Bio-based energy is a vast area that can be broadly divided into:
- Biomass based power production
- Biomass based heating / drying / cooling
Biofuels are replacement to transport fuels derived from biomass. The two main categories of biofuels are ethanol and biodiesel.
- Ethanol can be used as a replacement for gasoline. Ethanol is typically produced from sugar/starchy materials such as sugarcane, corn, maize etc.
- Biodiesel can replace diesel as the fuel in diesel engines. Biodiesel is typically produced from oilseeds such as palm, soybeans, sunflower, rapeseed (canola), Jatropha, algae etc.
Biofuels can be primarily classidied into first, second and third generation biofuels.
Issues in biofuels
Biofuels are a controversial domain today. While they definitely result in fuels that are carbon neutral (they emit only as much CO2 as their feedstock absorbed during their growth), they also have results in the food vs fuel debate because the feedstock for the biofuels are primarily food products.
As a result, later generation biofuel feedstocks have started emerging.
- For biodiesel, alternative non-food crops such as Jatropha are emerging to take the place of food crops such as soybeans and sunflower.
- For ethanol, cellulosic feedstock (which is pretty much any type of waste biomass such as wood chips, leaves, crop waste etc) is expected to play a major role.
Currently, ethanol has a much higher share of biofuels than biodiesel, though the share of biodiesel has been growing rapidly since 2006. Newer technologies such as cellulosic ethanol and thermo chemical methods could result in large-scale production of biofuels from less costly and more easily available feedstocks.
Biomass is biological material derived from living, or recently living organisms. In the context of biomass for energy this is often used to mean plant based material, but biomass can equally apply to both animal and vegetable derived material. Trees, crops, garbage and animal waste are all biomass. Most of the biomass we use for energy today is wood. Biomass can be used - instead of fossil fuels such as coal, oil or natural gas – as the feedstock to produce electricity.
The three primary routes for biomass to power are: Combustion, Gasification and Anaerobic Digestion.
- Combustion is easy to understand – instead of using coal or other fossil fuel, use biomass to produce steam that runs a turbine.
- In the case of gasification, the biomass is first gasified to make what is called producer gas. This gas is used in a gas engine to produce power.
- The last route anaerobic digestion is usually applied to biomass that typically have a high amount of water in them (anaerobic digestion is most used for treating organic waste such as kitchen waste and sewage waste into energy). Under this route, microorganisms act upon the organic matter present in the biomass under anaerobic (absence of air) and convert it into biogas.
How far are they from commercialisation
Almost all of the technologies for the production of second generation biofuels are in the final stage of commercialization and their launch is expected within the next two years. The success of such fuels depends, to a large extent, on national policies and measures towards sustainability. Ensuring access to the required feedstock for second generation biofuels is also crucial for the sustainability of the market.
Biomass based Heating and Cooling
This doesn’t take a lot to understand – instead of using coal or natural gas, use biomass for heating, drying or cooling applications. Already, biomass is being used for cofiring along with coal in some power plants worldwide. In addition, biomass is already used in a number of industries for heating and process drying.
By 2020, renewable heat solutions as alternative to fossil based systems should be available for almost each type of consumer. The biomass market share is expected to rise from 11% in 2007 to about 25% in 2020.
Business opportunities in biomass based energy
Biomass has the highest potential for small scale business development and mass employment. Characterized by low cost technologies and freely available raw material it is still one of the leading sources of primary energy for most countries. With better technology transfer and adaptation to local needs biomass is not only environmentally benign but also an economically sound choice. Bio-based energy, as a business is very huge, and can be expected to grow at a faster pace in the years to come.
From utility companies to small farmers, biomass has something for everybody.
Significant opportunities exists in
- Farm production: Cultivating energy crops which can be used as a feedstock.
- Feedstock intermediary: This compasses all operations associated with getting the biomass from its source to the biorefinery.
- Biorefinery Processes: Feedstock is converted to end-products through various process.
Manufacturing materials, machineries, equipments for the industry, trading these materials and end-products and providing services to the sectors along the entire value chain – all these provides a gamut of opportunities for entrepreneurs.
Making Money from Biomass Energy
Given the variety of processes and raw materials, biomass energy generation provides scope for involvement for larger number of individuals and organizations.
Research has helped develop crops which can be grown in arid areas and can be harvested for over a decade without ever replanting. Many small farmers have already started planting such crops for wood fuel so as to earn extra income.
Commercialization of biomass technologies is helping create markets for such commodities and the increasing cost of alternate energy sources has proved beneficial for the suppliers of these commodities.
Development of such wood fuel plantations at a commercial scale and a tie up with established local users could provide lucrative returns especially because of the lower opportunity cost of using arid lands.
An interesting characteristic of biomass is local production and local consumption. This reduces fuel transportation costs and cuts power transmission losses and also makes biomass more amenable to process heat related applications. This use is specifically beneficial to industries which produce agri-waste like rice husk, coconut and cashew shells which can be processed appropriately and fed as biomass fuel to captive power plants.
Such plants provide massive savings and despite high capital costs they usually have attractive pay back periods of 2-3 years. There are interesting business opportunities for enterprising individuals who can identify such biomass sources – which are usually discarded as waste – and help industries procure appropriate technologies to use them. Such plants do not need high end manufacturing and can be built with many industrial off-the-shelf components.
In the context of solid waste management in urban cities, biomass presents opportunities for mass employment.
Local entrepreneurs in small cities have organized and trained an army of rag pickers to collect and segregate waste which is then processed to produce briquettes of biomass fuel and recyclable plastic waste.
This arrangement generates employment, requires very low capital investment, keeps cities clean, reduces strain on natural resources for fuel and stimulates the local economy in general. This arrangement works well even for urban cities if areas are appropriately segregated and the biomass fuel can find institutional buyers.
Steady supply of biomass is cited as one of the biggest hindrances for biomass energy development. Grass root innovations like organization of tribal communities to tap forest waste – one of the largest sources of biomass – could help set up reliable supply chains. Farmer co-operatives equipped with adequate know-how of biomass could help divert agricultural waste unfit for use as cattle fodder. Such initiatives can reap rich returns as there is a premium on a steady supply of biomass.
The recently launched smokeless stove, loosely based on gasification, is an excellent example of a business based on low cost technology and involving low capital outlays as well. Apart from the health benefits it also yields higher thermal efficiencies resulting in huge savings for institutional users. It has also encouraged setting up of local biomass fuel supply chains and stimulated many allied industries.
Sustainability of biofuels market in long run
It is assumed first generation biofuels has a steady activity on a global basis through to 2012, after which it goes into decline and is steadily replaced by Gen-2 Biofuels of algae and cellulosic technologies. Once these technologies have been proven, they are forecast to experience growth through to 2025 and then to remain steady for 10 years before going into decline. It is forecast that there will be continuing niche uses of biofuels in 2050.
- Provides energy security for countries that have little or no oil reserves
- Reduction of GHG emissions
- Atmospheric pollution reduced
- Contribution to rural development and wealth distribution
- Solid wastes reduced
- Positive effects on many countries‘ trade balances (with replacement of oil imports)
- Potential conflict with food for land use
- Possible increase in agricultural products prices
- Reduced biodiversity
- Increased use of fertilizers and pesticides for growing biofuel crops
- Potential issues related to water availability
- Energy-intensive production process and the relatively low energy return.
- Biomass crops are seasonally harvested, bulky, and increasingly costly to transport
- High degree of uncertainty about the growth and evolution of biofuels over the next decade.
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