Drop-in biofuels are exciting, but have yet to convince
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24 March 2011 07:08
Datamonitor News and Comment
© 2011 Datamonitor Ltd. All rights reserved
Many countries share the aim of reducing their dependency on foreign oil imports. Biofuels are seen as part of the solution, and they also help to reduce carbon emissions in the transport sector. A form of this fuel, drop-in biofuels do not need any modification of existing infrastructure and have many advantages over ethanol. However, they need to be competitively priced to gain wide acceptance.
The reality today is that biofuels are not widely available, are not competitively priced without subsidies, and first generation biofuels may be seen as contributing to high food prices. A shift to ethanol, biodiesel, or similar fuels would involve changes in existing infrastructure such as modified engines and fuel pipes for vehicles and new fuel pumps at petrol stations. Furthermore, ethanol can only be blended into petrol very close to the point of sale. These factors have
contributed to a blend of 85% ethanol and 15% petrol only being popular in Brazil and the US. Fortunately, however, the poor market share of ethanol has failed to discourage research and development into more sustainable biofuel options.
Innovators have been working on so-called renewable "drop-in" fuels. These biofuels can be used in conventional engines, without the need for any modifications. Jay Keasling, who has previously created affordable anti-malaria drugs from yeast, has developed a renewable diesel that some vehicle manufacturers have tested and deemed safe under their engine warranties. This represents a novelty in the biofuels market.
The advantages of diesel engines are clear. They are more fuel efficient and have lower greenhouse gas emissions than petrol engines. However, particulate matter emissions, and nitrogen oxide emissions are problematic. The new, renewable drop-in diesel is claimed to have over 90% less greenhouse gas emissions than petrol and very low levels of other emissions. This means that the whole vehicle industry has reason to be excited, in addition to environmentalists.
Jay Keasling states that, as well as renewable diesel, his process also allows the production of renewable petrol and renewable jet fuel, all of which can be done with existing technologies. This utilization of current technologies and infrastructures will undoubtedly reduce capital expenditure throughout the whole transport industry. Most importantly, drop-in fuels make a seamless transition from fossil-based fuels to renewable fuels possible, reducing the need for foreign oil imports and
contributing to a healthier environment locally.
However, renewable fuels will still have to compete with oil prices, as well as emerging technologies such as electric vehicles. In its World Energy Outlook 2010, the International Energy Agency estimates that world oil prices in 2035 will lie somewhere between $51.44 and $209.60 per
barrel (at constant 2007 prices). When 2035 approaches, drop-in biofuels will have to reach price parity with this level in order to be a realistic alternative, and so far there is no sign of that happening.