The potential of energy crops to provide a fast-growing feedstock to generate low-carbon electricity has long been recognised but in spite of that, it remains an industry in its infancy and with a number of challenges to overcome.
Firstly, energy crops, which are fast-growing grasses or trees grown specifically for energy generation, face competition from a range of other feedstocks including waste from agriculture, the timber industry and the food sector.
Secondly, the sector finds itself trapped between a number of different markets that are not connected to each other – the agricultural market, the oil market and the electricity market, says David Hostert, bioenergy analyst at Bloomberg New Energy Finance.
Few farmers in theUK, for example, are switching to energy crops, says Jeremy Tomkinson, chief executive of theUK’s National Non-Food Crop Centre. “With wheat prices at around £170 a tonne, why would you move away from the arable cycle and lock up your land for up to 12 years without any prospect of an income for at least three years, particularly given the uncertainty that exists around policy?” In addition, farmers often have hundreds of thousands of pounds tied up in farm machinery specific to arable farming.
Then there is the fact that because energy crops are not a single product, it can be difficult to predict prices – while the wood pellets market is the closest to commoditisation, prices tend to vary depending on the calorific value of the feedstock, the cost of land, harvesting and pelletisation along with the cost of transport.
The market is set to develop more quickly following the recent opening of the world’s first biomass exchange inRotterdamearlier this month. The exchange has been developed jointly by energy exchange APX-ENDEX and thePortofRotterdam,Europe’s biggest port.
Finally, major concerns remain over the sustainability of energy crops because of their possible role in deforestation and land-use change. If energy crops are grown on land that has previously been used for forestry or conventional agriculture and forest production, or even for nature protection and conservation, it could increase emissions rather than reduce them. “Where rainforests are cut down or peatlands drained for agriculture, the emissions can be huge,” says the NNFCC.
As a result, the EU is developing sustainability criteria for biomass and certification is likely to become an important issue for energy crops, particularly those grown in tropical regions in Africa,IndonesiaandMalaysia.
One of the main problems, though, is that we don’t really know what the impacts are. “The environmental sustainability of bioenergy crops is receiving wide-spread attention, scientifically, politically and in the media,” says Dr Niall McNamara, of the Centre for Ecology and Hydrology. “A key emerging issue is the lack of underpinning data with respect to soil carbon conservation and the associated greenhouse gas balance.”
This state of affairs is slowly changing. The CEH, along with the Energy Technology Institute, is producing a framework for the sustainability of biofuels in theUK, while in theUS, the Department of Energy’s Billion Ton Study of biomass supply has evaluated the resource potential for theUS. Although it does not consider the impact of land use change, it is at least a contribution to an area with sparse data.
The main energy crops are perennial grasses such as switchgrass and miscanthus; coppice and non-coppice woody, annual energy crops including eucalyptus, southern pine, poplar and willow; and annual energy crops such as sorghum, according to the US Department of Energy. The more northerly the location, the more likely it is that energy crops will be trees, while in the tropics it makes more sense to grow grasses.
Short-rotation coppicing (SRC) overcomes the major disadvantage of conventional forestry, which is that it operates on a relatively long time scale that involves committing an area of land to forestry for many decades, with the bulk of the income from the investment not realisable for many years, which provides poor cash flow.
In SRC, the stems of trees such as willow and poplar are cut back, creating a “crown” that throws out many more shoots, hugely increasing the yield.
Demand for energy crops is being driven by regulations such as the EU’s targets to cut emissions by 20% by 2020 and also air pollution rules such as the Large Plant Combustion Directive, which means that many coal-fired power stations in the EU are coming to the end of their lives. Co-firing with biomass is one way to extend the life of these facilities. But biomass can also be burnt on its own and if there is a sufficient supply, its dispatchability makes it an ideal partner to intermittent renewables to enable an uninterrupted power supply with minimum emissions.
Many of the companies involved in the production of energy crops are biotechnology companies rather than farmers or forestry groups. Futuragene, for example, “started as a protein engineering company based around cellulose binding domains,” says chief executive Stanley Hirsch. “We now have a whole set of patents and technology to modify plant cell walls. Cell walls form a very rigid barrier – if you can relax them, you can promote plant growth.”
US-based Anagenesis, meanwhile, claims that its “unique, patent pending, extremely fast-growing, pollution clearing Anagenesis Trifolia tree,” is based on “a revolutionary, proprietary, cost-effective cellulosic ethanol production method” that is based on more than 30 years’ research.
Energy crop provider Ceres, which claims to have a proprietary collection of 100,000 genes from numerous plant species, says that it is “developing dedicated energy crops as raw materials for renewable transportation fuels, electricity and bio-based products using advanced plant breeding and biotechnology”.
Mendel Biotechnology, which recently raised $11.8m in a Series F fundraising round and counts BP, Bayer Crop Science and Arborgen among its strategic partners, highlights its “new genetic and chemical solutions for improvement of crop yield and resource use efficiency”.
However, the sector is taking biotech in a different direction, Hirsch insists. “Up to now, genetic modification has been focused on resistance to insects and herbicides, which are input traits. We are working on output traits.”
The key for companies in this field is fast-growing trees that can be hybridised. “It’s all about maximising the yield,” says Hostert. “Companies in this field want to grow as much biomass as possible per hectare with the minimum input.”
Eucalypts are perfect for this, says Hirsch – there are 550 different species that can be modified to specific conditions. They are also very fast-growing – in Bahia inBrazil, for example, they grow about 5m per year and a plantation can generate 45 cubic metres of biomass per hectare per year, he says.
However, while the plants may grow fast, bringing a new “product” to market is also a slow process, says Hirsch, whose company is planning its first regulatory field trials to deregulate a new trait that will enhance yields for eucalyptus trees. “It is a 9-11 year process and we are in the final 2-3 year stretch.”
While the technology in creating this trait is broadly applicable to other species, to do so would require a whole new regulatory process, so Futuragene, which is backed by Brazilian pulp producer Suzano, plans to concentrate its efforts on improving yields for eucalypts. “Each regulatory process is an individual event. It is an expensive and time-consuming process. The regulatory process around the world needs to be harmonised,” Hirsch says.
Futuragene is focusing much of its effort onChina, where it has a research centre inShanghai (along with facilities inIsraelandBrazil) and it has established links with theChineseAcademyof Forestry. The company recently announced plans to plant 50 million drought-resistant trees a year in the country, not just to provide biomass but also to prevent desertification.
US- and Germany-listed but India-based Clenergen, has identified two species of tree – majestic and melia dubia – and a species of bamboo that are best suited for dedicated energy crop plantations and says that its “tree adaptation process” can increase the rate of growth by 40% per year, which it says reduces costs by 30%. The company says that through a process known as polypoldisation, it can produce trees with leaves 50% larger than normal.
“Polypoldisation is a scientific process first discovered in the 1970’s which is well established in the agri-food business, having been successfully used to encourage faster rates of growth in common crops such as corn, wheat, barley, rice sugarcane, cotton and sorghum,” the company says, but the technology has only recently been applied to the forestry industry, where it is beginning to produce positive results in eucalyptus, willow, and poplar tree varieties.
Clenergen sees its main customers being coal-fired power plants in Europe, South Korea, Japan and the US, as well as captive end-users such as mining and manufacturing operations. Its supply chain, though, will be widely diversified, with feedstock coming from as far afield asGhana,Guyanaand thePhilippines.
Energy crops are a product with a huge potential market, but investors are reluctant to commit until issues such as land use change are dealt with and they can see a clear path to a return on their investment. If current trials show improved yields and fossil fuel prices continue on their upward trajectory, the sector should thrive.