Report Finds That Biomass-Derived Ethanol in Europe Could Replace Up to 62% of Gasoline Consumption

Transforming agricultural residues into next-generation ethanol and biochemicals could create up to one million jobs in the EU27 by 2020, while theoretically replacing up to 62% of the EU’s forecast fossil-based gasoline consumption, according to a new study released by Bloomberg New Energy Finance with the support of Novozymes and DSM.

The study—“Next-generation ethanol and biochemicals: what’s in it for Europe”—explores the potential results of the development of a next-generation ethanol and biochemicals industry in the European Union in the next decade, and also the barriers to that development. The report presents two scenarios—base and aggressive (the “bull” case)—for the development of a bioproducts industry and compares them with the current development path.

Bloomberg New Energy Finance found that approximately 225 million tonnes of biomass should be annually available by 2020 under the base case scenario for bioproduct conversion. This total annual European biomass resource jumps to 270 million tonnes by 2020 under the aggressive scenario.

Agricultural residues contribute to 80% of the 2020 biomass residues supply, forestry 3% and MSW biomass residues 17% in the base case scenario; these proportions change to 79%, 2% and 19% under the optimistic scenario. The top five ag sources are wheat straw from the field, sugar beet residues, barley straw, maize stover, and rye residues).

In the base case scenario, next-generation ethanol supply could grow from 63 billion liters (16.6 billion gallons US) in 2015 to 75 billion liters (19.8 billion gallons US) in 2020. Due to greater biomass availability, in the aggressive scenario, next-generation ethanol supply could grow from 73 billion liters (19.3 billion gallons US) in 2015 to 90 billion liters (23.8 billion gallons US) in 2020.

The conversion yields for turning lignocellulosic biomass into ethanol, using the enzymatic hydrolysis technology, have improved dramatically in the past five years. Between 2010 and 2020 we expect ethanol production to increase by 45% in the base case scenario and 57% in the bull scenario. This is an interesting result, as the actual underlying biomass potential availability only increases by 3.9% and 11.9%, in the same 10-year time period. This outcome can be explained by our assumptions regarding ethanol yields from a tonne of biomass, which will improve progressively from 250 liters in 2010 to 300 liters in 2015 to 350 liters in 2020 due to further process efficiency improvements (see Figure 5). Technology and efficiency improvements in the next decade will therefore magnify any small growth in biomass supply potential.

We have assumed that 95% of the biomass potential will be converted into next-generation ethanol and the remaining 5% of the biomass potential will go towards biochemical production. Bioproduct diversification should lower the overall biorefinery operating economics. The ability of a biorefinery to alter the quantity of its outputs—in a similar fashion to Brazilian sugarcane mills—should reduce some of the project risk, as it can cater for different markets depending on the current price of the product.

—“Next-generation ethanol and biochemicals: what’s in it for Europe”

The authors project a relatively measured fall in gasoline consumption from 125 billion liters (33 billion gallons US) in 2010 to 101 billion liters (26.7 billion gallons US) in 2020 due to a decreasing EU27 gasoline car fleet. This trend is unlikely to change before 2020 due to competitive European diesel prices, they note. Since ethanol consumption is pegged to gasoline consumption, any movements in the gasoline market will have an impact on ethanol demand.

They also note that it will be technically impossible, under the current EU27 legislation, for ethanol to replace more than 10% of the total annual gasoline supply.

If the EU27 region wants to reduce greenhouse gas emissions, facilitate the development of a new industry, create new job opportunities and reduce its dependency on foreign oil it is vital to ensure that ethanol can technically substitute more than 10% of the fossil gasoline supply by 2015. That can be achieved in several ways, for example, the US is working towards tightening vehicle specification so they can use a 15% blend. Another way to achieve it is by promotion of the production of flex fuel vehicles. Two great examples of what can be done are Brazil and Sweden, where 90% and 25% of the new vehicles are FFV.

—“Next-generation ethanol and biochemicals: what’s in it for Europe”

As a result, they say, if the EU27 region is to realize some of its next-generation bioproduct potential then it will be very important to create an aggressive next-generation biofuels mandate. The study also calls for incentives for the collection of farming residues, as well as tax breaks for investments.

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