Executives from DuPont Biofuels Europe, BP and British Sugar recently testified before a subcommittee (European Union agricultural and environmental policies) of the UK House of Lords as part of the subcommittee’s Biofuels Inquiry.
BP and DuPont have formed a partnership to develop, produce and market next-generation biofuels to help meet increasing global demand for renewable transport fuels. The two companies have been working together since 2003 and are now ready to bring their first product to market: biobutanol, which will be introduced in the UK in 2007 as a gasoline bio-component. (Earlier post.)
In response to questions from the subcommittee, Philip New from BP Fuels Management Group, Chris Carter and Karl Carter of British Sugar plc, and Michael Dolan of DuPont Biofuels said that one of the key requirements for establishing an economically and environmentally sustainable biofuels industry in the European Union is the establishment of a consistent EU-wide policy with clearly defined objectives.
The existence of different regulatory mechanisms as well as different protected duty tariffs creates a risk of Balkanisation and distorted trade flows, according to Philip New.
An example would be the consequences of Germany’s relative generosity recently in the matter of waiving a mineral tax on biocomponents as a whole, which has led to an influx of biocomponents into Germany, therefore making it more difficult for Member States bordering Germany to be able to advance their own policy goals.
That is a small example but nonetheless one that we fear could have consequences in the future, creating a Balkanisation of both biofuels markets and potentially fuels markets as a whole. To that end, ensuring that policy is consistent with the principles of a Single European Market appears to us to be quite important.
It is a particular concern when we think about the potential introduction of ethanol as a direct blended component in gasoline which requires modifications to the base gasoline specification. This could constrain the free flow of gasoline between Member States and have a distorting impact on the market price of gasoline country-to-country, a phenomenon we call boutique fuels, which is widespread in America and has contributed in part to some of the supply disruptions that the US has seen, particularly on the East Coast, so far this year.
I think it also plays as an extension of that point into ensuring that product specifications remain consistent across Europe and that product fungibility is something that can be offered consistently as well. It again supports the idea of a relatively efficient market. So, broadly, the importance of the EU in ensuring there is consistency of legislation and that that legislation is consistently applied seems to us to be very important.—Philip New
Achieving the EU biofuels target of 5.75% of energy content in fuels by 2010 will be “difficult, if not impossible,” according to New. This is partly due to inconsistent regulations, which, for example, limit the amount of ethanol and biodiesel that can go into their respective fuel pools to 5%.
Biobutanol, however, “has a capability to be used in existing fuels under existing regulations at a rate of ten per cent, as opposed to five per cent for ethanol,” according to Michael Dolan from DuPont.
If the EU were to change the oxygenate limits in its gasoline specification, which I understand is something it is considering at the moment, to 3.5 per cent, that would constrain ethanol to being a ten per cent component, but under those circumstances butanol could be present at up to 16 per cent. Given the higher energy content of butanol, effectively this would double the energy from renewable sources per litre of gasoline, so we see it as a quite important potential tool for enabling the acceleration of the use of bioproducts.—Philip New
Dolan noted that he expects cellulosic biofuels in the market within the 2011 to 2013 time-frame.
We do also look at other technologies, technologies where you would combine the ability to break down cellulose with the ability to ferment a biofuel in the same organism, what we would call consolidated bioprocessing.
That is something that we are very actively watching as a possibility going forward, but I think it is fair to say that our belief is that that technology is probably ten years out. It offers potential for advantages but I think the industry will start initially to use enzymes before we would look at more sophisticated technologies that would overlay on the enzyme technology.—Michael Dolan