NNFCC market review biofuels issue seven october 2012

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Welcome to the October issue of our biofuels market review. This month, the European Commission released their proposals to limit the use of food crops in biofuel production and encourage the market for a new generation of „advanced‟ biofuels that do not create additional demand for land.

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NNFCC market review biofuels issue seven october 2012

  1. 1. NNFCC Market Review Biofuels Issue Seven, October 2012E While at the same time there remain serious ach month we review the latest question marks over how the government will announcements and news from deliver the remainder of the 10 per cent EU across the global biofuels market. transport fuels target using „advanced‟This service is exclusively for our business biofuels made from non-food feedstocks suchmembers. as algae and straw.Foreword Industry was forewarned about the changes, when a leaked document was published lastWelcome to the October issue of our biofuels month. The proposals have remained largelymarket review. This month, the European unchanged, but there was some respite forCommission released their proposals to limit the biofuels industry as the Commission madethe use of food crops in biofuel production a u-turn on plans to include indirect land useand encourage the market for a new change emissions in sustainability accounting,generation of „advanced‟ biofuels that do a change which will has been welcomed bynot create additional demand for land. the industry and will chiefly benefit first generation biodiesel producers. However,The plans include a 5 per cent cap, by others like Oxfam criticised the decisionenergy, on using food crops in producing saying the proposals “don‟t go far enough”.transport fuel in the EU. By putting a cap onthe use of food crops, the Commission has Read on for all the latest biofuels news.effectively announced the slow death of theEuropean first generation biofuels market. HighlightsBiofuels currently account for around 4.5 percent of transport fuel used in the EU; much of Page 2 Market Newswhich comes from food crops. Page 3 Crop-based BiofuelsCouple this with the future increase in crop- Page 4 Advanced Biofuelsbased biofuel production capacity alreadyplanned and the fact that most operational Page 6 Aviation Biofuels Newsbiofuel facilities are not running at fullcapacity, it is likely the 5 per cent cap will be Page 7 Commodity Pricesreached within the next twelve months. Page 8 Events NNFCC Market Review, October 2012, Page 1 of 8
  2. 2. Market stock changes caused by indirect land-use change in the FQD. This will be used to calculate the life cycle greenhouse gas emission savings from biofuels and bioliquids, but will not be used in the sustainability accounting rules for biofuels. However, the Commission has confirmed it will review the effectiveness of the proposed ILUC measures and, if appropriate, will produce a legislative proposal for introducing estimated indirect land use change emissions factors into the appropriate sustainability criteria toEuropean Commission reveal plans to be applied from 1st January 2021.limit use of food crops in biofuelproduction In addition, the Commission intend to increase the minimum greenhouse gas savingThe European Commission have announced threshold for biofuels produced in newchanges to the Renewable Energy Directive installations with effect from 1st July 2014 inand Fuel Quality Directive (FQD), with the aim order to improve the overall greenhouse gasof limiting the use of food crops in producing balance of the biofuels and bioliquidsbiofuels, while encouraging the market for consumed in the EU as well as discouragingadvanced biofuels made from feedstocks further investments in installations with lowthat do not create additional demand for greenhouse gas performance.land. Click here for more information.Under the proposals the amount of foodcrops being used in the production of biofuels Groups ask Congress leaders to backwill be capped at just 5 per cent of the final Renewable Fuel Standardenergy consumption of each European Unionmember state in 2020. Currently biofuels A coalition of US biofuel trade organisationscontribute around 4.5 per cent of the final have urged House and Senate leaders „toenergy consumption in the European Union, stay the course‟ on the Renewable Fuelmeaning there is little scope for further Standard (RFS). A drafted letter tells thedevelopment in this area. Environmental Protection Agency that a waiver of RFS requirements is neitherMember states are required to generate at „desirable nor warranted‟.least 10 per cent of their final energyconsumption in transport from renewable The letter provides evidence to demonstratesources in 2020. To make up the shortfall, the that waiving the RFS will have a minimalCommission announced there would be an impact on grain prices, weaken the US"enhanced incentive scheme" to further commitment to renewable fuels thuspromote advanced biofuels made from increasing gas prices, would cool investmentfeedstocks that do not create an additional in advanced biofuels and destabilise ademand for land. These fuels, made from cornerstone of the US economic recovery.feedstocks like algae and straw, will count for Any decision on a RFS waiver is expected todouble or even quadruple towards targets. come by the middle of November.There will also be greater emphasis put on Click here for more information.reporting estimated emissions from carbon NNFCC Market Review, October 2012, Page 2 of 8
  3. 3. Crop-Based Biofuels There was also caution looking to the future; with almost all gasoline in the US already blended with 10 per cent ethanol (E10), the maximum level approved for use in all cars and light trucks, ethanol use is facing a blend wall unless higher percentage ethanol blends can achieve significant market penetration. While the US Environmental Protection Agency (EPA) has approved a 15 per cent ethanol blend (E15) for vehciles made after 2001, concerns remain about vehicle warranties, liability for misfueling and infrastructure costs, which could limit E15 use. Ethanol share of US gasoline consumption, 2009-2012. Source: EIA Anticipated growth in the use of cellulosic ethanol has failed to materialise, says the report, and there was no production of cellulosic biofuels in 2010 or 2011, while production of cellulosic biofuels in 2012 is likely to be well below targets. Click here for more information. German bioethanol business records positive yearly results Diesel share of US distillate consumption, 2009-2012. Source: EIA German bioethanol producer CropEnergies has posted new record revenues for its firstUS report highlights biofuels trends half financial results. Company revenues grewand issues to €319.9 million, an increase of 16 per cent from the same period last year (Mar-Aug). ItsThe US Energy Information Administration operating profit also rose by 28 per cent tohave published their biofuels issues and trends €37.2 million and its net financial debt wasreport. According to the report biodiesel use reduced by €37.3 million to €121.1 million.grew from less than 1 per cent of US distillate CropEnergies attributed the jump in profits toconsumption at the start of 2009 to around 3 its “diverse supply chain”, which providesper cent in August 2012. Ethanol use grew bioethanol and vegetable proteins for thefrom 7 per cent of US gasoline consumption food sector.to nearly 10 per cent over the same period. Click here for more information.The report reveals that in the 2010/11, 40 percent of the US corn crop and 14 per cent of New investment to double Bangchaksoybean oil production was used to produce biodiesel outputbiofuels and other products, including animalfeed. However, a serious drought in the Thailand-based oil refiner Bangchakmidwestern US during summer 2012 lowered Petroleum says it is set to invest THB1.2 billioncrop production estimates, resulting in higher (€30.2 million) in two biodiesel projects.prices and a reduced forecast for biofuels Bangchak will invest two thirds of the moneyproduction for 2012/13. in doubling the capacity of it Ayutthaya NNFCC Market Review, October 2012, Page 3 of 8
  4. 4. biodiesel plant to 600,000 litres per day and tonne of petrol every day, within two yearsthe remaining investment will go into building and a refinery scale facility within 15 years.a palm oil crushing facility in Rangsit. It isbelieved that downstream biodiesel Click here for more information.production will start in 2013 beforecommercial operations begin in 2014. DuPont contracts Fagen to build commercial cellulosic ethanolClick here for more information. biorefinery DuPont has selected Fagen to build one of the world‟s first commercial-scale cellulosicAdvanced Biofuels ethanol biorefineries in Iowa, US. Fagen has constructed more than 85 ethanol plants and recently entered into collaboration with Butamax Advanced Biofuels, a joint venture between BP and DuPont, to retrofit ethanol plants to produce biobutanol. DuPont have already purchased land adjacent to their existing Lincolnway Energy ethanol plant to build the refinery; which they Source: Air Fuel Synthesis say will enable synergies in energy and logistical management.British engineers produce petrol fromair technology Click here for more information.At this month‟s Institution of Mechanical TMO Renewables signs feedstockEngineers Conference, UK-company Air Fuel contract with Brazilian sugar andSynthesis presented their new “petrol from air”technology concept. The technology works ethanol businessby taking sodium hydroxide and mixing it withcarbon dioxide from the atmosphere before During a recent UK business delegation to„electrolysing‟ the sodium carbonate, so that Brazil led by Prime Minister David Cameron,it produces pure carbon dioxide. Hydrogen is TMO Renewables signed a Letter of Intentthen produced by electrolysing water vapour with Copasucar, the largest Brazilian sugarcaptured with a dehumidifier. The pure and ethanol commercialisation operationcarbon dioxide and hydrogen are then with integrated production.combined to produce methanol which ispassed through a fuel reactor, making petrol. With the support of the Prime Minister, TMO presented its waste to ethanol technology toThe £1.1m project, in development for two industry leaders in Brazil; the second biggestyears, is funded by a group of unnamed producer of ethanol and an expandinginvestors who believe the technology could market for next generation ethanol. Theprove to be a cost-effective way of creating agreement secures a 25 year contract forcarbon neutral transport fuel. Company 400,000 tonnes per year of bagasse (leftoverofficials say they have produced five litres of sugarcane residues), to support a 10 million„drop-in‟ petrol in three months from a small litre per year ethanol refinery to be builtrefinery in Teesside, but hope to build a larger alongside the Copasucar Sugar Mill.plant, which could produce more than a Click here for more information. NNFCC Market Review, October 2012, Page 4 of 8
  5. 5. as a solution to finding a reusable catalyst for converting biomass into fuel. While scientists are now able to produce these nanospheres in ways that control the size of the pores and the type and position of the catalytic groups, understanding precisely how these chemical reactions take place is allowing further fine-tuning and predictable Source: Ensyn control of catalytic processes.Ensyn and Fibria establish strategic A team of scientists at Ames have now determined that though these particles werealliance for the production of fuels designed with hollow passages specifically toand chemicals from cellulose maximise the surface area available for chemical reactions, these reactions don‟tEnsyn and Fibria Celulose have announced happen uniformly across the entire surfacethe creation of a strategic alliance, which area of the particle.includes the establishment of an equally-owned joint venture for the production of This issue prompted the Ames team tocellulosic liquid fuels and chemicals in Brazil, develop a new model which allows betteras well as a US$ 20 million equity investment in predictions of how these complex systems willEnsyn Corporation by Fibria. behave. Consequently, researchers found that increasing the pore size of the spheres byFibria are one of the world‟s largest pulp less than one nanometer improved theproducers, while Ensyn have developed the catalytic activity more than twenty times.Rapid Thermal Processing™ pyrolysistechnology, which converts cellulosic Click here for more information.biomass into bio-based fuels and chemicals.The US$20 million investment will provide Fibria New technology using ionic liquids towith ownership of approximately 6 per cent ofEnsyn and also provides Fibria certain rights, break down cellulose could pavewhich, if exercised, would allow Fibria to way for cheaper biofuelsinvest additional capital and increase itsholdings to as much as 9 per cent of Ensyn. Hyrax Energy and the Wisconsin Alumni Research Foundation have agreed aClick here for more information. licensing agreement for a new method of producing bio-based chemicals and fuelsNew research on nano-catalysts that promises to accelerate commercial development of the technology.could improve processes for refiningbio-based fuels and chemicals The process uses ionic liquids to break down cellulosic or non-food plant biomass withoutScientists at the US Department of Energy‟s using enzymes or costly pre-treatment. The(DOE) Ames Laboratory have announced company‟s process creates fermentablemajor progress in the refining process for bio- sugars, which can be converted into a varietybased fuels and chemicals using of important chemicals, including biofuelsnanospheres. These tiny spheres of silica, and bioplastics.embedded with catalytic groups and ahoneycomb of pores, have been developed Click here for more information. NNFCC Market Review, October 2012, Page 5 of 8
  6. 6. Biocaldol cease trading UK-based next generation biofuel specialists Source: MJ Daly, USUHS Biocaldol and their R&D business Bioconversion Technologies Limited went intoDeinove create bacteria strain that administration on 14th Sept 2012 and havetransforms biomass into next ceased trading. Biocaldol developed micro- organisms, custom-made process design andgeneration bioethanol engineering for the production of next generation biofuels, animal feed and otherFrench biotechnology company Deinove biomass-derived products. No reason hashave announced that its R&D team and its been given for the closure.partners in the Deinol program have isolatedand optimized a strain of Deinococcus Click here for more information.bacteria able to generate ethanol fromwheat-based biomass. With production of analcohol content of more than 3 per cent,Deinol exceeded its goal for this proof ofconcept milestone. Aviation BiofuelsDeinove‟s Deinococcus bacteria candegrade complex biomass residues intosimple sugars and convert them into ethanol,all in a single process and without additives(such as enzymes, yeast or antibiotics). Thissuccessful milestone triggers the payment of€1.15 million to Deinove by the French ministryof industry.Click here for more information.Large-scale production of algalbiofuels poses sustainability concern Pilot-scale reactor, Source: ARAScaling up the production of biofuels made New biojet fuel test on course infrom algae to meet at least 5 per cent – Octoberapproximately 39 billion liters – of UStransportation fuel needs would place US-based Applied Research Associates andunsustainable demands on energy, water, Chevron Lummus are working with Agrisomaand nutrients, says a new report from the Biosciences, the National Research Council ofNational Research Council. Canada (NRCC) and the US Air force Research Laboratory to evaluate andHowever, these concerns are not a definitive ultimately produce a 100 per cent drop-inbarrier for future production, and innovations biojet fuel. Carinata seeds form the basis ofthat would require research and the new RediJet fuel, which will be tested in adevelopment could help realize algal NRC Falcon-20 twin engine jet at the end ofbiofuels full potential. October in Ottawa, Canada.Click here for more information. Click here for more information. NNFCC Market Review, October 2012, Page 6 of 8
  7. 7. Abu Dhabi biojet fuel project step Sustainable jet fuel will then be producedcloser using sea water pumped into agricultural ponds that contain local shrimps and sea bream. The waste water from those ponds willA demonstration farm at the Masdar Institute also be used to irrigate local fields.of Science and Technology (MIST) is closer tofinding a home. MIST, in collaboration with the This research is being supported by EtihadAbu Dhabi Urban Council and Western Airways, Honeywell, Safran and Boeing whileRegion Municipality, is evaluating several the demonstration farm will be funded by theoptions to acquire 200 hectares of land by Abu Dhabi Government.the end of this year. Click here for more information.Commodity PricesArrows indicate rise (↑), constant (–) or fall (↓) from previous month. Price, US$/US gallon Item Sep 07 Sep 12 % Price increase Diesel (NY) 2.32 ↑ 3.23 39.18 Unleaded petrol (NY) 2.10 ↑ 3.27 55.57 New York Harbour petrol and diesel prices, source www.indexmundi.com Price, US$/US gallon Item Oct 11 Oct 12 Expected 2012 avg. Index value (2000=100%) Jet Fuel (Global) 3.029 ↑ 3.165 ↑ 3.076 363.4 Global jet fuel prices, source www.platts.comExpected average fuel price for airline industry in 2012 is provided by IATA please see www.iata.org 2012 aviation fuel costs estimated to cost aviation industry $31 billion on 2011 fuel costs Bio jet fuels 2010 cost: $6.39-6.94/gallon (likely to cost $2.22/gallon by 2030), source Indian Oil Price, US$/US gallon Item Nov 12 Dec 12 Jan 13 Feb 13 Ethanol Futures (CBOT) ↑ 2.406 ↑ 2.390 ↑ 2.374 ↑ 2.361 Ethanol Futures (NY) ↑ 2.490 ↑ 2.475 ↑ 2.460 ↑ 2.450 Chicago and New York ethanol futures, source www.cmegroup.com Item Price, €/tonne Oct 12 Ethanol Spot (FOB T2) ↓ 665.00 Biodiesel Spot (FAME 0°C, CFPP FOB ARA) ↓ 1079.25 Biodiesel Spot (SME, CIF ARA T2) ↓ 1099.25 Biodiesel Spot (PME, CIF ARA T2) ↓ 976.75 Biodiesel Spot (RME, FOB NWE) ↓ 1234.25 European ethanol and biodiesel spot price, www.kingsman.com NNFCC Market Review, October 2012, Page 7 of 8
  8. 8. Biofuels: the Renewable Transport FuelEvents Obligation, progress on adoption andF.O. Lichts World Ethanol & Biofuels the next generation, 08 Nov 2012 in2012, 05-08 Nov 2012 in Munich, London, UKGermany www.westminsterforumprojects.co.uk/forums/web.agraevents.com event.php?eid=450Leading event for the global biofuels industry This seminar will be a timely opportunity towith 70+ speakers, 700+ delegates from 45+ assess the development of biofuels in the UK‟scountries, 40 different sessions, social events energy mix, the impact of the recentlyand structured networking over four days. amended Renewable Transport Fuel Obligation (RTFO) and development inNNFCC Head of Biofuels and Bioenergy, Dr advanced biofuels.Geraint Evans, will be speaking on the futureof advanced biofuels. NNFCC CEO, Dr Jeremy Tomkinson, will be speaking at 12.00 on the advancements inLife Cycle Assessment Workshops, the development of advanced biofuels.07-08 Nov 2012 in York, UKwww.nnfcc.co.uk/events Rushlight BioBriefing: The Future Prospects for Biofuels, 29 Nov 2012 inTwo workshops have been developed to London, UKprovide a basic understanding of LCA and www.rushlightevents.com/index.php/em/evehow to set about doing one. The first nt/action/view/frmEventID/3/frmPageID/190/workshop covers the principles of LCA,requirements, problems and issues. The The main focus of this event is on the futuresecond provides a „hands on‟ opportunity to prospects for biofuels; looking at thelearn to carry out an LCA. The workshops can opportunities, regulatory regime andbe taken together or separately. technical challenges facing the industry. Credits and Disclaimer NNFCC Market Review is edited by Dr Matthew Aylott for NNFCC members. Feedback is welcome. The Review has been compiled in good faith and NNFCC does not accept responsibility for any inaccuracies or the products or services shown.NNFCCThe Bioeconomy Consultants NNFCC, Biocentre, Phone: +44 (0)1904 435182 York Science Park, Fax: +44 (0)1904 435345 Innovation Way, E: enquiries@nnfcc.co.uk Heslington, York, Web: www.nnfcc.co.uk YO10 5DG. NNFCC Market Review, October 2012, Page 8 of 8

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