Biofuel Potential
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November 2007 Biofuel thematic paper – Biofuel potential The potential for biofuel production/usage is assessed below. The assessments cover: EU, the U.S., China, Brazil, Denmark and the whole world; they are made for the years 2010, 2020 and 2030. The assessments are made on the basis of the following assumptions: • No effect on food, feed and export demands. • Second generation technologies are not utilized in large scale until after 2010. This note refers to 2 types of potentials: • Maximum: The potential to produce biofuels if all the biomass which can be removed without harming the environment is used to produce biofuels. • Realistic: The potential to produce biofuels while taking into account the fact that the available biomass can also be used for other purposes (e.g. food and “heat and power”). It requires active government support to realize these levels of biofuel production. Issues related to the discussion of “food vs. fuel,” environmental impacts, socioeconomic impacts and developing countries are covered in other thematic papers. The potentials are referred to in Mtoe (million tons of oil equivalent, 1 Mtoe = 41.87 PJ = ~ 0.5 billion gallons of ethanol) – on an energy content basis. Energy demand for road transport Energy demand for road transport is a key factor for biofuel demand. Over the past many years, energy demand for passenger and freight transport has grown steadily in most regions of the world. The main underlying factor for growth in energy demand for road passenger transport is income growth coupled with a tendency to spend more or less the same percentage of disposable income on transport. Increasing wealth among citizens gives more people the option to buy a car and use the added flexibility that it provides. Additional income therefore means additional travel budget, which allows more frequent, faster, farther and more luxurious traveling. Likewise, more wealth increases the demand 1 for goods, thereby increasing energy demand for freight transport. The projected increase in energy demand for road transport is shown in the figure below. Figure 1 Energy demand for road transport by region 900 800 700 600 500 Mtoe 400 300 200 100 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 EU U.S. China Brazil Sources: EU – European Commission, U.S. – EIA, China – A.T. Kearney, Brazil – Petrobras. Current biofuel targets The current targets for biofuels usage in the EU, the U.S., China, Brazil and Denmark are listed in Table 1. The EU has defined its biofuel target as “10% of the energy demand for road transport by 2020”. Given the projected energy demand for road transport (as shown in the figure above), this equals 35 Mtoe of biofuels (or 18 billion gallons/70 billion liters of ethanol if all biofuels are ethanol1). In 2007 President George Bush launched his plan to reduce U.S. gasoline usage by 20% in the next ten years (named: Twenty In Ten). Part of this plan is to increase the supply 1 Biodiesel will play an important role. 2 of renewable and alternative fuels to 35 billion gallons in 2017 (~67 Mtoe). This is equivalent to approx. 10% of the projected energy demand for road transport by 2017. China expects biofuels to meet 15% of its transportation energy needs by 2020 equivalent to approximately 24 Mtoe of biofuels. In Brazil, all gasoline sold for road transport must contain 20-25% ethanol. Depending on the availability of ethanol, the Brazilian government changes the percentage of ethanol in the gasoline. Currently the mandatory percentage is 22.5%. In 2007 Denmark is expected to commit to a 10% biofuel share by 2020, in line with current EU targets. Table 1 Biofuel targets and need for biofuels by region (definition of target is written in italic red text) Country/ Year Mtoe Billion gallons Billion liters Share of energy demand for region (ethanol)c (ethanol)c road transportd EU 2020 35 18 70 10% US 2017 67 35 133 10%a China 2020 24 12 47 15% Brazil 2006 7 3.7b 14 10% (22.5% of gasoline) Denmark 2020 0.4 0.2 0.8 10% Notes: a Equivalent to approx. 15% of projected gasoline consumption in 2017. b Domestic use, in addition to this approx. 1 billion gallons of ethanol was exported. c For illustration, if all biofuels/alternative fuels are ethanol, which will not be the case in reality. Potentials - EU First generation biofuels The Joint Research Centre (JRC) of the European Commission has assessed the EU’s “realistic” potential to produce first generation biofuels in the “Well-to-wheels” report. Their estimates are summarized below. For most crops, production and consumption of agricultural products are today roughly in balance in the EU. Biomass for the first generation biofuels by 2010 therefore has to come from: • Land released from the recent sugar reform: This will increase the 2010 potential by 2.4 Mtoe of biofuels compared to today. • Land currently set aside: If all set-aside land is used for biofuels this could add 5.0 Mtoe of biofuels. 3 • Increased yields: It is expected that yields will continue to increase in the future. This will allow a production of an additional 3.2 Mtoe of biofuels by 2010 compared to today. • Existing energy crops: 2.2 Mtoe of biofuels are today produced in the EU. In summary, JRC estimates that it is realistic that the EU can produce 12.7 Mtoe of first generation biofuels by 2010. This equals 3.9% of the projected energy demand for road transport. Hence it appears to be necessary for the EU to import biomass/biofuels to meet the current 5.75% biofuel target for 2010. The results are summarized in Table 2. Second generation biofuels The European Environmental Agency has likewise assessed the long-term “maximum” potential of the EU to produce biomass for second generation biofuels in the report “How much bioenergy can the Europe produce without harming the environment?”. The estimated biomass potential is sufficient to produce approximately 120 Mtoe of biofuels – equivalent to 33% of the energy demand for road transport in the EU by 2030 - if all available biomass is used for biofuel production (see table 2). However, in reality the available biomass will also be used for other purposes. Hence it is not realistic that the EU can cover 33% of the future energy demand for road transport from domestically produced biofuels. The Biofuel Research Advisory Council of the European Commission envisages a 25% biofuel target for 2030 (requires 91 Mtoe of biofuels) with half of the biofuels being produced domestically (~46 Mtoe) and half imported (~46 Mtoe). This requires that close to 40% of the available biomass is used for biofuels by 2030 (46 Mtoe/120 Mtoe=38%). 4 Overview Table 2 Potential biofuel production and usage in the EU (in Mtoe) Potential if the following types of land are used for growing crops for first generation biofuels: Land currently used for energy purposes, set- aside land and land released from sugar reform. Further increased yields add to the potential. Source: EU, Joint Research Centre – ”Well-to- wheels” report 2010 2020 2030 Type of scenario Realistic Maximum Maximum Energy for road transport 324 354 365 Realistic potential. Not additive to second generation potential, as the Biofuel potential First generation 13 (16) (20) “same land” is used for growing Second generation - 98 120 second generation biomass. Total 13 98 120 Source: Simple extrapolation of 2010 estimate from EU, Joint Research % of energy demand 3.9% 28% 33% Centre – ”Well-to-wheels” report (based on increased yields). Realistic biofuel target % of energy demand 5.75% 10% 25% Existing targets Potential if all available biomass is used for biofuels. Realistic biofuel target for 2030; half of it produced domestically and half of it imported. Source: Based on data the European Requires that ~40% of the available biomass is Environmental Agency’s report ”How used for biofuels. much bioenergy can Europe produce In line with vision of European Commission – without harming the environment?”. Biofuels Research Advisory Council Potentials - The U.S. First generation biofuels FAPRI2 (2007) estimates that the U.S. is capable of producing 13.3 billion bushels3 of corn in 2010/11, of which 4.3 billion bushels will be available for ethanol production (compared to 2.2 billion bushels in 2006/07). This implies that by 2010 the U.S. should be capable of producing roughly 12 billion gallons of ethanol (assuming an energy content of corn of 18 MJ/kg and a conversion factor of 47% from corn to ethanol). This equals roughly 24 Mtoe of ethanol or roughly 4% of the U.S. energy demand for road transport by 2010 (see Table 3). 2 The Food and Agricultural Policy Research Institute (FAPRI) is a dual-university research program with research centers at Iowa State University and the University of Missouri-Columbia. 3 1 bushels of corn=25.4 kg. 5 Second generation biofuels The U.S. Department of Agriculture and the U.S. Department of Energy (2005) estimate in the report “Biomass as Feedstock for a Bioenergy and Bioproducts Industry: The Technical Feasibility of a Billion-Ton Annual Supply” that the land resources in the U.S. in the long run will be capable of producing 1.3 billion dry tons of biomass per year. The estimated biomass potential is sufficient to produce approximately 264 Mtoe of biofuels – equivalent to 34% of the energy demand for road transport in the U.S. by 2030 - if all available biomass is used for biofuel production (see Table 3).