Energy Transition Handbook - Flipbook - Page 28
Hogan Lovells
28
Biofuels and biomass
Using biomass for energy is not a new idea: civilisations have been burning wood far
longer than they have been driving cars or flying in planes. Yet in a world increasingly
focused on reducing carbon emissions and fossil fuel consumption, biomass and
biofuels have taken on a new salience. Whether we are discussing biomass combustion
(be it dedicated biomass combustion or co-firing of biomass with other fuels) to
produce energy, or converting biomass to biofuels for use in transport, this is a sector
that has great potential.
Sources of biomass include forest residues
produced from plantations or actively managed
forests and energy crops that can be grown on
marginal land. Potential supply chains for biofuels
include agricultural residues such as olive cake
pellets, palm kernel expeller used for co-firing
at coal-fired power stations or wood pellets for
co- firing and electricity generation.
A key issue is the sustainability of the biomass
source driving the transition from 1st generation
biofuels produced from food crops to 2nd
generation biofuels produced from crop and forest
residues and from non-food energy crops.
An international market for the import and export
of these biofuels is currently growing, although
it has yet to reach maturity, and at the same time
more local supply opportunities are increasingly
available. This means increased competition
in the biomass feedstock market and falling
prices, helped by technological developments.
Total biofuel output, for instance, is forecast to
increase 25% by 2024.
However, there is a consensus that more needs
to be done. In the transport sector alone, global
biofuel output would need to triple by 2030 in
order to meet the International Energy Agency’s
targets for sustainable growth. In 2018 aviation
biofuel production of about 15 million litres in
2018 accounted for less than 0.01% of aviation
fuel demand. The industry needs to continue
to develop long term projects for both power
plants and transportation fuel, building up the
infrastructure and familiarity with the relevant
markets to enable economies of scale and
knowledge base required to mature the sector.
Biofuels (such as ethanol produced from sugar
cane or biodiesel) offer the potential for significant
reductions in greenhouse gas emissions when
compared to conventional transport fuels and
can play a key role in decarbonising the aviation,
marine and heavy-duty road transport sectors.
Key issues/risks:
•
Costs in establishing energy crops for feedstock
– these tend to be upfront and the return on
investment may take some time
•
Reliance on energy crops in an era of global
warming, threatening supply
•
Competition for biomass feedstock supply from
other product markets eg woodchips
•
Changing views of the sustainability of
biomass sources and related regulatory
issues and barriers, including international
standards for industrial pellets that may need
to be met, and import licenses for biomass that
will be required
•
Quality of feedstock
•
Infrastructure needed for the transport and
storage of biomass feedstock
•
Ensuring long term supply agreements are
sustainable and any currency risks are hedged,
particularly where supply chains import from
emerging economies