Sustainable Transportation: A New Way of Thinking

SEKAB’s strategy
Europe is slowly beginning to understand the importance of a diversified fuels matrix and a reduction in GHG emission levels. What will SEKAB’s strategy be for the coming years? “Our strategy consists mainly of two point. The first is our strong focus on the development of second generation ethanol, the research & development and industrialization of it. The second point is to provide sufficient quantities to the market, to really implement the ethanol into the fuels matrix. Therefore, we are developing markets both foreign and domestic. At the moment, we are investing in Poland and Hungary. In Poland we have broken ground a few weeks ago, in Hungary we will follow soon. Both countries are part of the European Union and are committed to comply to the 10% market share in 2020. On top of that, Hungary will probably have some degree of export capacity due to the large surplus of maize. A good strategy for al, I think, is to utilize the comparative advantage of these countries to the best extent, since industrialized countries in western-Europe lack the capacity for large scale domestic production.

The subjectivity of cost-competitive technology
Some people suggest that we should wait with the large scale use of biofuels until second generation technology becomes cost-competitive, a development SEKAB is working on as well. Mr. Carstedt however questions whether we should give any value to the term ‘cost-competitive’ at all. “Cost competitive has so many unknowns. Competitive to what? To oil at $50/barrel or $200/barrel? It is a very relative thing. What price do you put on carbon dioxide? €20/ton or €10/ton? I don’t know an I don’t think anyone knows. So cost competitive is really a very relative issue. It will be cost competitive, but it depends largely on the costs of our competitors. And as oil reserves are depleting, it will only be a matter of time. Than the question is, how does it compare to other renewable energies, which depends on where we are in 10 years. Will we still have the capacity to expand the production from grains? If you don’t, what else do you have except cellulose? And at that point, you are only competing with yourself. In that stage, cost-competitive depends on the price of biomass, making feedstock development key. Subsequently, the question than turns to volumes. Are the residuals sufficient, or do we have to look to other fractions? This is a very step wise development.

We see a development towards cellulose and a development towards larger scale. We are developing regardless of the cost competitiveness to oil or other fossil resources. And that should be the way of thinking. Oil will run out, and we don’t have many other options. We at SEKAB have a pilot plant right now and we plan to have a development plant that is 40 to 50 times larger up and running in 2010. That will take 2 to 3 years to operate and to build a new one, than you’ll have cost-competitive technology probably around 2013-2014. But having technology is one thing, applying it large scale is another. For that you need a balance in demand and specifically in supply of biomass, since you cannot produce in a sustainable manner if you use more than the annual growth of biomass.