Growth industry

The main question facing the future of biofuels is not whether they can work, but how they might be developed further.

Any large-scale development remains stifled by numerous issues. The International Energy Agency (IEA) has identified several areas requiring extended research. But while there is a need to better quantify the various benefits and costs of biofuels, there is sufficient evidence to confirm that these fuels could represent serious alternatives to conventional ones or, at the very least, complement existing transport fuels.

Over the next decade, the cost of producing advanced biofuels such as those from lingocellulosic feedstocks — the green parts of plants — may drop noticeably. In fact, prices may fall to below the costs of producing conventional biofuels since biomass feedstocks, including crop and forestry wastes, may be much cheaper due to dedicated energy crops such as grasses or trees that can be produced on marginal land.

From a greenhouse gas point of view, cellulosic ethanol is good news, since it is almost completely carbon neutral. The cost of reducing greenhouse gases from these advanced biofuels may drop to $50–$100 (£27–£55) a tonne over the next decade — much lower than today’s cost of using grain crops.

It is in the developing world that the outlook for production of biofuels appears most promising. The cost of producing ethanol from sugar cane in Brazil is now close to the country’s cost of petrol on a volume basis. The warm, sunny climate encourages relatively high feedstock yields per hectare.

Labour costs are low, and efficient co-generation facilities producing both ethanol and electricity have been developed. Production costs continue to drop with each new conversion facility, which currently provide CO2 reductions at a cost of $50 a tonne or less.

However, there is a mismatch between countries where biofuels can be produced at lowest cost and those where demand is rising most quickly. If biofuel needs of IEA countries over the next decade were met in part with a feedstock base abroad, then biofuels cost could drop substantially.

Diversifying biofuel sources could also benefit energy security, as a chief source of uncertainty is the weather. Heavy rain or sudden drought can damage the plants that yield these fuels, so planting a variety of crops over a large area could help protect against loss.

New conversion technologies are being developed which aim to make better use of the entire plant, rather than just the starch or sugar components. In addition to improving the economic and environmental characteristics of the fuel, this will substantially increase the potential feedstock supply. It will allow biofuel crops to be grown in new areas — such as grasses on pastureland — reducing competition with food crops.

These new technologies, including conversion of lingo-cellulose to ethanol and conversion of any type of biomass to diesel fuel via thermochemical conversion, have the added benefit of requiring very little fossil fuels during any phase of development, so net greenhouse gas emissions are very low.

Lew Fulton is transport energy specialist at the IEA, a sister organisation of the Organisation for Economic Co-operation and Development. This is an extract from an article on the viability of biofuels in the May issue of OECD Observer. © OECD/IEA