Innovation and technological development in energy

Europe’s will to substitute solid biomass origin energy consumption (principally wood and wood waste, but also straw, crop harvest residues, vegetal and animal waste) for a part of that of fossil fuel origin (petrol, gas and coal) is beginning to pay off.

Primary solid biomass production (not including renewable solid urban waste) is once again in marked increase with 5.7% growth with respect to 2004 (+3.196 Mtoe). This increase is principally due to a rise in German production (+1.731 Mtoe between 2004 and 2005) that is making it possible for Germany to approach Sweden’s production level (an increase of 0.470 Mtoe). The drop in Finland’s production (-0.8 Mtoe) can be explained by a decrease in 2005 (after having had a very good year in 2004) in paper pulp industry activity that supplies a significant share of biomass energy through production of black liqueur and wood residues.

European electricity production of solid biomass origin is also in marked growth, with a 16.2% increase between 2004 and 2005 (+6.1 TWh, i.e. a total of 44.1 TWh). The EU owes this principally to the development of electricity resulting from CHP (combined heat and power) production in Germany and the Netherlands, and to the development of fossil fuel/biomass co-combustion in electric power plants of the United Kingdom. CHP is the principal technology used to produce electricity from solid biomass, since it accounts for more than three-quarters of this total production.

1. Primary energy production* of solid biomass  in the European Union in 2004 and 2005**
(in Mtoe)

Direct combustion of urban waste remains the principal means for treating household waste. Incineration plants make it possible in this way to produce heat and electricity in the same way as a thermal power plant running on more “noble” fuels would. It is not always possible to precisely distinguish the organic share of solid urban waste that alone can be qualified as being renewable. Nevertheless, different countries make estimates in order to determine this share (generally considered as half).

Primary energy production coming from renewable solid urban waste (that is to say excluding biogas production) is estimated in the European Union at 5.3 Mtoe for 2005, i.e. a slight increase with respect to 2004 (+ 0.2 Mtoe). Among the principal producers, the most noteworthy is Italy (+15.1% between 2004 and 2005), which has reached second place position in the EU to the detriment of Denmark. France continues to be the leader in terms of valorising this waste, in spite of a decrease in its production in 2005 (-3.9%).

The increase in the price of fossil fuels and the political necessity for decision-makers to take environmental constraints into consideration have had very beneficial effects on the choice of biomass energy solutions in 2005. Current decisions are fundamental because they are going to permit long term modification of local energy production infrastructures. At the end of 2005, the EU’s Biomass Action Plan redefined an objective for all of the 25 member States. The European Commission esteems that the measures provided for by the Action Plan shall lead to an increase in the use of biomass (solid biomass, biogas, biofuels, renewable municipal waste) that should reach approx. 150 Mtoe in 2010 (55 Mtoe intended for electricity production, 75 Mtoe intended for production of heat and 19 Mtoe intended for transport). This scenario is found in the continuity of the Community objectives for 2010 concerning renewable energies: a 12% share in total energy consumption, a 21% share in gross electricity consumption and a 5.75% share in vehicle fuel consumption. The Commission points out that this scenario could be reached in 2010, but also envisages the possibility of it being achieved one or two years later than this. Taking recent developments and the capacity of certain countries to valorise their potentials into consideration, we estimate solid biomass consumption at 78.6 Mtoe for this date and energy consumption linked to renewable solid urban waste at 6.5 Mtoe. This forecast takes the estimates of national experts and the current rate of growth of primary energy production into consideration. If we add the forecasts made in the last biofuel barometer (9.9 Mtoe in 2010) and in the last biogas barometer (8.7 Mtoe in 2010), our primary biomass energy consumption forecast amounts to 103.7 Mtoe, i.e. 46.3 Mtoe less than the scenario foreseen by the Plan

But European leadership in terms of primary biogas energy production is being challenged more and more by Germany, which markedly increased its production in 2005 with 1594.4 ktoe (+23.1% with respect to 2004). Germany has even taken the lead from the United Kingdom in terms of electricity production, with 5.6 TWh produced in 2005 (+26.1% with respect to 2004). The success of biogas origin electricity production can be explained by the establishment of new purchase prices with the revised version of the Renewable Energy Law of March 2004. These prices are especially attractive for small biomass electricity production power plants.

The other two big biogas producers in Europe, Italy (with 376.5 ktoe, +40.9 ktoe) and Spain (316.9 ktoe, +21.9 ktoe), have the particularity of developing their rubbish dump biogas deposits. In spite of a 3250 ktoe valorisable potential, France is only classed 5th in Europe with production of 209 ktoe (+2 ktoe with respect to 2004).

VALORISATION BELOW WHITE PAPER OBJECTIVES

At present, there is a real political will to develop biogas production for each type of deposit. Biogas offers a double advantage in associating the eliminate of waste with the valorisation of energy. For this reason, we are maintaining our forecast of 8.7 Mtoe for the year 2010. This estimate is based on the current efforts of the large biogas producing countries (with the United Kingdom and Germany at the top of the list) being maintained, and being reinforced by other countries with strong potential, like France, Spain and Italy, where biogas continues to be only little valorised. In spite of this, the European Commission White Paper, which set a 15 million toe target for this date, seems to be out of reach.

3. BIOFUELS

BIODIESEL SECTOR
In 2005, biodiesel remained the leading biofuel in the EU, representing 81.5% of production. 3184000 tons of biodiesel were produced in the EU, i.e. 1250600 tons more than in 2004 (+64.7%).  Germany alone represents 52.4% of this production, with 1669000 tons produced in 2005, i.e. 61.3% growth with respect to 2004. This spectacular growth in the German market is the result of a very favourable legislation granting a total tax exemption for biofuels, and this whether it's in pure or mixed form. However, this legislation was modified on 1st August 2006. Emphasising the strong rise in the price of petrol, the German government introduced a 0.10 € tax for biodiesel used in pure form, and a 0.15 € tax for biodiesel when mixed in refineries.

 French production, which has continued to decrease since 2001 (date on which it was the leading European producer country), finally recovered in 2005 with a 41.4% production increase (a total of 492000 tons). In 2006, the excise tax on petroleum products, from which biofuels benefit, was reduced and re-established at 25 €/hl (33 €/hl in 2005) for biodiesel, and 33 €/hl (38 €/hl in 2005) for bioethanol intended to be transformed into ETBE.

The rise in importance of biofuels in the European Union has been more than confirmed. Tax exemption policies have been set up, in particular in Germany, Spain, the United Kingdom, Italy and France. France has also established an ambitious biofuel plan running until the year 2015, since it is question of reaching European directive objectives as early as 2008 (5.75% biofuels in the transport sector) with a 7% incorporation rate in 2010 and 10% in 2015. It’s probable, however, that many countries will not succeed in reaching the European directive objectives. In effect, taxes on fuels constitute a very sizeable portion of the budgets of the different member States, which can lead certain countries to delay necessary investments.

Taking current development of the two sectors into consideration, we estimate biofuel production at 9.9 Mtoe in 2010, while, according to the Joint Research Centre of the European Commission, it should have to reach 18.2 Mtoe at this date to meet the european directive’s objectives, which are very near to those of the White Paper (18 Mtoe). And yet this figure could even be revised upward if all of the EU member states set up more aggressive tax exemption and production approval policies. Decisions shall have to be made very quickly, keeping in mind that it takes at least a year and a half to build a brand new production unit.