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Global Bioethanol: Evolution, Risks, and Uncertainties
Global Bioethanol: Evolution, Risks, and Uncertainties
Global Bioethanol: Evolution, Risks, and Uncertainties
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Global Bioethanol: Evolution, Risks, and Uncertainties

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Global Bioethanol: Evolution, Risks, and Uncertainties explores the conceptual and methodological approaches for the understanding of bioethanol technologies, policies and future perspectives. After a decade of huge investments made by big companies and governments all around the world, it is time to talk about the real conditions in which bioethanol will (or will not) evolve. Uncertainties and certainties are discussed and addressed to understand the futures of global bioethanol. The book analyses the evolution of bioethanol in the world’s energy mix under technological, economic and commercial perspectives. It gives particular emphasis on the innovative trajectories of second-generation ethanol and their potential in different countries and regions. Future scenarios are proposed in order to evaluate the possible outcomes of ethanol in a global perspective.

For providing a thorough overview of the bioethanol sector from different points of view, this book is a very useful resource for all involved with biofuels in general and bioethanol in particular, including energy engineers, researchers, consultants, analysts and policy makers.

  • Presents a thorough examination of the uncertainties surrounding bioethanol in the future global energy mix
  • Provides a data-driven and updated picture on the technological, economic, and market trends and scenarios for bioethanol
  • Offers a foresight analysis on the perspectives of bioethanol as a global commodity
  • Includes a prospective about who is going to lead the new trajectories in the global arena
LanguageEnglish
Release dateJun 14, 2016
ISBN9780128031568
Global Bioethanol: Evolution, Risks, and Uncertainties

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    Global Bioethanol - Sergio Luiz Monteiro Salles-Filho

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    Chapter 1

    Ethanol Industry: Surpassing Uncertainties and Looking Forward

    Wilson A. Araújo,    DuPont Industrial Biosciences, Paulínia, Brazil

    Abstract

    The ethanol industry has been an important contributor to country economies and their energy security strategies besides playing a significant role regarding climate change issues. Its share in the global biobased market represents over USD 55 billion of a total biobased market of about USD 65 billion. Ethanol production is clearly an essential part of that industry which is no longer merely one for the future. Besides the well-established first-generation biofuels industry based on grains, beet and sugarcane (ethanol and biodiesel), investments are currently occurring around the world to produce second-generation biofuels (eg, cellulosic ethanol) and biochemicals (eg, farnesene, propenediol, etc.). Based on market reports, academic studies and public information from industry associations and companies, this work pursues the understanding of cellulosic ethanol business dynamics as a viable alternative to increase global ethanol production. It provides a snapshot of the biobased economy and more granularly explores biofuels and ethanol industry growth challenges.

    Keywords

    Bioeconomy; biobased; biotechnology; biofuel; biochemical; ethanol; biorefinery

    Introduction

    The ethanol industry has been an important contributor to country economies and their energy security strategies besides playing a significant role regarding climate change issues. Its share in the global biobased market represents over USD 55 billion of a total biobased market of about USD 65 billion. Ethanol production is clearly an essential part of that industry which is no longer merely one for the future. Besides the well-stablished first-generation biofuels industry based on grains, beet and sugarcane (ethanol and biodiesel), investments are currently occurring around the world to produce second-generation biofuels (eg, cellulosic ethanol) and biochemicals (eg, farnesene, propenediol (PDO), etc.). Biotechnology advances and the large availability of biobased feedstocks, like agricultural residues, energy crops and even algae could boost biobased industry growth in addition to reducing greenhouse gas (GHG) emissions. Taking into account the global liquid fuel demand, biofuels could be considered an easy think business opportunity, but this is not a bed of roses. It is beyond simply planning and executing approach to attend a demand; this is not a business as usual. It involves, for instance, scaling up technologies and establishing a learning curve towards economic feasibility, dealing with policymakers and oil industry lobby against biobased products as well as counting on global commitments towards a sustainable scenario under discussion in arenas pre and post the Paris Climate Change Conference (COP21).

    The biofuels industry has reached the current stage thanks to parallel developments which boosted a surge in global demand for biofuels in the last decade: flex-fuel cars (ethanol and gasoline); policy mandates for greater use of biofuels; and subsidies in three most important regions: Brazil, the United States and Europe. The investment growth of biofuels is dependent on robust policies. Countries like the United States and Brazil have a long history of government support of their domestic industries and biofuel associations in both countries are very active in biofuels lobbying. It is important to note that policies have been globally fostering the expansion of the biofuels industry, but they are also often challenged to be reviewed, creating market uncertainties. Even in those two large biofuel producers the review of policies cannot be considered unusual and this debate is also often addressed in Europe.

    Liquid biofuels account for the largest share of transport fuels derived from renewable energy sources. Ethanol production reached over 80 billion liters in 2013 and in 2015 was forecast to reach over 90 billion liters, with the United States and Brazil remaining as the top two producers. The demand growth and production have to evolve in a high entropy arena which is explored through this chapter beyond the first-generation biofuels domain. Based on market reports, academic studies and public information from industry associations and companies, this chapter pursues the understanding of cellulosic ethanol business dynamics as a viable alternative to increase global ethanol production. It provides a snapshot of the biobased economy and more granularly explores biofuels and ethanol industry growth challenges. First it presents an overview of the bioeconomy and market potential for renewable products. Bioeconomy Toward a Renewable World section brings the biofuels context, its global economic relevance and current industry reality. Finally, ethanol industry dynamics and the uphill task to grow and surpass policy and economic uncertainties are discussed. The challenge is to ensure the sustainability of first-generation business while accessing the second-generation ethanol potential.

    Responsibility for the information and views set out in this chapter lies entirely with the author.

    Bioeconomy Toward a Renewable World

    This section provides an introduction to the bioeconomy. It is a snapshot on world efforts toward renewables beyond the first-generation biofuels domain (biodiesel, sugarcane and corn ethanol).

    Bioeconomy is a term which permeates academic and industrial audiences when discussing the challenge to build a sustainable future through biotechnology advances, the modern bioeconomy. In a broad definition, bioeconomy is the global industrial transition of sustainably utilizing renewable aquatic and terrestrial resources in energy, intermediate, and final products for economic, environmental, social and national security benefits (Golden and Handfield, 2014). Such a revolution requires coordinated strategies and commitments through legislation, policy, education and research. The United States and EU have been considering this theme as part of their strategic agenda. Brazil can be listed as a high-potential country due to comparative advantages, biodiversity, competitive costs of biomass—especially sugar cane and advanced tropical agriculture anchored in science and technology. Countries have been approaching the subject from different angles and defining its strategies, industry associations and international institutions have been coordinating efforts pursuing a deep understanding of growth hurdles and work on critical topics to drive success. It is a fair-minded approach to highlight that the world is struggling and, surely, progressing towards a renewable economy (Lorenz and Zinke, 2005; MEI/CNI, 2013; Pugatch Consilium, 2014; NAP, 2015).

    The World Economic Forum has been working in convening cross-industry stakeholders at the regional level in North America, Brazil, India and China. This indicates both the growing importance of discussions about renewable energy and biobased consumer industry solutions around the world. However, despite recent advances and promises for the future, a significant amount of work remains, such as establishing effective government policy, increasing capital investment, influencing industry perception as well as connecting stakeholders across the value chain to reduce costs and stimulate growth and innovation. Country initiatives have also been noticed, for instance, in Brazil, the National Confederation of Industry (CNI) launched its agenda for stimulating innovation in Brazil in 2011. Among the strategic highlights are factors related to biotechnology and biodiversity. In the United States, the National Research Council supported by the Department of Energy convened an ad hoc committee to create a roadmap on industrial biotechnology for accelerating the manufacturing of biobased products (MEI/CNI, 2013; WEF, 2014; NAP, 2015).

    The funding for this sector has been coming from governments (grants and loans), private equity and large companies. The total US federal spending on biofuels 2009–12 achieved USD 3.3 billion. Other national and state governments also fund the development of biorefineries, for instance, the National Development Bank of Brazil (BNDES) provided approximately USD 600 million between 2011 and 2014 for the financing of innovation in the Brazilian ethanol industry towards diversification (cellulosic ethanol, new products from sugarcane and gasification). CTC, Novozymes, Petrobras, Amyris and others have projects submitted and admitted in the BNDES program. Another global pot of funding comes from private equity investors like venture capitalists, angel investors and private individuals (NEXTSTEPS, 2014; BNDES, 2011, 2013).

    The development of a biobased economy evolves in a complex context, climate change, production of biofuels, oil prices, population growth, environmental protection and the nexus with food security. Biorefineries will support this transition applying energy and cost-effective technologies to process biomass and produce renewables molecules. It involves a number of industrial sectors pursuing increases in productivity of agriculture and white biotechnology process advances. White, or industrial, biotechnology is the application of biotechnology for the processing and production of chemicals, materials and energy. Microorganisms, enzymes and their genetically engineered generations associated with process engineering strategies form the basis of a group of technologies that academy and industry are seeking to develop for commercial use. The biorefineries are combined biotechnological, chemical, physical and thermal processing facilities converting biological feedstock into numerous biochemical and/or chemical intermediates. For example, Amyris has successfully produced fragrance oil at its currently operating biorefinery in Brazil and shipped to its customer, Firmenich. Unlike the traditional sugarcane juice fermentation, which results in ethanol, they developed a biotechnology process (genetically modified microorganism fermentation) which applies the same juice to produce farnesene, a building block, which can lead to a range of sugarcane-based products like cosmetics, diesel, lubricants and others (Langeveld et al., 2010; Erickson et al., 2012; Elabora Consultoria, 2014; Youngs, 2014).

    Biotechnology contribution to developing countries can achieve rates higher than the 2.7% of 2030 GDP estimated to OECD countries, with the largest economic contribution of biotechnology in industry (eg, high-energy-density biofuels produced from sugar cane and cellulosic sources of biomass) and in primary production (eg, genetically modified varieties) (OECD, 2009).

    Numerous potential pathways to biofuels and biochemicals exist via the sugar platform. A consortium led by E4tech (UK) created a company database for 94 sugar-based products. It is a comprehensive evidence base for policymakers and industry—identifying the key benefits and development needs for the sugar platform. Some of the established biobased products already dominate global production (eg, ethanol, PDO, lactic acid), and several products do not have an identical fossil-based substitute (eg, xylitol, FDCA, farnesene). Twenty-seven products of particular interest were selected for further market analysis, given the level of industry activity, and as highlighted by the US Department of Energy Top 10 biochemicals and International Energy Agency Bioenergy Task 42 reports. For those, the total current biobased market analysis achieved about USD 65 billion. The ethanol market is over USD 55 billion followed by much smaller, but still significant, markets for n-butanol (current production mainly via the ABE process), acetic acid and lactic acid, xylitol, sorbitol and furfural also showing significant markets for chemical conversion of sugars, without petrochemical alternatives. The smallest biobased markets are, as is to be expected, those of the earliest stage products, such as 3-HPA, acrylic acid, isoprene, adipic acid and 5-HMF. Biobased FDCA, levulinic acid and farnesene have the highest current prices (E4tech,

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