2010/09/13

Fwd: Biofuels Could Replace Half of EU Gasoline by 2020, Study Says

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Biofuels Could Replace Half of EU Gasoline by 2020, Study Says
2010-09-14 06:00:00.0 GMT


By Alex Morales
Sept. 14 (Bloomberg) -- Biofuels made from municipal trash
and plant waste rather than food crops could replace more than
half of gasoline use in the European Union by 2020, Bloomberg
New Energy Finance said.
The 27-nation bloc could produce 90 billion liters (24
billion gallons) of next-generation ethanol in 2020, or about 65
percent of predicted fossil gasoline consumption, the London-
based research group said today in a study. From 2013, at least
100 refineries a year could be built in the region, according to
the report. The EU currently has no commercial factories that
refine biofuels from plant waste.
European agriculture "can benefit from a new bioenergy
industry as farmers will have an extra revenue source,
increasing the euros-per-hectare ratio for every piece of
land," said Roberto Rodriguez Labastida, a co-author of the
report.
While the EU industry could be worth an annual 31 billion
euros ($40 billion) by 2020, the bloc has no target for making
next-generation biofuels, and a business-as-usual approach would
see revenues of 522 million euros, 1.7 percent of the potential,
Rodriguez said. European companies making ethanol include
Spain's Abengoa SA and CropEnergies AG of Germany.
Today's report was commissioned by Novozymes A/S and Royal
DSM NV, both of which produce enzymes used to catalyze reactions
during the production of second-generation biofuels. Novozymes
Chief Executive Officer Steen Riisgaard said in a July interview
that Europe is lagging behind the U.S., China and Brazil in
developing fuels from plant matter.

EU Lagging

The main barrier to the growth of the industry is an
"uncertain policy environment with no clear incentives,"
according to the report, which said the EU's first priority
should be to bring in a U.S.-style mandate for the bloc to
derive a certain percentage of transport fuels from the fuels.
The union has a target of deriving 10 percent of
transportation fuel from biofuels by 2020. It has no target for
next-generation ethanol, which doesn't use food crops. Under a
2007 law, the U.S. is required to use 36 billion gallons of
ethanol in 2022, 16 billion of it coming from next-generation
biofuel.
"With the current regulatory framework, the EU is likely
to underperform, leaving most of its potential in the ground
and, most importantly, its companies behind the U.S. and
Brazil," Rodriguez said. "A change in direction is needed if
the EU is going to be a leader."
Under the business-as-usual scenario, there will be 15
refineries making biofuels from plant waste by 2020, compared
with 946 in a "bullish" case, according to the study.
Rodriguez said the more optimistic scenario could be achieved by
using municipal waste and just 25 percent of crop and forestry
waste, allowing the rest to stay in the soil, providing
nutrients.

Land Grab

The push for the fuels is clouded by a debate over whether
it competes with farmland used for food production.
European companies including Portugal's Galp Energia SGPS
SA, the U.K.'s D1 Oils Plc and Sun Biofuels Ltd. and Agroils Srl
of Italy are among firms from around the world that have bought
African land amounting to more than the size of the Netherlands
as they push to grow non-food crops such as jatropha to make
biofuels, the environmental group Friends of the Earth said last
month, warning of food displacement.
"With next-generation technologies, this can be avoided as
they tap into currently unused feedstock," Rodriguez said,
referring to the leftover portions of food crops and waste.

For Related News and Information:
Climate-change news: NI CLIMATE <GO>
Top renewable energy stories: TOP ENV <GO>
Most-read environmental news: MNI ENV <GO>
Biofuels stories: NI BIOFUELS <GO>

--Editors: Reed Landberg, Mike Anderson

To contact the reporter on this story:
Alex Morales in London at +44-20-7330-7718 or
amorales2@bloomberg.net.

To contact the editor responsible for this story:
Reed Landberg at +44-20-7330-7862 or
landberg@bloomberg.net.