The BioFuels Market

Biofuels are liquid fuels produced from biomass feedstocks through a number of chemical processes.
The two main biofuels on the market are:

  • Ethanol and its derivative ethyl tertiary butyl ether / ETBE produced from plant sugar
  • Biodiesel produced from vegetable oil

Other liquid biofuels have been researched but have not entered large scale commercial production. Some examples include biomethanol and its derivative MTBE (methyl tertiary butyl ether) and bio-oil or pyrolysis oil produced by the advanced conversion of a biomass feedstock.

Biodiesel and ethanol are used as substitutes for fossil fuels in transport. Other substitutes for transport include hydrogen fuel cells and unconventional oil. Hydrogen fuel cells are not ready to enter large scale production as there are concerns over their safety, and the infrastructure needed is not yet in place.

An advantage of biofuels is that they can be directly substituted for fossil fuels in the existing transport network, in particular the pipe distribution network. They also have other benefits that make them attractive as a fuel substitute:

  • Existing cars can run on low blend ethanol, or can run with minor modification
  • They can be produced locally from a wide range of feed stocks
  • They can reduce the reliance on fuel imports
  • They reduce the need to stock pile fossil fuel reserves potentially saving $1 billion per annum globally
  • They enable farmers to diversify production and avoid crop stock piling
  • They are renewable and have fewer carbon dioxide emissions than their fossil fuel counterparts.

The production process for first generation biofuels:
The main feedstock in Brazil, the biggest ethanol producer, are sugar cane, beet, sorghum and maize. In the United States, most of its ethanol is produced from the hydrolysis or corn and biodiesel from soy.

In EU, typical feedstock for biodiesel are mainstream agricultural crops such as oilseed rape in Northern Europe and sunflower oil in Southern Europe, and for ethanol/ETBE, wheat and sugar beet in Northern Europe and sweet sorghum in Southern Europe.

All biofuels are sold as blends with gasoline, or as pure fuels, and are denoted by a letter, E for ethanol and B for biodiesel, and a number indicating the percentage of biofuels in the mix.

Currently, the biggest area of research is on second and third generation biofuels which use feedstock that are not grown on agricultural land, and thus don’t affect food prices. They are also not affected by commodity prices and feedstocks are usually available at no or low cost. Second generation biofuels generally reduce greenhouse gas emissions more than first generation feedstocks, and comply with EU sustainability criteria for biofuels.

Production processes for these fuels are generally more complex than for primary-generation biofuels. The technology to produce second-generation fuels is only in its infancy and there is more potential for massive cost reductions than for first generation feedstocks.

The most promising feedstocks for second-generation biofuels are waste oil, se cellulose, jatropha and algae. Biofuels investment is shifting from first-generation biofuels produced on a small scale to large-scale production of second-generation fuels, with incumbents in the oil industry collaborating with SMEs in both the development and production process.

Along with transport fuels various high value products can be produced from biofuel feedstocks. Key high value feedstocks include amino acids, vitamins, citric acid, enzymes, sweeteners and lactic acid. For second-generation feedstocks these high value products may be an important revenue stream to offset the high costs to produce second- generation biofuels.

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