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10 Questions

with Rob Vierhout
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By Paul Voosen
Staff Writer, The Prague Post
June 20th, 2007 issue

 

Jan Přerovský/THE PRAGUE POST
Rob Vierhout, secretary general of eBio, says that thanks to political support and high oil prices, biofuel use will continue to rise.
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The Vierhout file

Job title: Secretary general, European Bioethanol Fuel Association (eBio)
Nationality: Dutch
Age: 50
Education: Readings in European law and political science at Radboud University, Nijmegen, Netherlands
Family: Married, two children

Starting in September, fuel stations nationwide will be required to offer diesel fuel that includes 2 percent biodiesel; in January, all gasoline will have to include 2 percent bioethanol. The EU wants to increase these blends to 10 percent by 2020. Advocates of biofuels, which are made from crops such as wheat and scrub car emissions, say they provide a green supplement to oil, while critics say they are over hyped and don’t provide a long-term alternative to fossil fuels. In town for a conference, Rob Vierhout, secretary general of the European Bioethanol Fuel Association (eBio), talks to The Prague Post about rising grain prices, Brazilian competition and taking on big oil companies.
➊ Almost every country in the European Union, including the Czech Republic, lags behind national targets set for biofuel use. Why?
It’s a combination of factors. The EU’s current biofuels directive only gives member states an indicative target, meaning countries can set national targets lower than suggested, though they have to give reasons why. And the European Commission [EC] is not forcing them to go to the courts if targets aren’t met.
The countries that have achieved reasonable levels of use — for example, France or Sweden — already had industry in place. All the other member states had to start from scratch. And that didn’t happen until the oil price started climbing, which brought this sense of urgency.
So now attitudes are changing. Member states had to achieve a 2 percent use target by 2005, and only two states met that: Germany and Sweden. This year, member states set their 2010 goals, when the target is 5.75 percent. Almost all the states want to achieve that target. There’s a change in mentality going on, from weak nonbinding measures to high targets that can be enforced by the EC.
➋ Will it be biodiesel or bioethanol that’s used to meet these targets?
That’s left to the states. The future is a bit of a crystal ball exercise. Looking at 2020, we know that biodiesel is only made from rapeseed or sunflower and palm oil, which are much less available than the sources for ethanol. Given that you’d need to import lots of oil from third countries for biodiesel, bioethanol may win out, because when you’re importing, you’re dealing with sustainability: Are you chopping down the rainforest to grow plants that produce vegetable oil? But, who knows, the two could be balanced or in favor of biodiesel, as it is now.
➌ You mention sustainability. That’s been one criticism of biofuels, that the forests cut down to grow feedstock for fuels negate any of their green benefits. Is this valid?
Absolutely, it’s valid. At eBio, we think sustainability should apply to all crops, whatever their use. So if you’re using a crop for food or industrial use or animal feed, it needs to be grown in a sustainable way.
To give you a simple example, last year the EU imported between 3.5 million to 4 million metric tons of palm oil. Between 30,000 and 40,000 tons were used for biodiesel and all the rest went to food. No one ever discussed how much rainforest was being cut for growing palm trees before, because it went into food. But then, in the Netherlands, palm oil was being used for generating electricity. And an NGO found out that the palm trees providing this oil used to be rainforest, so they said, ‘The carbon balance is so negative, you shouldn’t do that.’
Biofuels have triggered this debate, and sometimes I have the impression that this criticism is fueled by the oil and food industry, because they don’t like biofuels — oil because we’re entering their holy realm and food because they’re confronted with higher prices for crops.
But again, if you’re producing a product that you say is sustainable, it’s a fair point to say, ‘Prove it.’ But I want a level playing field, so let’s apply this to all crops, whatever their use.
Also, let’s have a methodology to measure greenhouse gas performance, from the well to the wheel, asking, What is your CO2 balance? We say we have a CO2-friendly product, so let’s prove it. But let’s be honest and do the same test for fossil fuels and compare it with biofuels.
➍ If current biofuels were put to this test, you believe they would be a net positive on carbon emissions?
Overall, I’d say yes. But it depends on the crop you use, where the crop is grown. Are you using a lot of fertilizer or not? What kind of fossil fuel are you using for power, or are you using biogas? What about your by-product? Are you burning it, like in Brazil, or selling it as cattle feed? It’s not a simple equation. If you have 100 ethanol plants, you’d need 100 life-cycle analyses to determine the net effect.
➎ European bioethanol, produced from wheat, corn or sugar beet, is not as efficient or cheap as Brazilian bioethanol, made from sugar cane. Will second-generation technology that uses enzymes to create bioethanol from waste biomass — called cellulose — make Europe competitive?
The shift toward cellulose will increase the CO2 benefits of bioethanol, since it will increase your yield per hectare, because you can use more of the crop. And when you can digest biomass that is considered a waste, you’ll reduce your production costs. Also, with cellulose, what you can’t use you can burn and put into energy. But it will be a couple of years before we see large-scale industrial applications. The enzymes you need to use are still too expensive.
➏ You mentioned oil companies not being thrilled with biofuels. Are any starting to enter the industry?
Shell is a shareholder in Iogen, a Canadian company. They’re using straw as a raw material to process into ethanol. But they’re the only oil company putting money into it.
My guess is now that we’re going toward obligatory use of biofuels, oil companies will say, ‘Well we’ve been fighting it for many years but we couldn’t stop it. And if you can’t beat them, join them. So let’s buy the bloody thing.’ Five years from now, you’ll probably see many oil companies become active shareholders. They can do it. They could buy the entire industry if they wanted.
➐ You’ve mentioned that the European biofuels sector is driven by the policies of the member states, not the market. Does this leave the sector at risk of slumping if policies change?
Every market has risk, whether the driver is political or not. If the biofuels market were only based on the price of crude oil, it would still be risky, because those prices are quite volatile.
There’s not a problem here. Politicians have made up their minds: They’ve indicated they want a binding target by 2020 of a 10 percent blend of biofuels in normal petrol and diesel. It’s here to stay.
Take Brazil, where bioethanol is competitive with fossil fuels right now — when oil is above $32 [688 Kč] for a barrel, they can compete. Still, the government says you need 23 percent ethanol in every liter of petrol. Why say that, if it’s competitive? Because you want to keep your political influence. It’s too important to be decided by the market alone.
➑ Taking a long-term view, how much of a solution are biofuels to weaning ourselves off fossil fuels?
Well, I think eventually we will turn to a hydrogen-based transportation system. The question is when: 10 years, 20 years, 40 years? The problem with hydrogen is not just that you need a lot of energy to make it, but you need to change your infrastructure entirely. You need to change your cars, your gas stations, everything. You have to write off an infrastructure that has cost billions and billions of euros. For this reason, it will take some time, even if the technology is ready.
➒ Some critics, most recently the Czech Agrarian Chamber, have warned that biofuels will cause the price of basic crops to rise. How great a concern is this?
They will increase. The EC has done an interesting study. They asked what will be the effect of having a 10 percent biofuels obligation by 2020. And they found that the price of wheat would increase 6 percent.
That’s so far away, though, so how on earth can you tell? We do know that, last year, the price increase was caused not by biofuels but by drought. We had bad weather. In Australia, they simply locked their barns and said that no crop is going out anymore. If we have a reasonable crop this year, prices will go down again.
➓ The Czech Republic has said it will not subsidize the biofuel industry, which has led analysts to say that petrol prices will slightly rise when mandatory blending begins. Do other EU countries subsidize biofuel use?
The price increase you’ll see will be so small that it’ll disappear in the volatility of the petrol price.
Governments like the Czech Republic’s should show more initiative. Looking at various systems across Europe, the Germans are best. They’ve introduced an obligation to use biofuels while keeping in place tax exemptions for E85, which powers FlexFuel cars, and cellulose. And they’ve put high penalties on oil companies who don’t offer biofuels.
The government should look at what its neighbors are doing. Acknowledge that you can learn from them. Look at the German system, use the system.
Want your top manager to answer our 10 Questions? Send a message to Paul Voosen at pvoosen@praguepost.com


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