Market News

 April 03, 2009
Biofuel producer with a blueprint for sustainability


Can Sekab, a biofuel producer sourcing from one of the world's biodiversity hotspots, claim that its fuel is sustainable?

Biofuel controversy continues to crank up the heat in Brazil, where biodiversity hotspots are being snapped up and converted into biofuel production at a high social and environmental cost. So when bioethanol producer Sekab, which sources 100% from Brazil, walked away from the World Biofuels Markets Conference with a sustainability award tucked under its arm last month, it warranted a closer look.

Walking the talk

It appears as though this year's panel of judges at the Biofuel Sustainability Awards have backed a winner. Sekab, which supplies around 90 percent of ethanol in Sweden, claims to be the first bioethanol producer to legitimately provide 'certified sustainable' bioethanol to pumps in Sweden. This is noteworthy, given that in recent years nearly a third of the cars on the road have been running on Sekab's ethanol blend E85.

Annders Fredriksson, CEO, Sekab BioFuels & Chemicals, says Sekab is the only biofuel company to impose sustainability criteria, encompassing the entire lifecycle of ethanol production, on its suppliers. Given that its suppliers are subjected to biannual audits carried out by independent verifier, SGS, Fredriksson can confidently state that the fuel is traceable and accountable from field to pump.

Sekab's sustainability criteria are more stringent than those proposed under the European Union's (EU) Renewable Energy Directive. While Sekab requires the bioethanol production process to yield at least an 85 % carbon emission savings compared with fossil fuels, the EU Directive requires only 45% carbon emission savings, rising to 60% in 2015.

Mechanising... at any cost

To further reduce air pollution and CO2 emissions, Sekab is mandating its suppliers to shift toward 100% mechanised harvesting. This removes both the need for stubble burn off and for gasoline to ignite the stubble.

Echoing the Brazilian government, Sekab is touting mechanised harvesting as a solution to extreme conditions and frequent exploitation endured by manual harvesters. While this sits well with the company's zero tolerance policy on child and unregulated labour, Brazilian Sugar Cane Industry Association, UNICA, estimates that roughly 180,000 jobs will be lost to mechanisation over the next three years, leaving many cane cutters permanently unemployed.

Compensating for its social sustainability, a zero tolerance policy for deforestation means Sekab's suppliers must comply with Brazilian law, which dictates that 25 trees be planted for every tree felled. Coupled with a strict mandate on water conservation, the company's claims to environmental sustainability appear well founded.

Looking forward, Sekab has developed an industrial process for producing second-generation ethanol from biomass feedstock, including woodchips and sugarcane bagasse and plans to scale up commercial production over the next six years. This is key, given that second generation biofuels could reduce the current land requirement for biofuel production by around a third.

Scaling up

The model looks good. But does Sekab's sustainability model undermine its competitiveness? Harry Boyle, senior analyst at NewEnergyFinance thinks not. "If anything, given the new sustainability requirements of the EU, it makes Sekab more competitive,' said Boyle.

Additionally, last week Sweden secured a tax exemption on ethanol imports. The EU is allowing ethanol to be classified as a 'chemical product', exempting it from much higher taxes reserved for agricultural imports. This will help Swedish - and European - bioethanol to remain price competitive.

So it maybe worth asking whether, if Sekab's model was adopted by the entire bioethanol industry today, the EU target of 10% of transport fuel from renewable sources by 2020 could be met?

Fredriksson says: "Probably not, given that Sekab's 85% CO2 reduction requirement is too high for all Brazilian suppliers to currently meet." But he added that if the EU model was adopted by the industry, the 2020 goal could possibly be achieved. "In Sao Paulo state, most producers operate to a high standard. The majority of them already meet EU sustainability criteria," he said.

Kris Truyssen, European business development manager, SGS, also notes that it is unlikely that Sekab's model could be widely adopted, given that most bioethanol companies source from the spot market and therefore have little direct contact with their suppliers.

He adds that the ethanol mills that Sekab sources from also grow their own sugarcane, making verification simpler. "Smaller mills have to buy in cane, fragmenting the supply chain and making the auditing process more complicated," he explains.

Due to be implemented in the coming months, the EU's sustainability model is likely to be the most widely adopted, in Europe at least. But with the social sustainability criteria yet to be decided on, it's too early to guess what the end result will look like. In the meantime, the only operational, verifiable model out there is Sekab's.

Fuelling the world on bioethanol by 2050?

"If we were to entirely replace fossil fuels with biofuels at current consumption levels, the world's total, annual biofuel production would be used up in four days," says Annders Fredriksson, CEO, Sekab BioFuels & Chemicals. He goes on to estimate that the current 900 million or so cars on the road today will increase to 1.5 billion by 2050.

These are sobering statistics. According to Fredriksson, biofuels only provide part of the solution. "The trend of car ownership needs to be checked, cars on the road need to become more fuel efficient and biofuel feedstocks need to be as efficient as possible if [biofuels] are to form part of the solution," he says.

In other words grain, which only yields about 2000 litres of ethanol per hectare needs to be replaced with sugercane, which yields 8000 litres per hectare. This in itself will reduce the land required to fuel 1.5 billion cars from 1,200 million hectares to 400 million hectares.

The introduction of cellulosic technology can bring into play agricultural by-products like sugarcane bagasse, delivering second-generation biofuels. This would broaden the available feedstock base, further reducing the land requirement for biofuel production to 200 million hectares.

Finally, throw automotive technological advances into the equation -- increased fuel efficiency, more plug-in hybrids - and the land required to fuel 1.5 billion cars is further reduced down to 60 million hectares.

Now, consider that Sweden's industrial forestry area alone accounts for 22 million hectares and the hazy vision of fuelling the world on renewable energy begins to swim into focus.