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Second-Generation Biofuels
Authored by Chemicals, Materials & Foods Practice, Technical Insights, Frost & Sullivan, the following article provides a global perspective on the biofuels industry, the market drivers, challenges and the cause of interest in second-generation biofuels.

The biofuel industry has witnessed tremendous growth in the last decade, largely driven by the need to reduce carbon dioxide emissions, which have been indicated as contributing toward climate change. At the same time, rising fossil fuel prices led to biofuels becoming a competitive alternative. One of the biggest impacts of this growth was on the agricultural sector, as demand grew for biofuel feedstocks such as corn, soybean and sugarcane. The highest growth was witnessed in the USA, Europe and South America, where the US became the largest producer of corn-based ethanol and Brazil became the largest producer of sugarcanebased ethanol. On the other hand, Europe saw a higher growth for biodiesel, due to its preference for diesel-powered vehicles.

After a decade of growth, however, the biofuel industry is expected to take a slight downturn in 2012, largely driven by the elimination of tax credits in the USA at the end of 2011. In the case of ethanol, production is expected to be lower than the preceding year. Margins for both ethanol and biodiesel are expected to remain slim, leading to the possible shutdown of plants. In 2011, the US overtook Brazil as the biggest exporter of ethanol, as a confluence of events in Brazil such as bad weather, high currency strength and rising production costs led to the erosion of Brazil s competitiveness.

Another major challenge in 2012 will be the increasingly rigid requirements for sustainability certification. A study published by the International Food Policy Research Institute (IFPRI) in late 2011, which is based on the ILUC (Indirect Land Use Change) model, indicated that 70 per cent of the direct savings offered by biofuels is eliminated when land use change is considered, leaving biofuels with only a 17 per cent improvement over traditional fossil fuels. This study is among a spate of recent studies to indicate that biofuels are not as environment-friendly as once imagined. The lengthy and costly sustainability certification process has also deterred several agricultural stakeholders from contributing to the biofuel industry, as there are no such requirements if the same feedstock is going to be used for non-fuel applications.

Technology-wise, 2012 will witness a breakthrough when the first commercialscale plant producing second-generation biofuels comes online. Second-generation biofuels refers to biofuels that are produced from biomass, containing either cellulose or lignocellulose. In comparison, first-generation biofuels are produced from sugar, starch or oil-based feedstocks. There are several types of 2nd generation biofuels, namely, cellulosic ethanol, Biomass-to-Liquid (BtL) fuels, and Fischer- Tropsch synthetic diesel. Conversion of biomass to biofuels occurs via two routes: the first is biochemical (usually involving fermentation or enzymatic hydrolysis). The second route is thermochemical, where gasification is commonly used to produce syngas, which is subsequently converted to synthetic fuels. Interest in secondgeneration biofuels arose as a consequence of the ¬food vs. fuel  debate, which refers to the biofuel and food industry competing for the same agricultural feedstocks, leading to rising food prices. As agricultural or forestry residues are expected to be the main feedstock, the development of secondgeneration biofuels would not only address the ¬food vs. fuel  issue, but also other critical national issues such as better energy security and improved waste management. Consequently, R&D into these advanced biofuels escalated in the last decade, both in the academic and corporate sector.

Excitingly, after years of pilot trials by various technology developers, the first commercial production of cellulosic ethanol is expected to come online in October 2012 in northern Italy. The 60,000 tpa (20 million gallons) plant is operated by Beta Renewables (Beta Renewables is a joint venture between the Chemtex division of Gruppo Mossi & Ghisolfi and TPG) and is based on a proprietary enzymatic technology. Grassy residues and wheat straw will act as its main feedstock. Several other commercial plants are currently under construction, such as Enerkem s plant in Edmonton, Alberta, Canada; Abengoa s plant in Hugoton, Kansas; and POET s plant in Iowa, USA ?? all these plants are expected to come online in 2013 or 2014.

One of the biggest challenges during the scaling up process is the procurement of sufficient feedstock. Due to the economies of conversion, massive amounts of feedstock are required to supply a commercial scale plant. Due to the seasonal activity of the agricultural industry, it is difficult to ensure a consistent and continuous supply of feedstock. In addition, the collection of feedstock requires more work on the farmers  part, which deters their involvement. In addition, the transport of feedstock over vast distances will negate the carbon savings offered by second-generation biofuels. The final challenge is economic viability, as producers struggle to make the production of second-generation biofuels competitive with first-generation biofuels.

To improve economic viability, a few technology developers are choosing to incorporate renewable chemicals into the output mix. Several bioenergy companies have already shifted their focus from biofuel production to renewable chemical production, as evidenced by the strategies implemented by Amyris, LanzaTech and LS9. Although venture capital funding for bioenergy companies has been declining steadily beginning 2008, however, it has been indicated that among the bioenergy companies that hope to receive VC funding, renewable chemicals should ideally be a component of their product portfolio.

With second-generation biofuels finally achieving large-scale commercialisation in 2012, it has been selected as a Top 50 technology under ¬TechVision 2020 , a programme pioneered by the Technical Insights division of Frost & Sullivan.