Biofuel business a growing sector
By Mirna Santana
The potential for the biofuel industry is enormous. Currently, biofuels provide less net energy in comparison to coal. Ethanol provides 60% of energy compared to coal while biodiesel provides 86% (Bourne, 41), yet the abundance of biomass in the planet suggests that biofuels could meet consumers’ needs if managed appropriately.
Innovations and decrease in cost competitiveness in comparison to current fossil fuels may allow the broad implementation of biofuels as alternative fuels in the transportation sector as well as in the power sector (electricity/gas). Biofuels can serve at large scale such as industrial facilities and cities or villages. Biofuels could also be generated at small scale for local uses such as individual households, small businesses, and farms.
Biofuel business is a cross road among many sectors. A variety of players from different countries and sectors benefit from the boom in biofuels. Among these, the providers of biomass or substrate providers, the biochemistry industries, technology and development sectors, energy providers, local governments, and the biofuel experts and researchers are key players in this business.
The primary source of biofuels which is biomass, may be harvested from forests or other native vegetation, but most likely is the product of agricultural productions (i.e., corn and wheat). Thus to produce the primary sources at scales that are significant to impact the total energy demands, changes in agricultural, forestry and energy policies along with an increase in incentives by governments-- accompany by increases in the willingness to invest by the private or public sectors are needed. In the US, for example only additives for gasoline or liquid fuels have high incentives. Production of crops for fuels currently compete for the same land for food production. The biofuel industry is already a billion dollar industry business, and will continue to increase, especially when other energy sectors such as fossil fuel derived and nuclear may be troublesome.
There is quite a diversity of players in the biofuel business. Currently, many of the companies that sell oil or distribute fossil fuel based products--or petroleum-- are also investing and obtaining million-dollar revenues from biofuels. The Business Exchange says that the recent biofuel boom is driven by the high cost of gasoline and the adverse effects of fossil fuels.
Biofuels can be used alone but are mostly combined with fossil fuel products. Thus, biofuel companies sell their products to major oil companies as additives. For example, Petrobras, a Brazilian ethanol distributor signed an $820 million contract with Japan's Toyota Tsusho Corporation (TTC) to deliver 143,000 cubic meters/year of bioethanol-petroleum mix (bio-PET) for a period of 10 years. (Bloomberg Business Week, Nov 2010). Driven by the 2010 Gulf of Mexico oil spill crisis, BP acquired Veranium biofuel. Veranium produces its own lignin degrading enzymes that would allow the joined company to lead the market in cellulosic ethanol. Lignin is what causes a plant to be considered woody--it is a plant structural material.
The business and market of biofuels is very open to countries, local governments such as cities and municipalities, and large organizations seeking to save energy, earn carbon credits, or decrease their environmental footprint.
The biofuel business sector still has to find ways to meet feedstock needs. The question remains: Which crops are acceptable and how much land can be used for biofuels without conflicting with other human needs? This implies that to meet future biofuel targets or to increase their use and distribution the policies that promote biofuels need to be in place but also the investment, the research-development, and implementation components.
More profound changes--e.g., societal concerns, may be needed to promote willingness to shift entire fleets, buildings, cities, or nations to such type of energy. The policies and the governance part go along with investment and social/business adaptations to promote such cultural changes. Whether or not biofuels will remain as an adequate strategy to meet energy needs would be part of that discourse and decision making process too.
Research and development in this area is critical. The sectors involving technological and innovations in this sectors receive large amount of money from their potential buyers, which may be government or private companies. For example, Exon has invested millions in the development of synthetic microbes to improve oil.
The following countries are leading the biofuel business and expanding to other places from their home bases-- Germany, Brazil, South Korea, and Switzerland, and the US. Their rapidly growing markets and experts are a living engine for the biofuel industry.
Biofuels as a business is growing and contributing billions to the global and local economies. Only in Germany in 2006 the total contribution of renewables was 22.9 billions. From this, biomass or biofuel contributes 39.8% (9.100 millions). Biofuels from woofuel trade are the largest source of employment in India’s energy sector (3-4million employees). In Brazil the ethanol industry employed 700,000 people in 2005.
For the public, the biofuel boom may signify a lot of changes in the business as usual and perhaps changes in policy, regulations, and payments for energy consumption or their attributes such as climate change emissions and pollution. A big gain may be the decrease of air particles from biofuels in comparison to coal. Whether western cities will give rise to the ‘biofuel cities’ of the future remains to be seen.
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