted (releasing the same amount of CO₂). This, however, completely ignores that growing the biomass is a very CO₂ intensive process because of the use of machinery and fertilizer. Some estimate that for each tonne of CO₂ released during combustion, about 0.75 tonnes of CO₂ were used in the production process. This largely undermines the often-mentioned carbon advantages of biofuels. Some experts, such as chemist Richard Templer of the Imperial College London, even claim that the combustion of biofuels is as CO₂ intensive as the combustion of diesel. The only remaining advantage is the reduced energy dependence on foreign oil imports.

Land and water use

The first generation biofuels, e.g. growing crops to turn into fuel or electricity, need a lot of land to produce a liter of fuel or a megawatt of electricity. In densely populated countries such as the Netherlands, there is by far not enough space to grow biofuels for the whole economy, even if the entire land surface would be used. This also means that biofuels have to compete with alternative land uses such as food production.

Currently, water constraints in agriculture are getting more and more severe. The introduction of large-scale biofuels would require an immense amount of water. Some experts say that water availability may severely limit further agricultural and economic activity in the future, including the use of biofuels.

Destruction of wild habitats

As explained above, growing biomass increases the demand for agricultural land. A very alarming phenomenon is that many tropical countries, such as Indonesia, have shown sharply increased deforestation rates as palm oil plantings are being created. This eliminates much of the CO₂ advantages, because of the CO₂ that is released when forested areas are burnt or cut down. Even worse, pristine rain forests and their ecological functions are being destroyed. Recently, this phenomenon has attracted more policy attention. This is important, because many uninformed consumers would probably not have the feel-good experience when purchasing biodiesel if they really knew the entire production chain...

All these reason indicate why the current "first generation" biofuels does not seem feasible on a large scale. A promising development is the research on a "second generation" biofuels. This technology extracts energy from cellulose, which would make it possible to get much more energy from a single plant and hence reduces the need for additional farmland. This would decrease the environmental impact of biomass production. This technique is still fledgling, but EnergyPortal will keep you posted on the developments in this area.