Advanced biofuels: where are the long-term opportunities? (ERTC)
Global energy demand is projected to grow by as much as 25% through 2040 in parallel with GHG emissions reduction targets. Hydrocarbon-based fuels will continue dominating the market in the near-term despite the advent of electric vehicles and hydrogen, but advanced biofuels will be needed to meet long-term climate targets, according to the International Renewable Energy Agency (IRENA).
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IRENA’s low carbon pathway calls for 650 billion litres of global biofuels consumption in 2050, a fivefold increase since the 2016 baseline. The Renewable Energy Directive (RED II), which became effective in 2021, should help accelerate the low carbon pathway for the European transportation sector, with a 3.5% target for advanced biofuels by 2030.
In certain cases, existing refinery assets are playing an important role in delivering the flexibility for co-processing biofeedstocks that can be combined with gasoil feedstocks through modified hydrotreaters (for example). In other cases, higher market demand and government incentives provide opportunities for investing in stand-alone biofuels units. Besides Europe and other mature fuel markets, tax incentives can accelerate investment in regions just beginning to promote advanced biofuels.
To attract ESG-focused investors, both bespoke strategies require reducing a process facility’s carbon footprint, such as by replacing gas fired heaters with electric heaters, optimising distillation efficiency, debottlenecking compressors (e.g. FCC WGC), and so forth. Even though biofuels markets are politically instituted, their production could lead to high margins opportunities for some refiners.
The advanced biofuels industry is still rather small, with construction of relatively small units driven by innovation-based startups, according to IRENA. Advanced biofuels make use of non-food feedstock and non-feed biomass (e.g. vegetable oils and animal fats) and energy-specific crops capable of growing on degraded land.
Unlike first-generation biofuels requiring vast amounts of farmland (e.g. ethanol) to supply corn and sugar cane feedstocks, advanced biofuels do not compete with food or water supplies. Feedstocks such as algae and methane emitted from microbial activity in landfills can be processed to biofuels with properties similar in chemical composition to fossil fuels.
Real results have been reported towards advanced biofuels production. ExxonMobil’s advanced biofuels and algae research is advancing the technical feasibility in producing 10,000 bpd (580,300 mtpy) by 2025. They are targeting production of 1500 gallons (5678 litres) of fuel per acre per year from algae, which is five times more fuel per acre than from sugar cane or corn.
In comparison, millions of acres of virgin forest have been cleared since the 90s for the cultivation of corn (North America), sugar cane (South America) and palm oil (Indonesia) to produce ethanol. Instead, ExxonMobil and the Renewable Energy Group (REG) have teamed with Clariant to produce biofuels from agricultural waste and residues, using Clariant’s sunliquid® technology to create cellulosic sugars.
More business opportunities could emerge along newly created biofuels value chains, such as bio-based petrochemicals, aviation fuels, etc. For example, co-products from the first sunliquid plant starting up before 2022 in Podari, Romania will be used for generating renewable energy. This will make the plant independent of fossil energy sources while the fermentation process delivers maximum ethanol yields.
Other companies are working with government laboratories and university research centres in the development of advanced biofuels. Securing feedstock is a major challenge. In addition, biofeedstock pretreatment (Figure 1) is an important consideration when securing a wider variety of feedstocks, such as forest waste and unused material from pulp and paper operations.
Eni recently opened a pretreatment unit at its renewable diesel and sustainable aviation fuel (SAF) production facility in Gela, Sicily. The unit will enable full use of biomass feedstock from used cooking oil and fats from meat and fish processing for hydrotreated biofuels production. Aerospace industry leaders including Rolls-Royce and Boeing have already carried out successful test flights using SAF.
The European Commission recently created a ReFuelEU Aviation proposal that would mandate the incorporation of SAF supplied at EU airports to 63% by 2050. In addition to SAF, market demand, spurred by government incentives, requires a wide array of biofuel-based products. This requirement accelerates the competition to become key suppliers of ecofuels to end users for the circular economy.
In fact, new biofuels applications are emerging for end users that weren’t visible just a few years ago. This includes biofuels used to supply reserve power for mega data centres, and for powering generators essential to microgrids networks and other modular power systems. These systems are rapidly emerging for the delivery of electricity in the 10-to-100 MW range seen in developing regions lacking access to centralised grids (e.g. Africa, East Asia and South America).
Repsol is well into the construction of an advanced biofuels plant at its Cartagena refinery. The plant will have an annual production capacity of 250,000 mtpy of hydrobiodiesel, bioject, bionaphtha and biopropane. Besides renewable diesel, SAF and other fuels benefitting from different biomass sources, some of the most capable renewable fuels producers are diversifying even further, like Neste (see Figure 2).
Diversification of renewable-based product portfolios is clearly seen between LyondellBasell and Neste, which have agreed to a long-term commercial relationship for producing polymers and chemicals from renewable feedstock. Neste’s proprietary RE™ technology will be used to produce the raw material for plastics production made entirely out of renewable and recycled sources.
Fuel demand has still not returned to pre-pandemic levels. Many European refiners are using 2022 to diversify into renewable fuels based on biomass feedstocks. Shell expects its Rotterdam biofuels facility, based on its own proprietary technology, to start production in 2024. The 820,000 mpty facility will produce SAF and renewable diesel from used cooking oil, waste animal fat and other residual products.
Another closely followed operation is Shell’s use of bio-naphtha and light hydrocarbon gases created during the formation process to produce hydrogen for hydroprocessing operations, which will further enhance sustainable refinery-wide operations. The common denominator seen with all these initiatives is that advanced biofuels offer minimal environmental impact while generating new revenue streams.
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This short article originally appeared in the 2021 ERTC Newspapers, produced by PTQ / DigitalRefining.
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