Bio Energy Transportation
Mare Forum Conference
14-15 September 2006 - Chairman’s notes

Sustainability is the new mantra which permeates any discussions involving energy or industrial process these days. There is a nervousness surrounding the provision of hydrocarbons , both from the environmental standpoint, and increasingly as regards security of supply. What will it profit us if there is sufficient oil in the world, but we end up being held to ransom by those who control it? It is a potent argument, as compelling as those surrounding the threats of global warming, and the received wisdom that we are accellerating the destruction of our own environment.

Biofuels clearly do not offer us a solution to all of these problems, but they answer several of the difficult questions about their component parts. They are green in terms of the possible reductions in harmful emissions they promise, while they offer this genuine attraction of sustainability. They offer new possibilities to agriculturalists with the alternative revenue streams for their crops, hitherto grown only for food. They offer developing countries genuine opportunities to get into the production of added value products, with a relatively low entry price into plants for the production of ethanol or biodiesel, or at the very least pelletised biomass, which can be shipped out or fed into power stations.

The potential and promise of biofuels were considered at length at last week’s Mare Forum conference on Bio Energy Transportation in Rotterdam. Potential is perhaps the operative word, because while they offer an attractive alternative to fossil fuels, and are growing at a considerable pace, they presently represent no more than about 1% of current fuel usage. But despite this modest current level, biofuels are likely to become an ever more important cargo for shipping, not least because of the targets which had been set by governments which would require a greater use of these cleaner energy sources. And while these cargoes were presently low value, they may well evolve into quality cargo, able to attract higher rates.

While the present production of biofuels was modest, and currently needed financial support of some kind to be viable, this could well change. The EU target which prescribes 5.75% of Europe’s energy to come from sustainable sources by 2010 as our contribution to Kyoto may or may not be feasible, but clearly targets focus minds.

Statistics on these products may be confusing, with a number of problems of definition. Most bioproducts, such as soya, rapeseed, palm oils and sugar cane have a dual purpose and can be used either for food or fodder, or fuel. Many others, such as wood waste, woodchips or pelletised wood can be employed as raw materials for pulp and paper and wood products, or can be burned as biomass or used for ethanol or biodiesel. Even locally, shipments of biomass moved over European borders frequently encounter problems with customs, the rules being imprecise about whether a cargo of foodstuffs, fuel or waste was being considered.

Could there be a conflict between the demands for biofuel and the needs of the world for food, with competition for available land to grow these possibly competing crops. It has been suggested there was a requirement to invest in biomass, especially in the developing world, where there was a compelling need to increase yields, to produce food, and to bring unproductive land into use. A huge potential for the expansion of agriculture for biomass, not least because it might be reasonably forecast that one third of our energy requirements by 2050 might be grown, rather than mined or pumped. “2nd generation” biofuels, using more of the available energy locked into crops, and producing greater efficiencies in the production process are a possibility.

There is nothing better than an example and a project designed to assist Mozambique, producing fast growing eucalyptus on the island, which would be the raw material for a local, large-scale biodiesel plant, offered assistance to both agriculture and industry.

The ability for biofuels to employ the existing infrastructure, but with a significant reduction in harmful emissions is an important feature.. The proven Fischer-Tropsch process was highly effective in producing ethanol and bio-diesel from a range of sustainable materials. New possibilities, notably for the developing world came from the Jatropha plant, a seed-bearing shrub which lived as a hedgerow on marginal soils in equatorial regions. Land which was previously unproductive had the potential to produce 5 tonnes of oil-bearing seeds per hectare, with huge amounts of land available to grow the crop. Biomass can offer the opportunity to produce both fuel and food, and a secondary use for agricultural products which, as they stand, might be uneconomic for the producers.

Brazil, of course, has more experience of biofuel production that anywhere else on earth, it having been a policy to seek energy self-sufficiency through agriculture, notably sugar cane derived ethanol and bagasse for the production of significant quiantities of electricity. . In Brazil, some 42%of total sustainable energy was derived from sugar cane and bioelectricity was competing with coal for power generation.

It was the flexibility of usage, which was one of the chief attractions, with the planted acreage divided between cane for the production of sugar, and that for ethanol. In global terms, ethanol production was rising steeply, having doubled in the past five years. The US was a significant producer, having doubled its ethanol capacity in the short term and Europe was becoming increasingly significant, with the main demand being for ethanol to blend with conventional fuels.

The sea transport of biofuels or biomass would become increasingly important, as neither the US or Europe could produce sufficient biofuels to displace oil. they should, it was suggested, “ look south” to the ample lands in South America and Africa.

In Brazil there was a local market for “flex fuels”in which the proportion of ethanol in gasolene mixtures could be varied by the consumer. Petrobras, which was a heavy user of biofuels, was increasingly relying on pipelines for local transport.

Could there be an integrated approach to sustainable development? Experience has been gained with small scale biomass schemes in Russia in which sawmill waste was given some added value with pelletising plants, although their success was heavily dependent on an available transport infrastructure.

And genuine sustainability was important. There is a concern that fuel demands would compete with those for food, and a market for biomass might cause food shortages, or the use of non-sustainable crops cause environmental damage. An international system of tracking and tracing origins of such biomass products was clearly needed. Alternatively, waste streams might be employed, such as the use of Iogen a potential end product..

The safe and adequate transport, handling and storage of biofuels were important consideration, and the impacts of new IMO regulations, which come into force next year, on the supply of ships have significance.The carriage of vegoils was getting more complicated and expensive, and short term shortages, with a large number of ships being ruled unsuitable next January, was a distinct possibility. It was problematical, whether vegetable oils, which would henceforth need double hulls under IMO rules would be able to pay their way. Higher costs may also attach to ethanol, as this product is likely to require inerting. More consolidation of cargoes may help to reduce these burdens.

The increasing importance of pelletised cargoes, which were so much more thermally efficient than woodchips might be anticipated, , while the growth of the pellet trade was of great interest to transport operators. Biomass itself required a close eye on safety considerations, as many of the cargoes were prone to heating or even spontaneous combustion. Indeed, there were important safety implications for many bio cargoes.

And of compelling interest to anyone concerned with the transport, handling and storage is the debate about where the product should be produced? Should it be in the developing world ? Should it be close to the place where crops are grown or raw materials produced? Is a logistical hub the ideal location - but in what country? Ports, or at the very least an access to navigable water , clearly offers the ideal site, but is there a “social” case for locating such plants in the developing world, providing added value where there is little at present? Food or fuel, plant location, and indeed the pace of expansion for this important potential source of energy remain live issue.

Conclusions and summary
This fascinating conference might be described as “new territory” for many of the participants (including the chairman) , with many attending to learn from a group of notably expert speakers. Any synthesis is probably better undertaken as questions , which the conference did, or did not answer, in the minds of those present. These can be grouped into three sets of “issues”, which have arisen during the two days.

These are divided into 1. Policy Issues, 2. Environmental issues and 3. Transport issues..

1. Policy issues

a. Should biofuel production be located in the country of origin of the biomass, notably where this is a developing nation, or in the country where the market for the product is?

b. Does this thinking change when we consider more sophisticated 2nd generation products? Could the developing nation miss out here?

c. What impacts are likely after the present Kyoto targets have been fulfilled – what, for instance, comes after the EU 5.75% target?

d. There is clearly a debate about whether food or fodder crops are appropriate for biofuels . Should their flexibility to switch be seen as an advantage, or should waste streams be the priority for biofuel production?

e. An overarching issue must be the oil price and its probable direction. How much should this be allowed to affect the pace of biofuel development?

f. How far should biofuels be subsidised , with the risk that markets might be distorted?

g. What role is there for compulsion – mandatory levels of usage for environmental reasons?

h. Is sufficient research going into new biofuel/mass products . What might BP/Shell and other majors produce?

i. It is clear that biofuels offer opportunities to the developing world in both agriculture and production. Can strategies be developed that will assist this process. Is this something for intergovernmental agencies, and what role might the industry play? How do schemes which will help the developing world be started and can they be expanded to provide viable volumes for international trade?

j. What will the pace of expansion be beyond 2010, and can the market cope?

k. Might pipelining be seen as a more environmentally friendly distribution system?

l. What are the implications for short sea and inland shipping as volumes increase?

m. While there is a convincing case for the role of the ports for both production and distribution hubs for products, are there challenges through environmental constraints, planning use and land costs?

2. Environmental Issues

a. Is there a compelling need for biofuels to be sustainably sourced? Can a green passport be devised that is internationally recognised and which avoids the problems that have emerged in say, the wood trade.? Is there a need for a carefully thought out policy for sustainability, considering the role of government and international accords, and which provides an integrated approach to tracking and tracing.

b. Might there be negative environmental impacts of production plants – both liquids and solids, - problems of emissions, dust, noise, traffic etc.

c. Have all known health issues been addressed – long term, carcogenic, toxicity?

d. Have safety issues been properly considered – fire safety and explosion risks in production, port storage, marine transport road transport or rail?

3. Transport issues

a. Will the cost of transport be an inhibitor to biofuel progress and development?

b. Will shipowners and other transport providers find this a sufficiently attractive trade?

c. Can we see the development of cleaner biofuel bunker fuels displacing heavy fuel oils?

d. Can facilitation problems be sorted out with the customs authorities over definitions of wastes, foodstuffs, fuels etc?

e. How much will existing transport and distribution infrastructure require adaptation as the market grows?

f. Can transport providers qualify for a “green bonus” for carrying low value but environmentally necessary cargoes?

g. Do we need different types of ship top be developed to provide ptimum transport for these growing trades ? This is heavily dependent on how much raw material and how much finished products are carried.

h. Can we make waste-burning ships work?

i. Can the tanker sector cope with impending regulatory changes without distortion?

j. What are the implications of the fact that vegoils, once cheap and uncomplicated to carry will be more complex and expensive to cartry after January 07?

k. Is there a case for more consolidation in tranport efficiency, which may lead also to storage demands?

Those becoming involved with these new and potentially large trades must come to their own conclusions and make their own judgements on these matters. Our speakers deserve enormous thanks.

Michael Grey
Commentator, Lloyd's List
Conference Chairman
 

Bio Energy Transportation 2007

will be held on 18 & 19 of September 2007

at the Hilton Hotel Rotterdam