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Competitiveness of EU-manufacturers

The EU is a major producer of biodiesel and a secondary producer to Brazil and the USA of bioethanol/ETBE.  Its lead position in biodiesel production is not due to its competitive edge on biofuel conversion technology (which is largely a standard practice involving well known and proven chemical processes), but because of political considerations.  The scope to exploit a competitive technological edge is therefore limited.  The competitive position of the EU may however, lie in fine tuning the quality of the fuel (by feedstock purity) to ensure a specific standard is met.  Crop breeding to increase total oil or sugar yields, and to improve long chain fatty acid or sugar content will be one way to do this.  Indeed, countries which may have an abundant resource (eg. palm oil) and a basic understanding of the conversion process, may seek guidance on the testing procedures necessary for the fuel to qualify for widespread commercial use.  In addition, research and experience on engine performance and emissions identification in the EU is likely to provide a competitive edge.  While the push to reduce emissions from the combustion of fossil fuels in the transport sector continues, liquid biofuels will maintain a credible alternative fuel option. 

It is unlikely that the EU will be able to compete with either the USA or Brazil in the production of fuel alcohols.  Such is the maturity of the industry in these countries and coupled with the relatively cheap feedstocks, it will be very difficult for the EU to compete on efficiency and cost grounds. [Source: U6]

The production of liquid biofuels lends itself well to both large scale production (up to 300,000 t/y) and small scale production (<10,000 t/y).  This is mainly because the conversion technology is simple and well-proven. Many of the traditional oil companies have been involved with the large scale production of biofuels eg. ELF and TOTAL in France and Italy. The fuel produced from these large scale biodiesel plants is primarily for public consumption.  Because this widespread consumption is available, the scale of production must be such to allow the consumer to purchase the product on a regular basis and from a number of relatively accessible outlets.  In France, biodiesel is used in blends with mineral diesel, so it is likely that no diesel engine modification would be required.  In Germany, where pure biodiesel is sold, only certain engine and car manufacturers (OPEL and VW Golf Ecomatic) will recommend biodiesel use.  However, Germany have advertised that the motorist can travel across the country on biodiesel because of the regular spacings of the 400 plus service stations.  In Italy, pure biodiesel is used, but mainly for static diesel engines in heating applications.

Many of the smaller biodiesel units are owned and managed by farmer co-operatives who produce the oilseeds and then use the biodiesel in agricultural activities.  The grade of fuel produced may not be to the standard that would be required by the public for private light vehicle consumption, but many tractor engine manufacturers (Ford, Case, John Derre, Deutz Fahr, Mercedes-Benz, Same) have tested and approved the use of biodiesel.  This is particularly the case in Italy, Austria, France and Germany.   The oilseed or sugar/starch production is from the farming sector who have organised themselves into co-operatives to supply the crop as a feedstock.  As such, these co-operatives would be classified as SMEs. [Source: EU3, U6]

Advances made by both the SMEs and large oil companies in the production and refining of liquid biofuels should place the EU in a strong competitive position.  The greatest advances have been made in the biodiesel field, rather than bioethanol where Brazil and the USA have cornered the market.  Nonetheless, there is scope for the EU biofuel companies to offer technical expertise in the areas of resource assessment, feedstock procurement, fuel production and use, particularly to those countries wishing to invest in or expand their biofuel industry.  For the major oil companies, the addition of liquid biofuels to their portfolio will provide a green image, which to date, has been lacking. [Source: U6]

The market for liquid biofuels is suited for exploitation by SMEs.  Indeed, most small scale biodiesel production is undertaken by agricultural co-operatives who supply the feedstock and use scaled down technology for their purposes.  They in turn, are often the final consumers of the fuel, so the whole production chain is concentrated around SMEs. This is particularly the case in Austria and France.  This type of operation appears to be particularly successful in those countries with a good track record for agricultural co-operation.  In the UK, where there are very few agricultural co-operatives, this type of production may prove difficult.  The tax relief on biofuels produced from small pilot plants will also be an incentive to SMEs as will information dissemination activities by researchers and engine manufacturers. [Source: U6]