10 November 2001

Green light for biofuels

READ this, and cheer: there is a profitable, and publicly esteemed, future for the UKs arable industry. Just around the corner is a vital and worthy new role for producers – as suppliers of renewable biofuels.

You may scoff. You may say that youve heard it all before, harking back to the media hype on biodiesel back in the 1990s. Despite the interest, that initiative never got off the ground in the UK; it was killed off by Government fuel duty.

So why is it different this time around? Because those in power are really serious about developing Europes own sustainable energy programme. And they are determined to move ahead, fast. Even before the 11 September catastrophe, European officials were seeking to reduce our reliance on imported energy from the Middle East.

Recent events in the US have underlined the urgent need for alternative, home-grown energy to replace oil, gas, coal and nuclear power, all of which are running out. Our climate change commitments increase the impetus, because home-grown fuel reduces our CO2 emissions.

Bold objective

As part of this energy drive, the commission is proposing compulsory minimum biofuel consumption in member states, with the level set at 2% of transport fuel by 2005, rising to 5% in 2010. The bold objective is to replace 20% of our conventional fuel with biofuel by 2020.

Where will this biofuel come from? From UK farms, if only we can develop the infrastructure to deal with it. But we are lagging behind. Germany, Austria and France are already part way to meeting this target. They went down the biodiesel route from industrial rape and sunflower, helping the "green fuel" along with a public relations campaign, and tax concessions to allow it to be economic.

The UK did not follow suit. Although attitudes have recently softened, for a long time the Government held out against supporting biodiesel production here, maintaining the duty at a level which effectively rules it out.

But now the energy debate has hotted up. One man who welcomes the new enthusiasm is Peter Billins, chief executive of British Biogen, the trade association for the UKs emerging bioenergy industry. He has been promoting the benefits of biomass as a renewable fuel source for the past six years; now he sees that his message has come of age.

"At last the Government is reviewing energy policy. Up until now it hasnt had one," he says. "Its clear we can expect far more Government intervention in the energy market." Whether this evolves into pump priming aid to help create local energy generation schemes, further tax concessions on green fuels or even extra grant aid for those switching to biofuel crops is not clear. But using some mechanisms yet to be decided, he is convinced the Government will soon create an environment where it pays for UK agriculture to grow energy.

There are huge opportunities for agriculture, he believes, particularly with bioethanol, rather than biodiesel, in the UK, because this could be generated from a wide range of crop waste such as straw, sugar beet tops, waste potatoes and so on.

Supply would not be limiting; we grow about 4m tonnes of straw annually, and discard perhaps 0.5m tonnes of waste potatoes. Sugar beet tops would be another biomass source; imagine if these could be delivered with the beet to the sugar factories for processing into bioethanol… Forestry waste could also be converted to bioethanol, with the added advantage that the woody material could be burnt to power the process. It appears that the opportunities are endless, as long as the biorefinery plant is there to take the biomass.

Huge market

The total petrol market is bigger than that for diesel; annual UK consumption is 22m tonnes as compared with 15m tonnes for diesel. The bioethanol generated could be mixed in as a blend, or substitute for petrol directly with no engine alteration required.

Mr Billins predicts that energy generation will develop in line with regional demand and local supply of biomass. For example, there will be electricity from short-rotation coppice, miscanthus and forestry in the west, with biorefineries in the east producing electricity and biofuels from crop waste.

Indeed, a new biorefinery is already on the drawing board, based in the east. It is being planned as part of the Green Fuel Challenge, set by chancellor Gordon Brown last year, when he asked industry to come up with concrete proposals for alternative fuels, and which triggered some reductions in duty, in return, in the March budget.

Some grant support is already in place for short-rotation coppice and miscanthus as energy crops. However, many growers would say this falls short of what is required, which explains the lack of interest from the mainstream arable sector; the biomass area is tiny – about 0.01% of farmland.

Critics also say the recent 20p/litre reduction on biodiesel duty in the March budget was not enough. Peter Clery, chairman of the British Association for Bio Fuels and Oils (BABFO), described the chancellors cut as "a start, but quite inadequate to bring forward the environmental potential of the fuel". In effect it cut the tax on biodiesel to 25p/litre; but that for road gas (LPG) came down to just 10p/litre. Mr Clery is lobbying for the tax rate to drop level with LPG. This measure alone would make it economic for farmers to grow up to 10% of the UKs diesel needs, he suggests.

But there are other ways of tweaking biofuel production to release more profit for growers. The answer, says Melvyn Askew, head of alternative crops and biotechnology at the Central Science Laboratory, York is to add value to every step of the production process. Hes seeking out industrial markets for a wide range of bio-molecules and biowastes, including rape meal which is a by-product of biodiesel. The benefits would mount up.

"Lets say we could add £4/t in value to wheat straw through using it industrially. If we used half our production – 2m tonnes – that would put £8m back into agricultural profits. Similarly, the rape market would be supported if we used the meal for speciality products. The potential is there."

Its important that biofuel production sits comfortably within IACS support, perhaps occupying set-aside, as it does elsewhere in Europe. But there are tricky issues involved; the Blair House agreement set a 1m tonne limit on rape meal production from industrial crops. That would limit the growth of the European biodiesel area.

However, Mr Askew is not convinced this barrier will remain; Blair House is crumbling, and may disappear in the WTO negotiations, in the face of domestic US agricultural support. In theory, European biofuels could also be supported under the environmental banner, slotting in as rural development and so eligible for aid – which would help Europe keep its own biofuel competitive in the face of possible imports.

Infrastructure

"I foresee the day when we use our waste straw, crop and forestry waste to give us petrol. The timescale is short; the technology is there and it could be economic. All thats holding us up is a lack of infrastructure."

Mr Askew wants the industry to act in unison. "Weve a history of being too independent, and that works against us. Growers must get together, perhaps through local co-operatives, and work out an infrastructure to deliver bulk supplies of waste to local fermentation factories. If we dont seize this opportunity, we will lose the bioenergy business to France, Germany and Poland. We dont want to be importing bioethanol and biodiesel from Europe in the future – and thats a real danger."