State of the Biofuels Industry

AN INDUSTRY POISED FOR GROWTH FACES FUTURE CHALLENGES

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WITH AN INCREASING focus on the environment and finding solutions to climate change, the renewable fuels industry is poised to take off in the next decade.

Talks on climate change are often dominated by developing technologies and policies to reduce greenhouse gas (GHG) emissions and make energy more ‘green.’  However, a growing population demanding more fuel and energy is hard to ignore and many countries, Canada included, are embracing renewable fuels as a ready alternative to fossil fuel.

The International Energy Agency (IEA), an inter-governmental organization which acts as a policy advisor to Canada and 27 other countries, predicts global energy use to rise by 40 percent by 2030. The report suggests rising oil prices and a stretched supply of fuel will result.  The IEA estimates that by 2030 the world will require at least 23 percent of the overall transportation fuel supply to come from renewable fuels like ethanol and biodiesel. 

The increase in demand estimates for these renewable fuels is even more extreme in a report done by Hart Energy Consulting. According to Tammy Klein, Executive Director of Hart Energy Consulting, we can expect to see an 80 percent increase in ethanol demand throughout the world from 2009 to 2015. For biodiesel, the demand is expected to triple in the same time period.

With this expected growth, there are a lot of opportunities for farmers in the Canadian renewable fuels industry. With increasing demand for ethanol and biodiesel, farmers can expect to see an increasing demand for agricultural feedstock like corn for ethanol and soybeans for biodiesel. And, as technology is commercialized, new opportunities will come to light for farmers in the realm of cellulosic feedstock requirements for fuel production. New markets for wheat straw and corn stover should be expected, according to Klein’s report.

Environmental Impact
Predictions of increasing demand are not simply a result of the need for more fuel. Sound science supports the use of renewable fuels as an alternative to petroleum-based fuels in regards to GHG emissions.

Ethanol production uses as much as 40 percent less energy than the equivalent fossil fuel production, claims Natural Resources Canada. The government agency also says that cellulosic ethanol production uses 90 percent less energy than fossil fuels.

“Renewable fuels in Canada enjoy a sizable advantage over fossil fuels when it comes to cutting carbon emissions and leading the way toward a clean energy future,” says Gordon Quaiattini, President of the Canadian Renewable Fuels Agency (CRFA).

Quaiattini went on to discuss a recent study by Cheminfo Services Inc. which found that ethanol reduced GHGs at a rate of 62 percent compared to fossil fuels and biodiesel reduced GHG by an even more impressive rate of 99 percent. The study is considered one of the most comprehensive and thorough reports focused primarily on Canadian renewable fuels.

Rising Support
The Canadian public is aware of the potential in renewable fuels. A recent public opinion survey, conducted by Praxicus Public Strategies, reveals that 81 percent of Canadians support the “a strategy to encourage the development of renewable fuel technology and production.”

The survey also demonstrates that an increasing number of Canadians support the current national requirement that gasoline consist of five percent ethanol by 2010; 47 percent of those surveyed favoured this national policy, an eight percent increase since April 2008.

“The fact that this many people believe renewable fuels is the way to go sends an unmistakable signal to the marketplace, to farm families and to policymakers,” says Quaiattini of the results.

Upcoming Challenges
Despite the rising support from Canadian consumers and the studies that hail ethanol and biodiesel as appropriate alternatives to fossil fuels, the renewable fuel industry is still facing stiff opposition in Canada and around the world.

The food versus fuel debate, which blasted to the forefront of the media in 2007, still rings in the ears of consumers. Many people still oppose using fertile land for fuel production instead of food production. “People forget that we are producing both feed and fuel at an ethanol plant,” says Bob Dinneen of the dried distiller’s grain co-produced in ethanol plants and used as animal feed. Dinneen is the President and CEO of the Renewable Fuels Association, the US equivalent to the CRFA.

He continues to point out that “we will never have food security in this world until we have energy security.” He points to the often held belief that food insecurity is not actually about having enough food but rather it’s a product of distribution and political instability.

Another challenge facing the industry is encouraging government support. Gathering and maintaining support from politicians and policymakers is important because much of the industry relies on government mandates.

“The biggest challenge going forward,” says Quaiattini, “is telling our story and partnering with government.” •