Argentina is the world's largest exporter of biodiesel. Due to the impact of low oil prices, the Argentine Biodiesel Chamber of Commerce has been complaining to the government in recent months, calling for more support policies.
The plight of the Argentine biodiesel industry is a microcosm of the current global biofuel industry. Biofuel companies in the United States, Brazil, and Indonesia all face similar dilemmas.
The rise of biofuels began as early as the oil crisis of the 1970s. At that time, international oil prices rose, and Brazil took the lead in introducing a policy of mandatory ethanol in gasoline. The development of biofuels was between 2005 and 2008. At that time, oil prices were so high that in 2007 it was close to an all-time high of $150 a barrel, and oil-importing countries were eager to find alternative sources of energy. In addition, with the increasing awareness of environmental protection, countries generally hope to develop clean energy. In this context, developed economies such as the European Union and the United States have introduced policies to support bioenergy. The United States passed the Energy Independence and Security Act in 2007, requiring a certain proportion of biofuels to be mixed in fossil fuels. The EU also proposes to increase the proportion of biofuels in the transportation industry by 10% by 2020. Encouraged by these policies, a large amount of capital is invested in the bioenergy industry. Some US and European companies even buy land and build factories in Brazil and Argentina to produce ethanol and biodiesel.
At present, the two factors of high oil prices and environmental protection that promote the climax of bioenergy have now undergone some new changes. The first is that oil prices have continued to fall for a long time, which has severely squeezed the development space of biofuels, making bioenergy lack market competitiveness. The biodiesel projects in the United States, Argentina and other countries are all based on the break-even point of the oil price of 80 US dollars. The current oil price is far below this level. Second, more and more voices question whether biofuels are truly environmentally friendly. It is argued that biofuels, especially the first generation of biofuels based on crops, are more clean than fossil fuels in use, but they still cause a lot of damage to the environment during land reclamation, planting and production.
The new direction of biofuels is the second generation technology, which uses waste materials such as straw as raw materials. In 2012, DuPont started construction of the world's largest cellulosic ethanol plant, producing ethanol from crop waste such as corn stover and corn cob. It was officially put into operation in November this year. Cellulose ethanol not only avoids problems such as food competition and land reclamation, but its greenhouse gas emissions will be reduced by 90% compared to conventional crude oil. However, from the market timing, according to DuPont's estimates, only when the price of crude oil is between 70-80 US dollars, cellulosic ethanol is competitively priced.
Despite the challenges, the pace of biofuel development has not stopped. According to the latest data from the International Renewable Energy Agency (IRENA), the total production of biodiesel and ethanol in the past 10 years increased from less than 3 billion liters in 2004 to 12.7 billion liters in 2014, an increase of more than four times. However, compared to other new energy sources such as photovoltaics, the growth rate of biofuels is obviously much slower.
The cost of biofuels is rigid, and current prices are hard to compete with downstream oil prices. The development of biofuels needs to be accelerated. First, it is necessary to reduce costs. Second, it needs to be more "green." In addition, at this stage, I am afraid that it cannot be separated from the strong support of the policy. Despite the availability of second-generation new technologies, it will take time for biofuels to break through the bottleneck.
The plight of the Argentine biodiesel industry is a microcosm of the current global biofuel industry. Biofuel companies in the United States, Brazil, and Indonesia all face similar dilemmas.
The rise of biofuels began as early as the oil crisis of the 1970s. At that time, international oil prices rose, and Brazil took the lead in introducing a policy of mandatory ethanol in gasoline. The development of biofuels was between 2005 and 2008. At that time, oil prices were so high that in 2007 it was close to an all-time high of $150 a barrel, and oil-importing countries were eager to find alternative sources of energy. In addition, with the increasing awareness of environmental protection, countries generally hope to develop clean energy. In this context, developed economies such as the European Union and the United States have introduced policies to support bioenergy. The United States passed the Energy Independence and Security Act in 2007, requiring a certain proportion of biofuels to be mixed in fossil fuels. The EU also proposes to increase the proportion of biofuels in the transportation industry by 10% by 2020. Encouraged by these policies, a large amount of capital is invested in the bioenergy industry. Some US and European companies even buy land and build factories in Brazil and Argentina to produce ethanol and biodiesel.
At present, the two factors of high oil prices and environmental protection that promote the climax of bioenergy have now undergone some new changes. The first is that oil prices have continued to fall for a long time, which has severely squeezed the development space of biofuels, making bioenergy lack market competitiveness. The biodiesel projects in the United States, Argentina and other countries are all based on the break-even point of the oil price of 80 US dollars. The current oil price is far below this level. Second, more and more voices question whether biofuels are truly environmentally friendly. It is argued that biofuels, especially the first generation of biofuels based on crops, are more clean than fossil fuels in use, but they still cause a lot of damage to the environment during land reclamation, planting and production.
The new direction of biofuels is the second generation technology, which uses waste materials such as straw as raw materials. In 2012, DuPont started construction of the world's largest cellulosic ethanol plant, producing ethanol from crop waste such as corn stover and corn cob. It was officially put into operation in November this year. Cellulose ethanol not only avoids problems such as food competition and land reclamation, but its greenhouse gas emissions will be reduced by 90% compared to conventional crude oil. However, from the market timing, according to DuPont's estimates, only when the price of crude oil is between 70-80 US dollars, cellulosic ethanol is competitively priced.
Despite the challenges, the pace of biofuel development has not stopped. According to the latest data from the International Renewable Energy Agency (IRENA), the total production of biodiesel and ethanol in the past 10 years increased from less than 3 billion liters in 2004 to 12.7 billion liters in 2014, an increase of more than four times. However, compared to other new energy sources such as photovoltaics, the growth rate of biofuels is obviously much slower.
The cost of biofuels is rigid, and current prices are hard to compete with downstream oil prices. The development of biofuels needs to be accelerated. First, it is necessary to reduce costs. Second, it needs to be more "green." In addition, at this stage, I am afraid that it cannot be separated from the strong support of the policy. Despite the availability of second-generation new technologies, it will take time for biofuels to break through the bottleneck.
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