Prospective study of the second-generation biofuels - Economic efficiency analysis of three diesel fuel substitutes production technologies in the framework of the fight against global warming. DG Tresor Working Papers, No. 2010/03 - September 2010

In order to fight against global warming, Member States of the European Union adopted in April 2009 a directive promoting the use of energy from renewable sources (2009/28/EC). Among the measures, the directive targets on a minimum use of 10 % of renewable energies in the total fuel consumption of the transport sector by 2020. Today, biofuels are the main substitute to fossil fuels. While the first generation biofuels, produced from food crops, has been highly criticized during the past years, hopes have been transferred on second generation biofuels (mainly biodiesel and bioethanol) which are produced from all kinds of biomass and in particular, non food crops (woody and herbaceous plants, agricultural and silvicultural wastes...). As these new technologies are not expected to be mature before 2015 - 2020, there are still few studies giving estimates of future production costs and environmental impacts of the considered processes. This study aims at evaluating the potential economic efficiency of three second-generation biodiesel production technologies in order to reduce greenhouse gas emissions. On the one hand, comparing biofuel production costs with fossil diesel and first generation biodiesel production costs allows us to assess their competitiveness. On the other hand, matching the additional production costs of the three processes (in regard to the fossil diesel cost) with the expected greenhouse gas reductions (bibliographical data) allows us to calculate the CO₂ abatement costs of these technologies. The results of this study show that the expected environmental balances for second-generation processes are definitely better than the first-generation ones, either for the greenhouse effect, or for the other environmental impacts. Second generation biodiesel production costs - calculated for various scenarios of raw material prices - are on the other hand higher than first generation biodiesel production costs. As a result, CO₂ abatement costs are higher too. Thus, these second-generation biodiesel technologies cannot be developed by 2020 without public support. However, there are still high uncertainties concerning various parameters and potential production cost reductions due to technical progress have not been assessed in this study. In order to comply with the target of a 10 % part of renewable energies in the transport sector by 2020, supporting research is essential, in order to promote the optimization of the different alternative technologies. (author)