The Future of Bio-fuels - Case Study Example

The impact of bio-fuels on the future of vehicular transport Declaration This is to certify that this is my own work and that it has not been used asa part in assessment of another unit in my degree programme. Student number: Executive Summary The global transportation sector relies heavily on fossil fuels for energy. More than 95% of the energy requirements are fulfilled by oil, a petroleum product derived from underground sediment extraction. However, oil sources are limited and it has been estimated that oil production rate will become stagnant in 2018, after which it will start declining. Although recent advancements in technology has minimised wastage during oil extraction and has also made previously thought unrecoverable reserves now recoverable, oil remains a non-renewable source of energy and its production would eventually get depleted. On the other hand, the energy requirements of transportation are exponentially increasing. The world population growing by 1% every year, and it has been estimated the consumption of oil by transportation sector will rise by 30% until 2050. As a result, the world is aggressively looking out for alternative sources of fuel that can replace oil for and never get depleted. One such renewable source of energy for transport sector is bio-fuels. However, although they are a sustainable source of energy and cause less pollution than traditional sources of fuels, they have been accused for causing loss of fertile lands reserved for agriculture, increase in food prices due to redirecting food crops towards fuel production, and large scale deforestation This report examines the existing state of development of bio-fuels with vis-a-vis the transport sector’s aspiration of sourcing only 13% of its energy from petroleum by 2050, and assesses the impact of bio-fuels on the future of vehicular transport. Table of Contents Declaration 2 Executive Summary 3 Table of Contents 4 Introduction 5 Scenario Development 5 Future-Proofing Response 7 Conclusion 10 Reference List 11 Introduction The largest contributors to energy requirements of the world are fossil fuels. Of these, the transportation sector heavily relies on petroleum. Petroleum in turn consists of oil and natural gas, out of which oil provides over 95% of the total transportation energy requirements (Bredenberg, 2012). However, oil sources are limited, while consumption is exponentially increasing. As per market report, the petroleum companies of the world extracted about 85 million barrels of oil, which equal to 13.5 billion litres (Lamb, 2009; Metric Conversions, 2012). It had been estimated that oil production rate will become stagnant in 2018, after which it will start declining. Although advanced technology has resulted in reduced wastage from individual oil wells and extraction from reserves earlier deemed unrecoverable, the most important concern remains that oil is a non-renewable resource of energy and its production would eventually peak out at some point in the near future (Viner, 2013). The world population growing by 1% every year, the increasing energy consumption of emerging economies and the estimated 30% rise in the consumption of oil by transportation sector by 2050 add severely to this concern (World Energy Council, 2011). Judging by the current scenario, it is evident that there is a huge uncertainty in the future of energy source for future transportation and the huge void being created by depleting petroleum sources is yet to be filled. Scenario Development One of the most promising alternatives to petroleum, that has been receiving increasing attention, is bio-fuel. Bio-fuels are created from living biological sources such as, plants and microorganisms, as opposed to underground sediment extraction of traditional fuels. Due to this nature, bio-fuels can provide a continuous source of energy and hence, can be considered to be renewable. Besides, they also emit less greenhouse gases upon combustion. The largest producers of bio-fuel are Brazil and the US, contributing to about 70% of total world output (Lawrence, 2013). While Brazil produces bio-fuels primarily from sugarcane, the US relies heavily on corn (EIA, 2012). Since both of these are food crops, the production of bio-fuels has drawn significant negative sentiments, particularly over the use of fertile lands reserved for agriculture and the effect on food prices due to redirecting food crops towards fuel production. Thus, it can be assumed that achieving sustainability in bio-fuels production would either harm existing agricultural pattern or contribute majorly to deforestation (Timilsina, 2011). To counter these risks, newer technologies are being deployed, such as, production from agricultural wastes, fats and grease (Potts, 2013). These are collectively known as second generation bio-fuels and are reducing the reliance on fertile land or food crops for bio-fuels production. Nevertheless, the progress of this development is very slow and several other concerns remain, as discussed below. As per David Tilman of University of Minnesota, second generation bio-fuels can replace only 15% of the world’s dependence on fossil fuels, implying that bio-fuels have very limited scope of performance (Bryan, 2008). The constraints surrounding the development and use of bio-fuels are discussed below. It is estimated that by the year 2050, transportation sector would consume about 30 billion litres of oil each day, in contrast to the fact that only 100 billion litres or bio-fuels were produced worldwide in the year 2011 (International Energy Agency, 2013; ENSAA, 2014). Even in today’s context, bio-fuels constitute less than 5% of the total transportation energy consumption (International Energy Agency‌, 2013). As per HSBC estimates, consumption of oil would have to be reduced to just 13% from existing 95% to attain sustainability in energy (ENSAA, 2014). Even if it is assumed that energy production and consumption by transportation in 2050 would be exactly equal to current pattern, bio-fuels would need to contribute another 82% to the overall fuel portfolio, equivalent to 1.6 trillion litres of fuel annually (considering that 100 billion litres constitute 5% of total fuel portfolio today). Judging by the existing technology, government backing and developmental stage, it is highly improbable that annual bio-fuel production of the world would jump from 100 billion litres to 1.6 trillion litres in just 36 years. Moreover, in reality, energy consumption would grow exponentially until 2050 and the actual amount of bio-fuel required to be produced would exceed the estimate by several folds. As per estimate, the production of bio-fuels would lag behind the desired targets by about 15 billion litres (4 billion gallons) every year (Lawrence, 2013; Unit Converter, 2013). As per Dr. Richard Pike of the Royal Society of Chemistry, the amount of bio-fuel required to power a single trip from Europe to America would engross a land area equivalent to 30 soccer fields. He also stated that replacing 1% of conventional oil with bio-fuel would take up to 1% of the total land area of the UK, demonstrating that existing production technology of bio-fuels cannot help countries with energy self-sustenance (Knight, 2008). Lastly, Dr. Pike criticised the apparent environment-friendliness of bio-fuels, stating that although bio-fuels emit less greenhouse gases, generation of bio-fuels impacts the environment significantly, owing to the use of fertilisers, crop yielding and fuel delivery. The director of Biofuelwatch, Deepak Rughani, stated that generation of bio-fuels often cause mass deforestation and is, thus, not a smart choice as a future fuel. He additionally noted that out of the world’s total funds allocated for research and development of renewable energy resources, majority are directed towards bio-fuels; while perennial resources such as, wind, solar and hydro powers that have no impact on the environment are reportedly getting subdued and neglected (Knight, 2008). From the current trends, it can be concluded that the expectation of bio-fuels replacing oil as the major energy source for transportation is enormous, yet the current progress and stage of development makes it unlikely to reduce oil consumption to just 13%. Considering the existing uptake trend of petroleum oil, it is likely that petroleum extraction rate would reach its peak much before 2050 and by 2050, the rate would fall significantly. On the other hand, bio-fuels would not be much developed by 2050, so as to become a serious alternative to fossil fuels. This would cause tremendous energy shortage in transportation and possibly may even cripple the global transportation sectors. Future-Proofing Response Judging by the severe limitations of the existing status of bio-fuels, it is apparent that the transportation sector is in dire jeopardy. In order to get deeper insights into the bio-fuel industry, a futuristic PESTEL analysis will be carried. The aim of this analysis would be identify the possible market situation of this industry. Political Factors: - The global bio-fuel industry has recorded considerable amount of growth over the last few years. The government of the respective countries are giving much attention to this sector. As a result of that global bio fuel production has increased rapidly. Government also provides various kinds of incentives for the welfare of this industry. For example, opportunities of international collaboration, investment programs, technological support etc. In addition, in partnership with the private companies government of almost every country is looking forward to augment the production of bio-fuel. Hence, with the current trends it is expected that government will continue to support the industry. Economical Factors: - The application of bio-fuel production acts a tool for waste management in an economy. Moreover, it also has the ability to issues pertaining to recycling and waste utilization. Despite the positive characteristics, the demand of bio-fuels is considerably low. However, more support from the government can transform the industry. Hence, in order to be economically beneficial, proper assistance of the government, efficient utilization of the resources is needed in the future. Social Factors: - It is a resource accessible to everyone, but being a non renewable source sophisticated management in production is necessary. With the increasing awareness among the consumers about atmospheric pollution and global warming, the use of bio fuel is obvious to increase in the future. Technological Factors: - The availability of water resource, land, proper climate coupled with equipments is the essential requirements for producing bio-fuel. However, with the assistance of technology the production capacity as well as management oif resources can be done more efficiently. Therefore with continuous development of technology, it is believed that the industry would be more competent in the years to come. Environmental Factors: - Bio fuel has been introduced to the general people as an alternate to traditional fuel. The production of fossil fuels is not friendly to the environment and creates various risks for the atmosphere whereas bio-fuels are environmentally friendly and is safer option to replace fossil fuel. Hence, in the context of environmental rules and regulations, bio-fuel industry would not be facing much difficulty in the future. Legal Factors: - There are several regulations undertaken by government of respective countries to look after the production and distribution of bio-fuels. The laws are mainly enacted with the aim to ensure effective use of the resources. In addition, laws have been also passed to discourage waste. Hence, it is obvious that in future more strong regulations will be passed and thus companies need to be more careful. Thus, bio-fuels production can be an alternative source of livelihood for many. The first step, that would need to be taken to make bio-fuels more practical, would be to continue using existing means of production, while investing in the development of more environment-friendly production solutions. In other words, it is recommended that first-generation bio-fuels are not discarded completely. While it is true that these bio-fuels tend to eat away crops and lands from agriculture, significant inter-governmental effort is required to impart self-sustenance to the process. To achieve self-sustenance in first generation bio-fuels production, every country must allocate land for usage. This would prevent large-scale decline of agriculture of any particular country and would also provide multiple sellers of the fuel, thereby preventing a cartel. Next, vertical cultivation must also be considered, whereby production of bio-fuel crops would increase several folds within a small land footprint (Alter, 2009). Rain water harvesting is also an ideal source of irrigation to consider, thus, reducing impact on farmland irrigation. Lastly, the governments must invest heavily in projects that would develop bio-fuels in countries with large tracts of unused, but useable lands, such as, in the African and Middle Eastern countries (Worldwatch Institute, 2013). This would not only ease the strain on agriculture, but also, develop the local economy of these countries. While several private petroleum companies enthusiastically invested in the research and development of second generation bio-fuels, they are increasingly backing out now due to the large financial commitments required and lack of governmental support (Lawrence, 2013). Thus, besides giving self-sustenance to first generation bio-fuels production, the governments must also aggressively back the development of second generation bio-fuels by providing funds, tax deductions and incentives to private petroleum companies. The governments must also coordinate and create a transcontinental supply chain of organic and farmland wastes, that can be transported to second generation bio-fuel facilities, where they would be converted to useable fuel. It is to be noted here that close to 1.5 billion tonnes of organic waste are produced annually worldwide, which are ultimately destroyed (UNEP, 2009). This waste, if collected efficiently, can significantly increase the viability of second generation bio-fuels and would reduce the extent of lands earmarked for landfills. Lastly, the governments must monitor recent trends, developments and discoveries in bio-fuels research and fund companies with innovative ideas that can revolutionise the bio-fuels industry, but lack sufficient financial capabilities to transform their ideas into practical solutions. Two of such ideas are the third and fourth generation bio-fuels. Third generation bio-fuels are derived from genetically modified algae that can supply high amounts of energy at a lower cost. They can be cultivated in environments inhospitable for traditional agriculture, such as, semi-arid lands and saline water. Fourth generation bio-fuels are derived by trapping carbon dioxide and transforming them into energy. The carbon dioxide trapped can be sourced either from the by-products of the first, second and third generation bio-fuels production process, or from the air. Fourth generation bio-fuels differ from all other bio-fuels in the respect that they not only emit less greenhouse gases upon combustion, but even reduce atmospheric greenhouse gas content as part of their production process (DNV, 2010; Kagan, 2010; ENERGY FROM WASTE AND WOOD, n.d.). The third and fourth generation bio-fuels hold tremendous potential for the future of transportation energy consumption, but are at a very basic developmental stage. If these two ideas are bolstered, they can not only help achieve the 2050 target of reducing petroleum consumption to 13%, but can also significantly contribute to reversing the process of global warming. Using all the techniques suggested above, a sustainable production model of bio-fuels can be designed by the sovereign governments of the world and the severe energy shortage expected to cripple global transportation by 2050 can be averted. The suggested procedures would help to achieve very high levels of bio-fuels production, yet at the same time, have very little impact on agriculture, forestry and the food chain. Conclusion The report identifies that 95% of energy requirements of the transport sector is fulfilled by oil, which is a natural resource and is slated to be depleted soon. It also identifies that the most promising alternative to petroleum considered in the world today are bio-fuels. The largest contribution to this type of energy comes from first generation bio-fuels, which have been severely criticised for use of fertile lands reserved for agriculture, increase in food prices due to redirecting food crops towards fuel production and large scale deforestation. A smaller contribution also comes from second generation bio-fuels, which use organic and farmland wastes for production. By studying the existing state of bio-fuels development, along with opinions and critical insights from experts, the report establishes that the international target of reducing petroleum consumption in the transport sector to 13% is unachievable, as bio-fuels production is already lagging behind by 15 billion litres every year. To counter the severe future energy shortage assessed, the report recommends geographic spread of lands earmarked for first generation bio-fuels production, vertical cultivation, rainwater irrigation, usage of non-agricultural lands in Africa and Middle East, backing petroleum companies for increment of second generation bio-fuels production and wide-scale implementation of newer technologies, such as, third and fourth generation bio-fuels. Reference List Alter, L., 2009. BioOctanic Tower: Vertical Farm Grows Biofuel for Gas Stations. [online] Available at: [Accessed 21 January 2014]. Bredenberg, A., 2012. The Damage Done, Gas Addiction Edition — How Detrimental Is Petrol? [online] Available at: [Accessed 21 January 2014]. Bryan, T., 2008. Bio-fuels in the Future. [online] Available at: [Accessed 21 January 2014]. DNV, 2010. Bio-fuels 2020. [pdf] Det Norske Veritas. Available at: [Accessed 21 January 2014]. EIA, 2012. Bio-fuels Issues and Trends. 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