Only a fifth of the biofuels needed to meet a government target in 2008/09 will be made in the UK, according to an ENDS survey.
When the government’s Renewable Transport Fuel Obligation (RTFO) launches in April, only 227,000 tonnes of biofuel capacity will be operational domestically, the survey shows (see tables).
Of this, 55,000 tonnes is British Sugar’s bioethanol plant in Norfolk (ENDS Report 395 pp 34-37 ), while the rest is biodiesel plant. Over 370,000 tonnes of biodiesel capacity is not operating. The lack of domestic production looks like it could affect future years too.
Under the RTFO, fuel suppliers have to include a growing proportion of biodiesel or bioethanol in their fuel from April to reach 5% by 2010 (ENDS Report 370, p 35 ). The target for 2008/09 is 2.5%, totalling 1 million tonnes of either bioethanol or biodiesel.
Given the lack of UK production, most of the 2.5% target is likely to be met using sugar cane bioethanol from Brazil and soy biodiesel from the US or Argentina. Palm oil biodiesel from Malaysia or Indonesia is expected not to make a significant contribution.
Although fuel suppliers have no target to meet using domestic production, they do have to report on the greenhouse gas savings and sustainability impacts of the biofuels they use - a difficult task if the biofuels are bought on the international market.
The DFT provides default values for CO2 savings in the RTFO’s carbon and sustainability reporting guidance (ENDS Report 396, p 10 ). For example, bioethanol from Brazilian sugar cane saves 61% CO2 emissions compared with the fuel it replaces, while US soy biodiesel saves 32% and Argentinian soy biodiesel 44%. These figures are better than the default values for most UK production, but scientists are concerned they do not take account of the change of land use in such countries that biofuel crops will result in. In February, the DfT launched a study looking at such "indirect" impacts (see pp 47-48 ).
The reasons for the lack of UK production are different for bioethanol and biodiesel. The first is affected by the current high price of cereal crops - wheat prices have risen by over 50% since last August - and the low price of ethanol.
Over 600,000 tonnes of UK production is planned to be operational by the end of 2009, but further plants planned by Green Spirit Fuels and Roquette are on hold. This could mean that when the 5% RTFO level is reached, there will only be some 700,000 tonnes of bioethanol capacity, less than the 1 million tonnes assumed needed.
"With wheat at its current price, you can’t get investment for plants," said Simon Williams, managing director of Green Spirit Fuels. "Brazil is ramping up production too, and if it can meet EU demand for the foreseeable future, that’s another barrier. We can’t compete with Brazil on a cost basis, and we’d need stronger sustainability standards to do so."
It is uncertain what proportion of the planned UK production will use domestically grown feedstocks. However, Ensus and Green Spirit Fuels have made commitments to use local wheat.
Biodiesel production is suffering principally due to US subsidies. Since 2004, US biodiesel producers have been able to claim subsidies of up to $300/tonne (£150/tonne) . This mixture can then be exported to the EU, where further biodiesel subsidies can be claimed and the fuel sold at a discount of around £140/tonne, according to the European Biodiesel Board.
In 2006, only 90,000 tonnes of US biodiesel was imported into the EU, but this rose last year to 1 million tonnes - a fifth of the European market, the EBB says. Of the UK producers surveyed, Biofuels Corporation and D1 Oils blamed the US subsidies for the fact their plants are barely operating. D1 oils announced in March it was considering shedding staff at both its sites.
As ENDS went to press, the EBB was expected to make a joint anti-dumping and anti-subsidy complaint to the European Commission about the US subsidies. If the Commission agrees there are grounds for the complaint, it could impose countervailing duties on US imports after a six month investigation.
"We’re outraged by the US subsidies," said Clare Wenner, head of biofuels at the Renewable Energy Association. "To be able to do carbon and sustainability reporting we need to develop long-term supply contracts with growers, but at the moment no one’s going to do that while its so cheap to buy US biofuels."
However, even if the US subsidies are overcome, UK biodiesel producers will have to compete with imports from other countries such as Argentina, which exported 300,000 tonnes of biodiesel made from soy to the EU last year and is rapidly increasingly production.
Again, it is uncertain how much of the planned UK biodiesel production will use domestic feedstocks like rapeseed as opposed to imported vegetable oils.