Cautious Optimism in the Waste-to-biofuels Sector

By Bruce Ross
Ross Gordon Consultants SPRL

This correspondent attended the Oleofuels 2017 conference in late June in Krakow, Poland, on behalf of the National Renderers Association (NRA) and led a panel discussion on vegetable oil availability in Europe. The conference is one of a series organized by Active Communications International that attracts excellent speakers and an audience of biofuels industry stakeholders from Europe and beyond. Participants this year included national government officials, traders in biofuels and biofuel raw materials, renderers, European Union (EU) biodiesel/renewable diesel producers, trade association officials, biofuel machinery manufacturers, fuel storage companies, non-governmental organizations involved in developing certification standards, and journalists.

Krakow is a stunningly beautiful city, especially in the summer, and the one-time hometown of Pope John Paul II. However, a local attendee at the conference said the city is not as stunning in the winter when there is so much pollution many residents wear face masks. The pollution is caused mainly by the burning of whatever is available as fuel to heat homes, not just coal that is locally abundant but also wastes such as plastics.

So, it was appropriate that the aim of the conference was to discuss cleaner fuels under the theme “Current and future trends for liquid biofuels produced from oils and fats.” Speakers included biofuels producers Argent Energy, ecoMotion, Eni, Neste, and Renewable Energy Group/Petrotec, all of which use animal fats and/or used cooking oil (UCO) as feedstocks. Some are customers of NRA members.

The mood of a conference is usually a good guide as to the state of the industry. Despite uncertainties about the future regulatory environment on both sides of the Atlantic, there was a strong feeling that biofuels produced from by-products, wastes, and residues are finally being recognized as providers of relatively easy ways for countries and industry players to meet renewable energy targets and aspirations in the transport fuel sector. Many EU member states are encouraging the use of UCO and animal fats as feedstocks for biodiesel, renewable diesel, and/or hydrotreated vegetable oil (HVO) production. This is resulting in potential shortages of these materials in regions such as Asia. United Kingdom biodiesel production is almost 100 percent waste-based.

For the first time, oil refining companies are getting into the waste fuels sector at scale, with the Eni and Total investment in France as an example. International arbitrage in waste oils and fats has emerged and existing producers of biofuels from wastes are building new plants. Argent, for example, is opening a second plant in Liverpool, England, and Neste has plans for another large facility. There has also been an increase in investment in advanced biofuels. One possible fly in the ointment though could be if Europe ends its love affair with diesel cars – there are signs of this since the Volkswagen vehicle emissions scandal. Yet Neste argues that renewable diesel is the lowest cost way of reducing carbon dioxide emissions from passenger cars and heavy road vehicles.

Regulatory Environment, Traceability, and Certification
While there is “many a slip ‘twixt the cup and the lip” (or “don’t count your chickens before they hatch”), most conference delegates believe that EU and United States (US) policy will continue to favor fuels from waste oils. In the EU, the European Parliament and member states are in the early stages of debating a European Commission proposal to revise the Renewable Energy Directive (RED) to produce RED II. This generally favors biofuels from waste but there is a long way to go. The Commission wants to encourage advanced biofuels but the consensus at the conference was that there will not be enough advanced fuels available to make any blending obligations for such fuels relevant in the near term.

Interestingly, the remark was made several times over the two-day conference that California, Oregon, and Canada are the places to watch for the direction of future biofuels policy. Speakers attested that several US states are setting the pace in America (or “taking up the slack from the federal government” as one speaker put it) in the same way that Germany and the Nordic countries lead the way in Europe.

No discussion of waste-to-biofuels would be complete without the matter of traceability being raised. Yet, instead of the usual accusations that UCO trade, for example, is rampant with fraud, there was recognition that all feedstocks transactions are vulnerable to this. There was less focus on certification at this year’s conference, perhaps because it is less of a novelty and programs have been seen as workable and adaptable to regional situations, independent, and necessary by all stakeholders, including biofuel producers.

First Generation Biofuels Fight Back
The conference was not monopolized by talk of biofuels from waste oils and fats. Since it was held in Poland, which majors in fatty acid methyl esters from rapeseed, there was a spirited defense of the need to nurture first-generation biofuels while advanced fuels are developed. A site visit to a Grupa Lotos biofuels plant near Czechowice–Dziedzice gave delegates a first-hand look at that part of the sector. Ironically, the facility derives combustion energy from locally-abundant coal.

Most representatives of the waste-to-biofuels sector expressed the view that the EU should not, as the Commission proposes, push first-generation crop-based biofuels out of the market so fast. This would be short-sighted as it cannot be expected that other products will be immediately able to fill the gap. In addition, it would shrink the overall market, making competition with fossil fuels more difficult.

A speaker from the World Bioenergy Association contended that the food versus fuel argument is no longer valid, which undermines one of the Commission’s concerns. He said that carbon taxes were a more efficient tool to steer rapid decarbonization rather than present alternative approaches.

The overall conclusion of most conference delegates was summed up by a spokesman from ecoMotion (the biodiesel arm of Europe’s largest renderer, SARIA) who said “we need to focus on a variety of feedstocks” based on trustworthy traceability systems. All agreed the biofuels sector needs all available feedstocks as there is danger of insufficient supply.

August 2017 RENDER | back