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The EU has set itself far-reaching climate and energy targets. For the transport sector the magic numbers for 2020 are 10% renewable energy and 6% greenhouse gas (GHG) emission reduction from fuels. Member states have made it very clear that biofuels are their best bet to fulfi l the 2020 targets. And beyond this biofuels will also continue to play an important role. So far, so good. But now... everybody is scratching their heads over how to actually achieve those targets. How much of which biofuel will be needed? What cars will need to be on the roads by when? What fuel specifi cations will be needed to accommodate all those renewable fuels? What infrastructure needs to be built up? EU ethanol producers once more look over the Atlantic and see their US colleagues hitting their blend wall in full speed. Could this happen at this side of the pond also?

Varying projections

Looking into the future is a difficult exercise. Nevertheless the Renewable Energy Directive (RED) forced member states to explain to the European Commission how they intend to reach their renewable energy goals in 2020. [read more]

There is cautious optimism for the US biodiesel industry, which is again ramping up output after numerous plants were mothballed in 2010, largely due to the loss of a tax incentive for blending. Infrastructure projects, such as adding biodiesel blending capacity at a terminal in South Dakota, US, that was put on hold in 2009, are again proceeding, with construction at this Sioux Falls terminal... now completed. This is certainly good news for those toiling in the industry’s vineyard. And while the clouds from what might be viewed as a perfect storm have cleared, there remains a great deal of uncertainty for the market’s participants. This includes a lack of clarity on investments to grow needed infrastructure and rising feedstock costs that imperil producer margins. On the former, the US Congress limited the extension of a tax credit that pays $1 (€0.7) gallon for blending biodiesel into diesel until year-end 2011; too short a timeframe for most bankers to feel comfortable in lending for plant expansions or for other infrastructure projects. Moreover, with deficit reduction a key mandate for newly elected lawmakers in Washington, DC during an historic midterm election in November 2010, another extension of this tax [read more]

A recent meeting amongst the US biofuels industry voiced concerns over the lack of funding being provided for government biofuels programmes, with money being plugged into new initiatives rather than existing commercialisation projects. The Obama government recently cut down on funding to two programmes – the Biorefinery Assistance Programme and the Bioenergy Programme for Advanced Biofuels – and... instead put taxpayers’ money into other schemes such as the Biomass Crop Assistance Programme. For example, the Biorefinery Assistance Programme is only set to receive $17 million (€12.3 million), while the new Biomass Crop Assistance Programme will be given $263 million this year alone. The Biorefinery Assistance Programme is administered by the United States Department of Agriculture (USDA) and the purpose of the scheme is to give loans to those developing and constructing commercial-scale biorefineries for advanced biofuels. Originally, the government said it would put $250 million into the programme, but those involved say they need more in order for commercialisation to get off the ground. Since its implementation, close to 30 developers have come on board the Biomass Crop Assistance Programme to receive the grants and are mostly using the money to create pilot facilities. However experts argue the money should be given to those projects that are nearing commercialisation instead. [read more]