Challenges growing for biofuels

Sept. 30, 2009
“In the near term, the biofuels market looks like a train wreck. However, in the 10 to 15 year timeframe, the outlook remains very positive.” –Clint Wheelock, managing director, Pike Research Making biofuels a consistent, reliable source of energy for ...

In the near term, the biofuels market looks like a train wreck. However, in the 10 to 15 year timeframe, the outlook remains very positive.” –Clint Wheelock, managing director, Pike Research

Making biofuels a consistent, reliable source of energy for world transportation needs, yet one that also does not encroach upon the globe’s food supplies, is becoming an even tougher goal; a goal that is, at least in the short haul, increasingly viewed as unattainable.

Yet the jury is still out on whether there is no future in biofuels, be they cellulosic ethanol, renewable diesel, biomass-to-liquids (BTL) or Fischer Tropsch liquids made from feedstocks such as agricultural or municipal solid wastes, grasses, woods, waste paper and algae. According to a new study released today from Hart Energy Consulting, despite a number of key issues such as land use and competition for feedstocks supplies for traditional food and feed uses, global use of biofuels is expected to more than double between now and 2015.

The firm’s global analysis reports that the U.S. is leading that expansion in biofuel use, with a growth of total biofuels use of more than 35%. Brazil will grow domestic supplies by 30% and more than double export volume. Indonesia and Malaysia will more than double production of palm oil biodiesel, while Germany will remain the largest producer of biofuels in Europe, Hart noted in its report.

Yet despite major public policy interest in next-generation biofuels, actual commercial growth in the production and use of these fuels between 2009 and 2015 is projected to remain behind expectations, according to Hart. It found that out of the approximately 170 next-generation biofuels projects around the world that are in some stage of development (operational, under construction or proposed), only 30% of those are actually expected to be operating between now and 2015, with most of those only in the pilot project stage.

Moreover, Tammy Klein, executive director of Hart’s Global Biofuels Center and this study’s leader, pointed out that government mandates set that require next generation biofuels will not be met, particularly in the U.S.

“The economics of ethanol and biodiesel are not yet competitive with petro fuels, and governments have pulled back some of their support,” noted Clint Wheelock, managing director at Pike Research, in a similar analysis of the global biofuels market released back in July.

He stated the widespread excitement surrounding biofuels is being tempered somewhat by its many challenges, which include: limited availability of inexpensive feedstocks, ethical questions of food versus fuel, petroleum price volatility, global recession, and overcapacity of production. Yet Pike’s research also determined that, despite those significant challenges, the combined biodiesel and ethanol markets should reach $247 billion in sales by 2020, up from just $76 billion in 2010.

My compatriot Brian Straight noted in his own recent blog post on the subject of biofuels – specifically about bidodiesel – that several major issues need to be addressed: geographic depth, strong institutional funding and vertical integration along the supply chain, with “government support essential” for both U.S. and European suppliers.

Pike’s research indicates three key waves of next generation biodiesel development over the next several years. First, fuels based on waste greases will hit the market in 2010. Jatropha-based fuels will begin having a significant impact on the market in 2014. Then the third big wave hits: algae-based biodiesel, which will achieve commercial availability in 2012 and will have a deeper effect on the market beginning in 2016.

It’s a given, however, that much about the future of biofuels remains uncertain – especially when placed in the context of competition over arable land with food and feedstock. Figuring out the answer to that huge problem is what will truly unlock the potential of biofuels down the road.

About the Author

Sean Kilcarr 1 | Senior Editor

Voice your opinion!

To join the conversation, and become an exclusive member of FleetOwner, create an account today!

Sponsored Recommendations

Leveraging telematics to get the most from insurance

Fleet owners are quickly adopting telematics as part of their risk mitigation strategy. Here’s why.

Reliable EV Charging Solution for Last-Mile Delivery Fleets

Selecting the right EV charging infrastructure and the right partner to best solve your needs are critical. Learn which solution PepsiCo is choosing to power their fleet and help...

Overcoming Common Roadblocks Associated with Fleet Electrification at Scale

Fleets in the United States, are increasingly transitioning from internal combustion engine vehicles to electric vehicles. While this shift presents challenges, there are strategies...

Report: The 2024 State of Heavy-Duty Repair

From capitalizing on the latest revenue trends to implementing strategic financial planning—this report serves as a roadmap for navigating the challenges and opportunities of ...