Next-generation Biofuels Set to Displace Fossil Fuels in the Transportation Sector

The development of second-generation biofuels, which are derived from cellulosic materials and third-generation biofuels developed from algae, has gained traction during the last few years. This is mainly due to strong governmental subsidies and funding programs in Europe and the United States. Second-generation biofuels will soon be available on a commercial scale. Third-generation biofuels are still in the early stages of development and the impediments surrounding this technology are very complex.

New analysis from Frost & Sullivan, Next Generation Biofuels: Strategic Portfolio Management, finds that second-generation biofuels have the capacity to replace first-generation biofuels based on edible feedstock with non-edible cellulosic materials.

"Energy independence is the most prominent factor driving the development of next generation biofuels," said Technical Insights research analyst Tomasz Kaminski. "The U.S. is the biggest consumer of oil in the world and this is the reason that fastest growth has been observed in the biofuel sector in the country."

End users in the United States consume nearly 21 million barrels of oil per day while only 8.5 million barrels of oil are produced domestically per day. The country depends on oil imports to narrow the gap between demand and supply. Next-generation biofuels will help countries, such as the United States, to reduce dependence on imported resources.

Besides resolving oil shortage issues, next-generation biofuels will also scale down greenhouse gas (GHG) emissions. Second-generation biofuels will enable more than 80 percent GHG emission reduction in the transportation sector. This will help address GHG emissions until technologies like electric vehicles (EV) or fuel cell vehicles (FCV) are available for replacing internal combustion or diesel engine in transportation sector.

Governments of various countries are providing aid and avidly supporting the development of commercial biofuel refineries. The European Union is committed to the 20/20/20 decree—enhance energy efficiency by 20 percent, decrease GHG emission by 20 percent and ensure 20 percent of all energy generation comes from renewables by 2020. This opens up huge opportunities for the biofuels market, as there is a lack of a viable alternative currently available for the transportation sector.

Third-generation algae-based biofuels will not only mitigate GHG emissions while burning, but also capture CO2 from power plants or even directly from the atmosphere, thus further enhancing GHG reduction.

Before next-generation biofuels can enter the commercial market, some problems need to be resolved. Biomass feedstock remains a challenge with very high production costs. Optimizing the technology for processing various feedstocks for biofuel production can overcome this issue. Improvements in production can help bring down costs. Moreover, better use of valuable by-products is necessary to ramp up owner revenues.

"To ensure market progression, second- and third-generation biofuels developers must focus their attention on production cost reduction and improvements in production pathways," said Kaminski. "Observations reveal that the thermo-chemical conversion pathway is at the forefront of research activity in the second-generation biofuels sector."

Cooperation with research institutions such as universities could deliver positive momentum for the biofuels market. Developers must make optimal use of financial assistance from governments. Biofuel production facilities should be located in the rural areas to boost rural development.

More information:
www.frost.com/prod/servlet/rep … pid=D20E-01-00-00-00

Provided by Frost & Sullivan