Second wave of biofuel production could wash fuel clean

Biofuel expansion is on the agenda of many countries.

Canada, the United States, Indonesia and Malaysia are all engaged in or talking about increased biofuel use.

I think new biofuel targets will benefit society by using surplus agricultural production to lower the carbon intensity of transportation fuel.

But sensitivity is needed.

Care must be taken to avoid rich incentives that encourage dangerous destruction of forests or other ecologically sensitive land to produce biofuel.

Also, the biofuel industry and agriculture in general should note that clean biofuels will likely be a transitional energy source eventually superseded as electric and hydrogen-powered vehicles become the dominant mode of transport.

Biofuel targets must be tied to already available crop surpluses made possible by constantly improving technology, seed genetics and agronomy. Many major crops that go into biofuel are in adequate supply, often to the point of price-depressing surplus.

Worries in the past that biofuel production increases food costs were overstated. The corn-to-ethanol boom in the United States in the first years of the 2000s might have modestly impacted the crop price spike of 2008-09 but the commodity price boom of the same period, an unusual string of weather problems and chronic underfunding of agriculture in the late 1990s and early 2000s were also to blame.

And the food price rise was rapidly controlled by the increased investment in agriculture sparked by the boom.

As worries about food prices fade, governments are again looking at biofuel policy.

Ottawa will likely decide this year on the Clean Fuel Standard, a broad policy addressing how low carbon fuels and electric vehicles can reduce the country’s greenhouse gas emission by 30 megatons per year by 2030.

It appears the program will not set specific standards for biofuel use and biofuel proponents are unhappy, complaining the fossil fuel industry will have too much say in how to meet the targets for low carbon fuel.

However, as least some of the targets will be likely met by increased use of biofuel and that means more demand for crops used to make ethanol, biodiesel and hydrogenation-derived renewable diesel (HDRD).

Biofuel supporters also hope they can get provinces to follow the lead of Manitoba in raising local biofuel inclusion rates. It recently lifted the biodiesel mandate to five percent from two.

If all provinces followed suit, demand for canola for biofuel would rise to 1.3 million tonnes from the current 500,000 tonnes. That would likely spark investment into another crushing plant and biofuel manufacturing plants.

I was heartened to note that the Pembina Institute in Alberta, a clean energy think-tank often criticized, unfairly I think, as an environmental zealot, favours stronger biofuel mandates.

In a story in the Calgary Herald, a Pembina spokesperson drew attention to research on the favourable life-cycle carbon intensity of biofuel. A 2019 paper by Navius Research, commissioned by Advanced Biofuels Canada, stated: “The data implies that, on average in 2017, ethanol sold in Canada was 52 percent less carbon intensive than gasoline, while biodiesel and HDRD are estimated to be 87 percent less carbon intensive than diesel.”

Using vegetable oil to make fuel is also getting a boost in Indonesia, the world’s biggest producer of palm oil.

This year it increased its biofuel mandate to 30 percent from 20 and it is studying the feasibility of raising that to 40 percent.

The move will help the palm industry deal with declining import demand from Europe and reduce the amount of crude oil the country has to import.

The world’s second largest palm oil producer, Malaysia, last week announced its intention to also move to a 30 percent inclusion rate by 2025 or earlier.

Also last week, the United States Department of Agriculture announced a goal for biofuels to make up 30 percent of the country’s transportation fuel by 2050.

The proposal is part of a broader innovation agenda of expanding American agricultural production by 40 percent while slashing its environmental footprint by half by 2050.

U.S. Agriculture Secretary Sonny Perdue stated support for quickly moving to a national 15 percent ethanol mandate from the current 10 percent.

However, the Environmental Protection Agency would also have to give its blessing and it has not been an enthusiastic supporter. Also, many fossil fuel refinery owners have strongly lobbied against expanded biofuel use.

The path forward for biofuel will no doubt be full of obstacles, but I see more support for the sector now than in the last 10 years.

Too often agriculture is pilloried as a major contributor to the climate change problem but in reality, with the right incentives for things such as biofuels and carbon sequestration, it can be a major solution.

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