Market Conditions for Emergence of Cellulosic-Biofuels Industry Analyzed

Scientists from the Center for Agricultural and Rural Development, Iowa State University (United States) and INRA, UMR Economie Publique INRA-AgroParisTech (France) examine the factors which could determine "whether the necessary private investment will be available to allow a cellulosic biofuels industry to emerge." The results are published in the journal, Energy Policy (URL above).

Presently, cellulosic-ethanol research activities are looking for breakthroughs which could lower production cost, so that private sector investments can be induced to flow. Research areas include conversion technologies, feedstock logistics and feedstock agronomy. The authors mention that previous studies on the future of cellulosic biofuels mostly focus on feedstock supply and associated greenhouse gas emission issues. They say that the "necessary market conditions suitable for the emergence or the absence of second-generation biofuels were overlooked", hence the motivation for their study.

The paper discusses the market forces influencing US and EU future demand for cellulose ethanol, and the role of competition with conventional biofuel options and petroleum-derived fuels. They were able to demonstrate that market forces alone would not be able to induce private sector investment in cellulosic biofuels, because of "a high degree of competition and uncertainty caused by uncertain technologies and commodity prices." They also showed that "emergence of a cellulosic ethanol industry is unlikely without costly government subsidies, in part, because of strong competition from conventional ethanol and limits on ethanol blending."

Other results of the study can be obtained from the journal article at the Energy Policy journal website (URL above).