The energy sector and its industries are facing, on a daily basis, new restrictions and taxations on gas emissions which are harmful both to the environment and public health. Therefore, the sector shall necessarily search for alternatives in energy sources, development of cleaner processes and the implementation of new strategies which helps to address the emissions and reduce its impact.
Currently, the industry is faced every day with new restrictions on emissions of harmful gases for (the environment) nature and humans (the public health) in their production processes. Therefore, these companies must necessarily seek new alternatives or at least develop projects that help as much as possible to reduce that impact. Any current productive process on an industrial scale produces, in any sector, unwanted (by-products) products that it needs, either to transform them or to throw them into the atmosphere. It is inherent to the process. But these processes are necessary for (economic, socio-economic) human development, and even for today’s life. It cannot discard them, but we can give them the corresponding back-up in their productive process, in order to mitigate the current consequences:
- Great dependence on fossil fuels: there must be means or raw materials different from the fossil fuel which can provide us the same product (outcome), or a similar one; or produce necessary by-products (such as additives, solvents, etc.) analogous to the products obtained from fossil fuel through different procedures, in order to reduce the dependence.
- Energy security: The IEA defines energy security as “the uninterrupted availability of energy sources at an affordable price”. Energy security has many dimensions: long-term energy security mainly deals with timely investments to supply energy in line with economic developments and sustainable environmental needs. Short-term energy security focuses on the ability of the energy system to react promptly to sudden changes within the supply-demand balance. Lack of energy security is thus linked to the negative economic and social impacts of either physical unavailability of energy, or prices that are not competitive or are overly volatile. Through technologically innovative projects, we could reduce the volatility in the price of biofuels. For instance, by reducing the possible lack of production because there are complementary methodologies, they can be introduced into the productive chain of developing countries, obtaining high energy value products that can be used to improve competitiveness in the sector and thereby provide energy security.
- Low efficiency process. One of the biggest problems in the productive processes comes from the low existing yields when compared with the global results (overall efficiency of the process, taking into account the by-products generated). Financing projects that aim to improve the performance of the processes through green methodologies is one of the greatest challenges and must be supported the most, both economically and at a legislative and political level.
- Restrictive policies against traditional processes. As mentioned above, the regulation and restriction of procedures is progressing, and must seek sustainable alternatives that reduce dependence on these projects, thus obtaining a double benefit: on the one hand an economic benefit as usual by-products return to have a second use, giving value to the process; and environmental benefit, due to the fact that the rates that will be paid for these undesired products, in the future, will no longer be implemented.
- Competition between markets. Currently, due to the increase in demand, the industry has sought procedures in other areas, such as the food market. Base the productivity on raw materials normally used for the food market, to incorporate them into your production process can create insecurity in that market. Not only at the time of the raw material itself, but also in its origin, its cultivation, its exploitation, location, etc. There is a whole vortex behind that raw material that is being affected by the introduction of other industries with more competitive prices. This unquestionably affects developing countries or corporations, since they are at a disadvantage compared to large groups that can diversify profits / losses in all their segments. This project does not base its procedure on that market; therefore, it would not be affected by it or vice versa.
- Supply security. One of the fundamental factors in any process of industrial production is the supply of raw materials. Dependence on oil, for example, comes down this road. The industry is insured in the supply of that raw material. BAC-TO-FUEL consortium knows a lot about it, so we work with a greater safety margin. It is therefore necessary to look for a raw material similar to oil in order to be competitive. At present, biomass is used as a competitive raw material. The problem is that, due to the instability of the supply (the quantity cannot be assured since it depends on many factors such as weather, time, production, etc.), it does not become competitive. However, BAC-TO-FUEL has by-products known throughout the chemical industry, and with enough overproduction, so that the supply would be assured and could be one day, in the long term, competitive with oil or at least apply for additive for biofuel transportation if price is still under favourable conditions.
- Dependence on imports. Most countries have energy dependence with third countries, either because they do not have the necessary resources to be self-sufficient at the energy level, or because they do not have the technology to do so. Through the new possible sources of energy production, dependence with these countries would be reduced, reducing price volatility accordingly.
- Financing. One of the biggest risks in the industry is investment. The risk that a company faces when it is prepared to develop a technology is increasing, either because of the increasingly restrictive legislation, either because of the high capital to be invested, either the state of development of the process and its short-term amortization. The consequences of the interaction of all these variables implies that companies reduce their investments and are forced to pay the corresponding fees. In fact, the benefit of a company will be greater if it pays the corresponding fees and if it invests in new environmentally enhanced procedures. That is why investment in technology should be encouraged at the political level, so that companies can make the change in their facilities progressively to adapt to new regulations. The BAC-TO-FUEL project would not represent a high cost in this sense, consequently its financing would be accessible and with an economic return in a term of 10 years, (we are in a TRL5 in 2021) common in the industry.
- Policy. All countries are working on the reduction of polluting emissions, having to obtain the same products by other non-polluting means or at least not as polluting as the current ones, either through COP21 climate change agreements, energy and environmental laws, or legislation framework of each country.
- The BAC-TO-FUEL project is not the panacea that will prevent the reduction of CO2 emissions to the atmosphere, since the amount of CO2 that is emitted is immense compared to what would be needed for this installation. But at least, it collaborates in the efforts to decarbonise the transport sector. So far it is known that countries such as the US and the European Union Countries are importers of CO2 in the market for that component. That explains the current low cost of CO2, and therefore companies may not feel the need to implement technological developments in this regard. Nevertheless, these rights will be restricted in 2030, and consequently the price of CO2 will rise considerably. Then, implementation of actions to mitigate CO2 will be essential.
- (CO2 trade). Companies must buy permits or credits for their emissions, and some firms needs millions per year. They can either invest in environmental climate friendly technologies to reduce emissions or purchase credits (current market) from another industry that has lower emissions than credits. In 2019, that prompt to the EU to start withdrawing that surplus allowances from the market. Low supply translates into an increase in price, and the bigger incentive to cut emissions. Companies that remain big polluters, soon they will have to paid more for their privileges. According to the EU aims on the report:
“To achieve the EU’s overall greenhouse gas emissions reduction target for 2030, the sectors covered by the EU Emissions Trading System (EU ETS) must reduce their emissions by 43% compared to 2005 levels”
“To increase the pace of emissions cuts, the overall number of emission allowances will decline at an annual rate of 2.2% from 2021 onwards, compared to 1.74% currently.”
After evaluating the existing problems for any industry / current client, the BAC-TO-FUEL Project meet all the previous points as follows:
- Dependence on the fossil fuels: The production of biofuel is made from H2 obtained by oxidation of residual H20 (does not have to be purified) thanks to the energy coming from sunlight, aided in the catalysis of sub-nanometric particles (AQCs) that improve the efficiency of the reaction; and from a current of CO2 gases (does not have to be purified) in a genetically modified bacterial medium to improve the reduction reaction of CO2 to alcohols C2 and C4, among others. Therefore, with this procedure it would help to obtain products similar to those produced from traditional raw materials (fossil fuel, coal, etc.) through a new “green” technology.
- Energy security: As mentioned in the previous section, energy security is influenced by the reaction capacity of the market when some factor, whether economic, political, etc. varies. This can happen in the short term or in the long term. With the incorporation of this procedure in its facilities, it could avoid the volatility existing in the price.
- Low efficiency processes. The Photovoltaic system of BAC-TO-FUEL converts solar energy to electricity with an efficiency of around 10-15%, while the net photosynthetic efficiency of plants in organic matter production is around 0.5%. Thus, in BAC-TO-FUEL project, a microbial electrosynthesis (MES) system that operate with an electric input from photovoltaic system, then even assuming 25% efficiency of MES, the overall organic matter production efficiency will be 3.75%. This means, at least 7.5 times more organic matter can be harvested per m² of land when the bioproduction is carried out in MES powered by photovoltaic system. Thus, the land-area requirement for the bioproduction in MES becomes appreciably low and need not to be fertile.
- Restrictive policies against traditional processes. The BAC-TO-FUEL project is supported by the European Commission, which seeks to obtain or produce clean technologies which reduce, as much as possible, dependence on traditional processes. Effectiveness, efficiency, sustainability in the projects is sought, but also that the by-products formed are either reused or their harmful effect on the environment is low. The traditional processes are still in long periods of amortization, so we cannot rule out their use until they are amortized. A conjunction between the two points must be sought, policies that support the implementation of new technologies, relying on traditional processes. This is where the function of the partner or final client is crucial, since this has the knowledge of those processes, with its weak points and opportunities of improvement, being able to advise the methods in progress to direct them to a better efficiency. A methodology must be developed which binds a restrictive policy with incentives for companies to commercialize these novel techniques, so that both the company and investors, whether public or private, will benefit.
- Competition between markets. This new technology does not compete with other markets, since it does not use attractive components for the industry as raw materials. Moreover, they are components in excess that must be purified, so their value is low. It is a point in favour for the client, since it will help to give stability in the market due to the reduction in volatility. The product obtained can be used by the same customer either as intermediate component, that is, as an additive, as a solvent, etc., or it can be incorporated it into the market. Currently, the project is in a TRL 4 (Technology Readiness Level), reaching at the end of the project a TRL 5. Analysing the commercial strategy of the product in a short period of time, as a TRL5 will probably not be competitive within the bioethanol market, the technology should be developed up to a TRL9 to be cost-effectively commercialized (around 2029-2030). The aim is to obtain a biofuel product from renewable H2 and CO2 reduction using genetically modified bacteria.
- Supply security. As presented before, obtaining biofuel from recycled sub products will provide stability to the supply chain favouring its implementation in developing countries with high drops in the supply, economic instability, etc. With the introduction of new production processes, there will be more alternatives and consequently the dependence on the traditional channels will be reduced. The price will also be stabilized, since another supplier appears in the game, having different business strategies, new criteria that will bring a price movement consistent with the idea of these markets.
- High importation. If this technology is developed in countries where import levels are high, these elevated imports could be reduced in the long run, since innovative projects allow to obtain the required products without having to depend on third countries; increasing your GDP and improving the apparent consumption accordingly. The raw material used in this project is accessible in practically all countries, so it would not be affected by import in this regard.
- Financing. BAC-TO-FUEL is financed by the European Commission until the project completion in 2021. This support allows the project to be developed in two ways:
- Technological path: Improvement of the procedures and validation of the hypotheses pronounced with their assumptions, obtaining a TRL5 at the end of the project.
- Commercial way: In parallel to the technical project, a long-term business model is being developed, in order to foresee the economic feasibility and its implementation in the industry.
Without this funding, neither of the two routes would be possible. They are necessary investments for the technological and economic development of the industry. Investments must be used by companies to collaborate, in some way, by contributing knowledge from an advisory member’s vision, thus being able to accompany the project from its inception to its completion. This will also help to promote subsequent phases for its future scaling and projection, if such clients or companies are open to make future investments to become more directly involved in the decisions and directions that the project may take.
- Policy. Both the EU and the rest of the world are working to fulfil the objectives of the Paris COP21 Climate Change Agreement. These objectives aimed lowering greenhouse gas emissions, developing mitigation projects or reducing possible risks, and promoting innovation and technological development in companies and organizations. BAC-TO-FUEL is aligned with that thought and regulation.
- CO2 market. At present, it is known that the price in the CO2 market is at a low value, which do not agree with the purpose of reducing emissions. This is due to the fact that a market has been created for the sale of rights by companies that have managed to reduce their emissions, but that still have high levels of emission rights.
They use this difference to make profit by marketing with it. The EU has established a mechanism to cease this procedure, accordantly in 5 years the emission rights will be drastically reduced, increasing the price of CO2 consequently. As a result, emitting CO2 will be very costly leading to a non-competitive market, unaffordable for companies. By contrast, supporting alternative projects such as BAC-TO-FUEL, companies could rely on the development of a technology that utilizes CO2 to generate products with high energy value, and thus foresee the expected trend in 5 years.