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Editorial comment

One can’t avoid oil price discussion these days and one certainly can’t avoid passing comments about petrol prices. So, I want to take a slightly different turn and take a look at the advanced biofuels market, as despite oil and oil products currently taking the limelight there are some discussion points floating in the biofuels realm that I’d like to bring to your attention. I often find that people are in one of two camps, those who see the pros in biofuels and those who see the cons. I’m afraid I’m the exception to the rule and am rather in the middle. Firstly, it’s most likely that biofuels and particularly advanced biofuels are going to play a part in the future energy mix as policy looks to combat climate change and keep to the 2°C rule, so they aren’t going anywhere. Secondly, the biofuels market is growing. E2 Environmental Entrepreneurs said in their ‘Advanced Biofuel Market Report 2014’ that capacity between 2014 and 2017 for the production of biofuel gasoline equivalent is going to increase from approximately 800 million gallons to 1.7 billion gallons, so obviously this is a sector on the up. Also, as the industry grows more jobs are going to be brought into the global market as well as more money into the economy. However, the negatives and challenges are what keep me from joining the pro biofuels team.One of the main challenges facing the advanced biofuels sector is that of regulatory instability and this is particularly true in the US. The Renewable Fuel Standard (RFS) is a continuous point of debate and contention between the Environmental Protection Agency (EPA) and associations such as the American Petroleum Institute (API) and American Fuel and Petrochemical Manufacturers (AFPM) and was especially so in 2014 as the EPA continues to delay the publication of required RFS levels. The California Low Carbon Fuel Standard (LCFS) is another point of discussion in the US for the biofuels sector as the standard has been frozen at 2013 levels throughout this year. So, the challenge regulatory uncertainty poses is that companies need certainty and stability in government policies in order to feel comfortable and confident in advancing the biofuels sector further, and this is indeed true for any sector.Feedstock for the production of advanced biofuels is another challenge. When it comes to first and second generation biofuels, the challenges have been the competition between feedstock being used for their production and being used as a food source. For advanced biofuels the hurdle is finding a reliable and widely available feedstock that will provide commercial success. At the moment, waste sources such as fats, oils and greases can be processed as well as purpose grown sources, however, not one single source has been optimised yet. The research that needs to be carried out to develop such a resource needs investment, which brings me to the next challenge faced by the sector, money.For advanced biofuels to become a real contender to oil products and make an impact, they need to be cost competitive so operational as well as capital costs need to be lowered. But when it comes to operating costs there is a bit of a vicious circle as feedstock is the main cost, and at the moment it is very expensive as there is not a widely available and 100% optimised source, and this needs investment. When it comes to capital costs, biorefineries that operate on a large scale have capital expenses that can range between US$5 and US$20 per gallon which is larger than crude oil refineries which are far more substantiated in the market. So, something needs to be done there to help the industry lower its overall operating costs. Overall, due to the above I’m neither pro nor anti biofuels and advanced biofuels in particular. But what is clear to me is that the sector has a lot of potential but needs to find settled ground when it comes to policies, feedstocks and money before it begins to make a big impact on the energy mix.


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