Dr. Norbert Walter, Chief Economist of Deutsche Bank and Dr. Uwe Franke, Head of BP Germany, forecast that bioenergy, and supporting biomass production, will determine the future of energy to a large extent and on a global scale.
Dr. Franke's keynote speech "Potential and Opportunities for Alternative Energy Resources" [*.pdf] sums up the reasons why bioenergy will play such a significant role in the 21st century and offers the perspective of how an oil company wants to be part of this revolution:
(1) Climate change is the top issue of the 21st century. There is no scarcity of energy resources; there is a scarcity of clean energy resources.Note that Dr Franke explicitly excludes the developing world from his view, knowing well that the real potential lies there (earlier post). Energy crops grown in the tropics and subtropics yield so much more usable biomass, that next-generation biofuels produced in the North (including cellulosic ethanol) can never compete with biofuels produced in the South (and traded on a global market). The only entrance for the oil industry into the biofuels sector - now largely dominated by agribusiness - is via high-tech, second generation bioconversion technologies (earlier post). This is why the oil industry is not keen on promoting the South's competitiveness (based on first generation technologies; if the South starts introducing second-generation conversion technologies using its own energy crops, it becomes even more competitive).
(2) In ten years time CO2 will be traded as a commodity on a truly global market. Technologies with only little or no CO2 emissions will thus become attractive.
(3) Therefore BP is investing into alternative energies. Last year it founded
“BP Alternative Energy” comprising investments of US$ 8 billion to 2015. The aim is to arrive at annual sales of US$ 6 billion. The focus is renewable energies and carbon free power production on the basis of (bio-)hydrogen.
(4) Bioenergy is one of the big business opportunities of the 21st century. BP is meeting this challenge: In June 2006 we founded “BP Bio-fuels Business”. In addition we intend to create the “BP Energy Biosciences Institute” for research and further development of bio-energy, in particular of liquid biofuels. This institute will be funded with US$500 million.
(5) Bioenergy offers new opportunities for agriculture and energy companies alike. Bioenergy potential is huge and is renewing itself continuously. But the potential is also limited and can not be completely reserved at the same time for a variety of different areas.
(6) Competition of using bioenergy between areas like food, heat, power, chemicals and fuels has to be taken into account and has to be analysed much deeper.
(7) Main areas of bioenergy use should be developed by the market. In about ten years pricing of CO2 will be a major market factor.
(8) Bio-energy’s innovation potential has to be explored. Innovation may also mean genetic modification in the areas of energy and industry biomass.
(9) The future of biofuels lies in its next generation. Large scale CO2 emissions reduction and substitution of fossil fuels can only be achieved with advanced biofuels. The expectation is that in 2050 approximately 30 % of the world's fuel pool can consist of biofuels.
(10) Advancing biofuels has to be undertaken commonly by the car industry, agriculture and the oil industry as well as governments and it has to be done on the European level. Key criteria for supporting bio-fuels should be quality, CO2 emissions reduction, technology openness and freedom of trade.
Norbert Walter's keynote speech, "The 21st Century: The era of bioenergy? Opportunities and challenges for governments, businesses and agriculture" [*.doc] takes a broader perspective and indicates how bioenergy will enhance energy security on a global scale. He also points out that of all renewables, only bioenergy has a sufficiently large potential to replace fossil fuels in any significant way. Walter finally makes a case study on Germany and concludes that biomass and bioenergy already make up 70% of Germany's renewably produced energy:
ethanol :: biodiesel :: biomass :: bioenergy :: biofuels :: energy :: sustainability :: renewables :: climate change :: fossil fuels ::
The 20th century was the age of fossil fuels. At the beginning of the 1970s, that is even before the first oil price shock, fossil fuels such as crude oil, natural gas and coal together met roughly 85% of global primary energy demand. In volume terms, oil was the leading input. Renewables, by contrast, accounted for “only” about 14%, with bioenergy making up the lion’s share (nearly 12%). Since then, energy consumption has roughly doubled. The production volumes of all fuels have expanded.
The oil share of total consumption has diminished. By contrast, the nuclear energy share has increased substantially from a low level and the natural gas share, too, has risen on higher demand. The renewables’ share has remained stable. Above all, this is thanks to bioenergy, as bioenergy generation has inceased just as strongly as overall global energy demand.
True, fossil fuels are good, but in the long run they are not good enough to ensure sustainable energy policies – at least as technology stands today. As the global demand for energy will continue to rise strongly over the coming decades, environmental and supply targets in particular call for an improved energy mix – not only globally but also at the national and European levels.
Primary energy consumption is forecast to rise by roughly 60% by 2030. In order for bioenergy to double its share by that date, additional volume expansion in excess of 200% would be required. This fact clearly illustrates that we cannot rely on bioenergy alone in the 21st century. Worldwide, the usable farmland and forests for example set a limit that can only be increased by using tools like green biotech, higher-yield fertilisers or agricultural machinery. Still there is no doubt: We are on the threshold of a new “era of bioenergy” in the 21st century. Bioenergy is one of the great hopes for improving our energy mix.
Renewable resources enable a more economical use of fossil fuels and thereby help reserves to last longer. When they are burnt their impact on the global climate is far less negative than that of fossil fuels. The only jack-of-all-trades among the renewables, bioenergy has huge potential in all areas of use:
-Bioenergies are used primarily for decentralised applications in the power and heating sectors. They thus offer at least local and regional protection against large-scale power outages like those recently in North America and Europe. Moreover, bioenergies reduce the vulnerability of entire economies to surges in the prices of oil and natural gas, heating oil and fuels.
-The early promotion of bioenergies in Germany and the EU is giving us a technological edge. These investments could prove highly lucrative if technology exports to the energy-hungry and populous countries of China and India can be successfully organised. The range extends from small-scale heating plant for households to high-volume production facilities for manufacturing biodiesel for the booming car markets in emerging nations.
-The renewable energy segment offers traditional farmers an interesting alternative source of income given that farm subsidies will tend to decline in future. If established farmers and forestry engineers become modern “energy managers”, two birds can be killed with one stone: the energy of the future, biomass, would receive the necessary expert support and the financial prospects for rural inhabitants would be stabilised.
-Biomass is much more important for the energy mix in Germany than often assumed and it is already undergoing constant expansion at breakneck speed. In 2005, for example, biomass supplied the bulk (almost 70%) of all energy (electricity, heating and fuel) generated from renewable sources. Biomass benefits from its diverse range of applications. The bioenergy share of primary energy consumption in 2005 was, however, just 3.3%.
• Biomass is – in volume terms – the only important renewable source for the manufacturing of fuels. In 2005 the biomass share of final energy consumption in the transport sector rose to 3.6% (2003: 0.9%). In Brazil, for example, ethanol covers around 30% of total demand of fuel.
• Biomass dominates the segment for heating generated from renewable sources. Its share of the heating market reached 5.1% in 2005 (2003: 3.8%). There is however still no effective heating legislation. Only in power generation is biomass not the leading renewable source of energy. This segment is dominated by windpower and hydropower. The biomass share of electricity generated is 2.2% (2003: 1.2%) – thanks to a significant boost from the amendment to the energy law. This all goes to show what is possible if the state sets the right course for the economy, farmers and forestry engineers. Bioenergy is therefore likely to play a pivotal role in the German government’s new energy concept, which will be unveiled in mid-2007.