Future Aspect of Biofuels
High oil prices in the new era encourage investment in biofuels:
- The most significant element enhancing the competitiveness of alternative fuels, including biofuels, is the increase in oil prices. The unusual six-year surge in oil prices has expanded the supply of conventional and alternative energy sources while also extending the window for efficiency improvements and encouraging energy conservation. Although these changes may eventually result in reduced oil prices, most projections do not indicate that actual prices will go below $50 per barrel.
- High oil prices have previously only lasted a little time. Prices tended to rise quickly, often as a result of armed conflict, peak in a matter of weeks or months, and then drop quickly. Following these price surges, the quick drop in oil prices made it harder to maintain alternative fuel initiatives and lessened customer incentives to limit their consumption of petroleum-based goods.
- In contrast to earlier times of high oil prices, the present oil market is strongly influenced by demand-side forces. These variables include strong economic growth and increased oil consumption from middle-income economies that are expanding quickly and have customers who want a higher standard of living and who have large energy demands. The current increase in oil demand worldwide has been mostly fueled by middle-income countries like China.
Having Access to Cheap Feedstocks Determines the Profitability of Biofuels:
- The biggest expense in producing biofuels is the cost of the feedstock, which in 2003–04 ranged from 37% for sugarcane-based ethanol in Brazil to 40%–50% for corn-based ethanol in the United States.
- 34 percent of the cost of producing sugar-based ethanol in the EU was borne by sugar beets. These cost shares are now significantly higher due to rising commodity costs. Energy is another significant cost factor that, in some nations, can make up as much as 20% of running costs for biofuels.
- A straightforward metric of how competitive biofuel produced from different feedstocks is the ratio of crude oil prices to feedstock prices. For instance, after 2004, as oil and ethanol costs surged while corn prices remained steady, the ratio of crude oil to corn prices rose dramatically.
- But from September 2006, the ratio dramatically decreased, making biofuels less cost-competitive. As soy and palm oil prices increased in 2006–2007, biodiesel producers in Europe and Southeast Asia also experienced a decline in competitiveness. Contrarily, from 10-year highs in 2006, global sugar prices fell by 50%, improving the relative prospects for Brazil's ethanol industry.
- The profitability of a biofuel plant is also influenced by the sale or useful application of byproducts. As a byproduct of the ethanol manufacturing from corn, dried distillers' grain (DDG) can be used as a protein-rich ingredient to animal feed.
- DDG sales have the potential to increase ethanol producers' earnings by up to 10% to 15%. Some ethanol plants absorb carbon dioxide, which is often released into the atmosphere, and sell it for use in the food and beverage industry.
- The fibrous residue left over after pressing sugarcane, known as bagasse, can be burned to provide heat for distillation and energy to operate equipment, or it can be sold to nearby utilities. A byproduct of the production of biodiesel, glycerin has several uses in the pharmaceutical, food-processing, and feed industries.
Future Prospects: Second Generation Biofuels' Possibilities:
- The future of biofuels is still fraught with many unknowns, including competition from unconventional fossil fuel substitutes and worries about environmental trade-offs.
- The degree to which the land intensity of the existing biofuel production can be lowered is arguably the biggest area of uncertainty.
- From 100 gallons per acre for EU rapeseed to 400 gallons per acre for U.S. corn to 660 gallons per acre for Brazilian sugarcane, the quantity of biofuel that may be generated from a single acre of land varies.
- Cellulosic ethanol has the potential to increase per-acre ethanol output to over 1,000 gallons, thus lowering the need for land.
- The hard cellular substance that gives plants their stiffness and structure is broken down to create cellulosic ethanol, and the following sugar into ethanol.
- The most accessible biological substance in the world is cellulose, which may be found in low-value items including municipal waste, fast-growing grasses, crop residues like maize stover, and wood chips and wood waste.
- Other costs of cellulosic ethanol production, such as the effects of harvesting grasses, trees, and crop residues on the erodibility and fertility of land resources, need to be adequately studied in the interim.
- Additionally, there are concerns about the upstream logistical and environmental costs of gathering, moving, and storing huge quantities of bulky feedstock utilised in processing.
Profitability and new technologies will determine biofuels' future role.
- The price of producing biofuels and its negative effects on the environment may progressively decline thanks to technological advancements and efficiency gains, which result in higher biomass yields per acre and more ethanol produced per tonne of biomass.
- In tropical regions, where growing seasons are longer, per-acre biofuel yields are higher, and fuel and other input costs are lower, biofuel production is expected to be both economically successful and environmentally friendly. For instance, Brazil powers its ethanol distilleries with bagasse, a byproduct of sugar production, while the United States relies on natural gas or coal.
- The viability of biofuels on a worldwide scale will be determined by a variety of interconnected factors. High oil prices will be crucial in this: Contrary to earlier periods when oil prices soared and then plummeted quickly, undermining the profitability of emerging alternative fuel programmes, the past six years of persistently rising oil prices have provided economic support for alternative fuels.
- On the other hand, growing feedstock prices (corn and vegetable oil, not sugar), which make up a significant portion of the cost of producing biofuels, have had a detrimental impact on the sector's profitability.
- In the U.S., Brazil, and the EU, where biofuel production has been most prominent, government support to lessen profit uncertainty has been a recurrent theme for this commodity-dependent industry.
- In addition to conservation and the use of other alternative fuels, biofuels will probably be included in a portfolio of remedies to the high cost of oil. Due to its land intensity, biofuels are likely to continue playing a minor role in the world's fuel supplies.
- More land would be needed to grow maize in the US than is currently used for all agricultural output if ethanol were to completely replace all current gasoline usage. Technology will play a key role in expanding the use of biofuels.
- The production of biofuel per acre might more than quadruple, resulting in a large decrease in the amount of land needed, if the energy of cheap, readily available cellulose sources could be economically utilized worldwide.
- The lack of mandates for the use of biofuels, a tax on carbon (the CO2 produced by burning fossil fuels), the high cost of building large-scale biofuel production facilities and switching agriculture to bioenergy crops, and the low cost of petroleum-based fuels have all made it difficult to commercialize biofuels.
- In fact, the situation has gotten worse with the introduction of fracking and other techniques to enhance the extraction of fossil fuels from the earth.
Fortunately, many of the technologies developed initially for the production of advanced biofuels can also be utilised to create other products with a good profit margin that could have otherwise been made from petroleum or things that would be challenging or impossible to make from petroleum.