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AFRY at Lignofuels 2020: Advanced biofuel projects need to be properly developed in order to excel in project implementation

28/02/2020

Esa Sipilä, Principal at AFRY Management Consulting, recently gave a presentation at the Lignofuels 2020 Conference in Helsinki about advanced biofuel markets and key drivers.

In his presentation, Sipilä underlined that European regulations have created a very large market for advanced biofuels with significant supply limitations. The lignocellulosic biofuel technologies are at early stage of commercialization and still phasing “flagship challenges”.

In addition, Sipilä stated that the advanced biofuels capacity from cellulosic feedstocks remain marginal while the Hydrotreated Vegetable Oil (HVO) capacity is expected to double by 2025. HVO industry has grown during the last decade and will continue to increase competition on sustainable oily feedstocks.

Although the market drivers are positive in the long-term, bankability of advanced biofuels and bioproducts will remain challenging.

What are the challenges in advanced biofuels?

In advanced ethanol production, only few flagship projects have been built, facing major challenges in ramp-up, capacity utilization and production economics. However, the hopes are high for the next wave of projects in coming 5 years. Lignocellulosic based biofuel projects are reaching investment decisions and new technologies have been tested in pilot plants. Biofuel policies have created specific demand for cellulosic biofuels, but today, cellulosic ethanol is directly supported in only a few countries. Cellulosic ethanol has separate markets and premium price compared to conventional ethanol.

The advanced drop-in biofuels are getting a lot of attention as they lack the drawbacks related to blend wall, lower energy content and taxation. As the HVO feedstocks are increasingly limited, more lignocellulosic projects are needed throughout Europe. Many lignocellulosic based drop-in fuel technologies are still developing, but the first projects are reaching investment decisions and have steel on the ground.

Esa Sipilä

Principal, Management Consulting