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Industry Anger at ECʼs Proposed Biofuel Targets

The European Union intends to boost the percentage of biofuels used in the fuel mix across the bloc. But its desire to promote second-generation (largely waste-derived) ethanol over plant-based first-generation fuels has angered some manufacturers.

Demeter Héjj, president of the Hungarian Biofuel Association.

The intention to halve the contribution of conventional biofuels by 2030 is strongly opposed by industry players who have invested large sums in the development in their existing facilities. Hungary-based Pannonia Ethanol, the largest producer in the region, believes the EU’s decision will undermine the future of the industry.

Last November, along with the Clean Energy Package for all European Citizens (commonly known as the Third Energy Package), the European Commission proposed introducing a cap on the contribution of food-based biofuels towards the EU renewable energy target, starting at 7% in 2021 and going down progressively to 3.8% by 2030.

In the revised Renewable Energy Directive (RED), which currently sets the rules for the industry, the Commission promotes the use of second-generation biofuels, as well as electromobility.

The aim of the legislation is to compel producers to use second-generation biofuels, refined from waste and residues, Máté Zöldy, an oil-industry expert, told the Budapest Business Journal. Producers and investors criticized the modifications sharply as they have invested in the development and expansion of the technology and facilities suitable for the first-generation of biofuels. Should the proposed changes be accepted, the expected returns will diminish greatly.

Following the announcement of the proposal, the European renewable ethanol association (ePURE) said in a statement that a reduction of the limit on conventional biofuels used to 3.8% would fundamentally undermine the EUR 16 billion invested in European biofuel production facilities since 2003 as a result of EU biofuels policy.

Renewable Share

The legislation currently in force says that the share of renewable energy in transportation between 2020 and 2030 should account for 10%. The contribution of corn or other feedstock-based biofuels is maximized at 7%. These ratios, effective from 2009, has spurred investment and the development of production facilities, Melinda Zsolt, a spokesperson for Pannonia Ethanol told the BBJ. The proposed reduction, however, would basically mean the phasing-out of the sector, she added.

Pannonia Ethanol maintains that scientific facts, climate policy goals and economic rationale all contradict the Commission’s stance. While the EC is right in saying the plants that go into first-generation biofuels can be used as feedstock, it fails to take into account that the process also produces a GMO-free premium feedstock with high protein content, she said. Since Europe suffers from the protein deficiency, which is substituted with imported soy of unidentified sources, this ought to be of high importance for the EU, she added.

The impact on Hungarian agriculture, on employment in the country, on local business tax and global climate is more important than the effect on biofuel producers, Demeter Héjj, president of the Hungarian Biofuel Association told the BBJ.

The organization would make the use of E10 fuel (a blend of up to 10% ethanol and 90% unleaded petrol) mandatory in the European Union by 2020. It also proposes a carbon-footprint based target, with the aim of decreasing the CO2 intensity of vehicles. It supports a 15% share of renewables in the transportation sector, in which first-generation biofuels would have a significant role, Héjj said. The association also believes a separate target figure should be set for gasoline at 6.5% from 2020 onwards for every member state.

Complex Processes

The quality of the fuel is dependent on the technology rather than the raw materials used, industry expert Zöldy said. The major difference between technologies is in the process that leads to the intermediate or semi-final product. Ethanol is made from sugar, so the plants used (mostly corn) are broken down to get the sugar. A more complicated process is when starch is used as a base product, as it has to be broken down to sugars to be able to produce ethanol. This technology is already available in the industry – some factories in the United States use it – but it is yet to make a breakthrough, Zöldy said. The most complex procedure uses cellulose: breaking it down to sugar is costly and requires more time, the expert said. Complexity, however, widens the portfolio of potential raw materials. The starch and cellulose technologies may become more widespread when the enhanced share of waste-based biofuels is forced by legislation.

Co-processing technologies, when waste-based and oil-based products are processed together to create an alternative fuel, may also become common. As technology advances, the use of waste-based components is becoming ever more widespread. “Technology allows for more effective production from waste – something that is supported by legislation as well,” Zöldy noted.

Operating as a bio distillery, the Pannonia Ethanol factory at Dunaföldvár has the potential to produce not only fuel, but a range of other side-products from electricity, heat, and bio chemicals. As long as traditional ethanol production remains alive, the company will have the opportunity to explore promising technologies not yet available at an industrial scale, Zsolt said when asked about future plans. However, if first-generation technology is phased out, there will be no market players able to finance such research and create products. But second-generation technology could also become trapped by this process – these developments require a predictable legislative and market environment in the long run, she added.

Pannonia Ethanol

The largest renewable ethanol producer in Central and Eastern Europe, Pannonia Ethanol makes bioethanol and high-quality animal feed at its plant in Dunaföldvár, Tolna County (100 km south of Budapest). The facility currently utilizes more than 1,000,000 tons of corn annually. The plant produces as much animal feed as renewable ethanol during the process and has output of up to 450 million liters of renewable ethanol, and 325,000 tons of Dried Distillers Grains with Solubles (DDGS), a high protein animal feed. The facility also produces 10,000 tons of corn oil.