This presentation was given by NNFCC’s Policy and Strategy Manager David Turley at the United Oilseeds and HGCA oilseeds update meeting in February 2013.

1. NNFCC
Boom or bust – the future prospects for biofuels
and oilseed growers
David Turley
Policy and Strategy Manager
5 February 2012
NNFCC: The Bioeconomy Consultants

2. NNFCC
Policy History (1)
EU Biofuels Directive 2003 (promotion and use of biofuels) established the first
biofuel targets as part of response to 1997 Kyoto Protocol agreements
2% substitution by energy content by 31/12/2005
rising to
5.75% substitution by energy content by 31/12/2010
At the time, the EU stated its longer term aim of increasing
this target to 20% by 2020
NNFCC: The Bioeconomy Consultants

3. NNFCC
Policy History (2)
In UK this was transposed into the Renewable Transport Fuels Obligation (RTFO) (introduced 15 April
2008) which set a rising obligation on fuel suppliers to substitute an increasing proportion of their fuels (by
volume) with biofuels.
However, no
target has been
set beyond
2013, and
currently there
is no intention
by UK
government to
increase the
target
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4. NNFCC
Major UK biofuel facilities
This has resulted in
development of 1 billion
litres of biofuel capacity
in the UK, representing
£1 billion of investment
and at least 3500 jobs
NNFCC: The Bioeconomy Consultants

5. NNFCC
UK biofuel production under the RTFO
3.6% of UK road
transport fuel
use
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6. NNFCC
UK biodiesel feedstock origin
RTFO Carbon & Sustainability reports
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7. NNFCC
UK biofuel developments
• Has been gradual shift from biodiesel towards domination by bioethanol, partly due to import of
cheap Brazilian ethanol and more recently ethanol dumping problems (US ethanol)
• EU road fuels market is shifting from petrol to diesel dominated, so biofuels trend is moving in
wrong direction !
• Over time has been declining use of OSR in UK biofuel use but also fall In palm and soy as use of
waste oil has expanded.
• In December 2011, the RTFO was ‘RED proofed’ and 2 - RTFO certificates/litre were awarded to
waste-derived fuels (including UCO) from 15 December 2011
• In the UK Tallow and UCO had its fuel duty rebates removed from April 2012. Use of UCO is
therefore expected to fall - preliminary results suggest this is the case, but there has been no
revival in use of virgin oils (results from first 4 months of 2012/13 obligation period)
• Biodiesel stagnation is also affecting wider EU Market
NNFCC: The Bioeconomy Consultants

8. NNFCC
European biodiesel production
Source: European Biodiesel Board
Biodiesel production has not increased in recent years for the EU’s major producers (Germany
and France) and overall production has fallen recently, for the first time.
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9. NNFCC
Policy History (3)
The Renewable Energy Directive (2007) set out the EU’s Renewable energy policy ambitions (heat,
power and fuels) for 2020. This included targets for;
• 20% share of energy to come from renewable resources
• 20% improvement in energy efficiency
• 20% reduction in GHG emissions
It also included a sub target that 10% of energy in transport sector should be from renewable
resources
- but RED now included defined sustainability criteria for any supported biofuels and a
commitment to review these
In addition to the RED the Fuel Quality Directive (FQD) (2009)
called for a 6% saving in life cycle GHG emissions from transport fuels
by 2020
- Biofuels were going to have to prove their worth !
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10. NNFCC
RED sustainability criteria
• Restricts sourcing from some land types (high biodiversity or carbon resource)
• Imposes minimum GHG savings (well to wheel)
• 35% GHG saving, rising to
• 50% GHG saving from 1 Jan 2017, and
• 60% GHG saving for new plants starting in or after 1 Jan 2018
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11. NNFCC
‘Conservative’ RED defaults for GHG emissions (g CO2/MJ)
Ethanol Biodiesel
Meeting the RED
default values will
be more difficult
for crop-derived
biodiesel than crop
-derived ethanol,
especially from 2018
and could rule out
crops like oilseed
rape as feedstocks
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12. NNFCC
The EC has been struggling to deal with the contentious problem of indirect land use change (ILUC) and to
introduce a factor into the RED to account for ILUC impacts. The argument for ILUC is that where production of
feedstock for biofuels displaces a food crop, then in a yield constrained system, production of that crop (or an
alternative) now occurs elsewhere and this may have significant environmental consequences (particularly if
this results in deforestation). The impacts of this should then be reflected in the environmental footprint of the
biofuel. The arguments reign over how this can be equitably quantified and allocated.
Source: Neste Oil
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13. NNFCC
Recent Commission proposals
In October 2012, The European Commission published its proposals to control the
potential scale of any ILUC impacts and to account for the GHG impacts of
ILUC for biofuels.
The stated objectives of the Commission are to:
• Transition to biofuels delivering significant greenhouse gas savings even when any
ILUC impacts are accounted for
• Ensure that biofuels should only be supported if thy deliver substantial GHG savings
AND are NOT produced from food or feed crops
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14. NNFCC
Key aspects of Commission proposals (Oct 2012)
• Limit crop-derived biofuels to max of 5% by energy content of 2020 transport fuel use.
• Stated ‘aspiration’ to remove all subsidies for crop-based biofuels post 2020.
• To only support biofuels that provide a greenhouse gas saving of >60% for new plants after 1 July
2014 (2 years earlier than current UK RTFO)).
• To allow biofuels made from non-land using feedstocks to count four times towards the
achievement biofuels inclusion target
– MSW, Algae, Residues
– Waste cooking oil will still count twice.
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15. NNFCC
Commission proposals (cont)
Proposed ‘ILUC factors’ (to add to well to wheel GHG LCA’s)
– sugar-based biofuels: 13 g CO2 eq / MJ
– cereals/starch based biofuels: 12 g CO2 eq / MJ
– vegetable oils: 55 g CO2 eq / MJ
– Waste, residues Zero
The Commission will retain the power to amend/extend these and based on the
outcomes of further work (Dec 2017), will consider introduction of such values from 1
Jan 2021
The ILUC values were derived from work by the International Food Policy Research Institute and
their use has drawn significant industry criticism, in part as the figures have not been subject to
peer review and there are a number of limitations in the approach acknowledged by the report
authors.
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16. NNFCC
Impacts of proposed ILUC factors on default life cycle GHG
emissions savings (red bars)
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17. NNFCC
Impacts of proposals
• Unlikely that further biodiesel plants will be built based on utilisation of oil crops as feedstocks.
• Unlikely that further 1st generation bioethanol plants will be commissioned, due to lack of investor
confidence in the sector.
• Fuel pool is increasingly diesel dominated and prospects for encouraging further uptake of
biofuels (e.g. in aviation sector and shipping) are better for biodiesel fuels, due to better fungibility
characteristics, yet this is the resource that will be most constrained going forward.
• Cannot rely on increasing use of ethanol to meet 2020 targets due to blend wall limitations of
current car fleet (and declining proportion of gasoline-fuelled cars in European fleet).
NNFCC: The Bioeconomy Consultants

18. NNFCC
Impacts
Pressure from
imports will
increase, further
reducing
the market
opportunity for EU
producers
Further investment in the biofuels sector will be
halted by lack of confidence in an already difficult
economic climate
There is no guarantee
that the significant
The likelihood of investment required to
meeting 2020 commercialise advanced
targets will be processes (using wastes
reduced, and non crop biomass)
will follow, due to the
uncertainty in the sector
AER-GAS.de
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19. NNFCC
Impacts
• Fails to recognise the value of crop derived biofuels delivering significant GHG reductions
Future
prospects ?
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20. NNFCC
Future UK oilseed rape prospects
• Despite all the problems in the biofuel sector, oilseed rape prices have remained buoyant, due
climatic issues affecting global vegetable oil supplies.
• Only around 1% of the UK oilseed rape crop is currently used as a virgin oil in UK biofuels.
• However, the UK has benefitted from the export market opportunities created by the German and
French biodiesel markets. 75% of German oilseed rape production is currently destined for
biofuel production and other demands are met through import.
• Even with a standstill in current biodiesel market development, there will remain a strong demand
for oilseed rape in the medium term from the European mainland, this will help to support current
UK areas of oilseed rape cropping, though prospects for any further expansion will be tempered.
NNFCC: The Bioeconomy Consultants

21. NNFCC
The NNFCC provides high quality, industry leading consultancy
for more information contact us David Turley
Policy and Strategy
• Bio-based opportunity
analysis
Email - enquiries@nnfcc.co.uk • Sustainability
+44 (0) 1904 435182
Contact David at
d.turley@nnfcc.co.uk
Follow us on Twitter @NNFCC
• Future Market Analysis • Technology evaluation & associated
• Feedstock Logistics Planning due diligence
• Sustainability Strategy • Project feasibility assessment
Development • Policy and regulatory support
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