1. Clean Fuel and Vehicles in Central & Eastern Europe & Turkey-Szentendre-27-28 October 2005 1 Fatin ALI MOHAMED Energy and Clean Production Branch UNIDO Biodiesel A solution for Energy Security, Environment & Rural Development

2. Clean Fuel and Vehicles in Central & Eastern Europe & Turkey-Szentendre-27-28 October 2005 2 Contents 1.What is biodiesel? 2.Why Biodiesel? 3.Review of the present situation in Europe 4.Reflections & Concerns 5.Key elements to successful biodiesel production 6.Conclusions and Possible next steps promoting production & use of biodiesel

3. Clean Fuel and Vehicles in Central & Eastern Europe & Turkey-Szentendre-27-28 October 2005 3 Together with bioethanol, biodiesel is a biomass based transport fuel (also for stationary internal comp.engines) Can substitute fossil diesel in vehicle engines - either as 100% biodiesel or partially in a blend What is Biodiesel?

4. Clean Fuel and Vehicles in Central & Eastern Europe & Turkey-Szentendre-27-28 October 2005 4 Strategy papers indicate : alongside renewably- produced hydrogen, biofuels represent an important potential route for achieving the goal of zero-carbon transport. What is Biodiesel?

5. Clean Fuel and Vehicles in Central & Eastern Europe & Turkey-Szentendre-27-28 October 2005 5 Produced through transesterification of fat molecules; in Europe mainly Rapeseed & sun- flowerseed are used What is Biodiesel?

6. Clean Fuel and Vehicles in Central & Eastern Europe & Turkey-Szentendre-27-28 October 2005 6 On life cycle base, CO2 emissions of Biodiesel is between 100 to 78% < fossil diesel, depending on, e.g., intensity of Agric.mechanisation used for growing oil crops Carbon Sequestration for emission trading Mitigating GHG Emissions: Graphic source: © University of Hohenheim Why Biodiesel?

7. Clean Fuel and Vehicles in Central & Eastern Europe & Turkey-Szentendre-27-28 October 2005 7 Health Benefits Ozone layer - Reduces CO2 emissions with~78% in comparison with fossil diesel, on life cycle base Fewer soot and particle emissions Environmental Benefits non-toxic Biodegradable Closed CO2 cycle, thus reduces production of GHG Sulphur free Why Biodiesel? Benefits seen in Biodiesel:

8. Clean Fuel and Vehicles in Central & Eastern Europe & Turkey-Szentendre-27-28 October 2005 8 Benefits for Engine Optimized viscosity and thus, reduction of engine wear Macro-Economical Benefits Employment creation Increased security of energy supply Conservation of foreign exchange by reducing import quotas and improving country’s balance of payments Benefits seen in Biodiesel: Why Biodiesel?

9. Clean Fuel and Vehicles in Central & Eastern Europe & Turkey-Szentendre-27-28 October 2005 9 Air pollution in cities: could be reduced significantly, biodiesel results in substantial reductions of: –unburned hydrocarbons (67%) –carbon monoxide (47%) –particulate matter (47%) Cleaner air cities Why Biodiesel?

10. Clean Fuel and Vehicles in Central & Eastern Europe & Turkey-Szentendre-27-28 October 2005 10 a solution to… Air pollution in cities: Emissions of NOx are slightly reduced or increased (10%) depending on the engine and testing methods used. However, biodiesel’s lack of sulfur allows the use of NOx control technologies that cannot be used with conventional diesel; therefore, effectively managing NOx emissions Graphic source: © University of Hohenheim

11. Clean Fuel and Vehicles in Central & Eastern Europe & Turkey-Szentendre-27-28 October 2005 11 Plantation of oil crops, especially on marginal land, improve the biodiversity Using Biodiesel is an appropriate option for sensitive zones with water reservoirs due to being non-toxic & Bio-degradable Biodiversity Why Biodiesel?

12. Clean Fuel and Vehicles in Central & Eastern Europe & Turkey-Szentendre-27-28 October 2005 12 On life cycle based biodiesel has a positive Energy Balance: For every one unit of energy needed to produce biodiesel, 3.2 units of energy are gained. Preserve natural resources Why Biodiesel?

13. Clean Fuel and Vehicles in Central & Eastern Europe & Turkey-Szentendre-27-28 October 2005 13 Issues in CEE Exude from rural areas; Need to create new opportunities for rural development, income & job creation Needs to reduce dependency on imported fuels & to increase security of energy supply Obligations to meet international commitments for Global greenhouse emissions & undertake mitigation efforts Air pollution, especially in large cities, & health consequences; need for cleaner fuel for transport

14. Clean Fuel and Vehicles in Central & Eastern Europe & Turkey-Szentendre-27-28 October 2005 14 EU has set a goal: by 2010, 5,75% of energy used in transport shall be biofuels In Europe Biodiesel counts for ~ 80% of biofuels produced; Its quality insured with (EN14214) Present Situation

15. Clean Fuel and Vehicles in Central & Eastern Europe & Turkey-Szentendre-27-28 October 2005 15 1.4 million ha was cultivated in 2004 to produce biodiesel Germany is largest producer, reached already goal for 2010 Czech Poland~40 plants in Europe: Austria, Czech, Germany, Italy, France, Poland, Spain & Sweden Present Situation

16. Clean Fuel and Vehicles in Central & Eastern Europe & Turkey-Szentendre-27-28 October 2005 16 CountryBiodieselEthanol Austria> 100Currently no plant Czech Republic 100Building up the industry Denmark44Experimental production France321100 Germany1088non Hungary2 (not commercially) Production capacity available Italy419Building up the industry Poland1.236.8 Spain70150 Sweden856 UK15- Biodiesel & bioethanol production in 2004, ‘000 tons Present Situation

17. Clean Fuel and Vehicles in Central & Eastern Europe & Turkey-Szentendre-27-28 October 2005 17 Feedstock Availability & cost of feedstock (~80% of production costs), Availability of land: for food or fuels? Crop rotation Set-aside land in EU (~5-6 million ha), at least 19 million ha is needed for the 5.75% in 2010 Reflections & Concerns

18. Clean Fuel and Vehicles in Central & Eastern Europe & Turkey-Szentendre-27-28 October 2005 18 Is it economically competitive? Unit cost of biodiesel from rapeseeds is ~0.52 to 0.6 Euro/l (before taxes) depending on the plant production capacity Feedstock costs ~80% of production costs. Price of diesel (at distribution station) is ~ 0.6 Euro/l. Reflections & Concerns

19. Clean Fuel and Vehicles in Central & Eastern Europe & Turkey-Szentendre-27-28 October 2005 19 To enable market penetration & development incentive mechanisms & excise exemption are needed Supportive financial mechanisms, set-aside & carbon credit Main message is to strive to decreasing cost of feedstock (↓ agric. input & ↑ productivity/ ha) and mixing with other, less costly feedstock, e.g., Used Frying Oil Reflections & Concerns Is it economically competitive?

20. Clean Fuel and Vehicles in Central & Eastern Europe & Turkey-Szentendre-27-28 October 2005 20 –Ensuring involvement of all stakeholders –Legislative framework –Feedstock selection, availability, price,.. –Marketing strategy, segment –Process technology & quality control –Plant site selection –…. Key issues towards successful biodiesel production chain

21. Clean Fuel and Vehicles in Central & Eastern Europe & Turkey-Szentendre-27-28 October 2005 21 Ensuring involvement of all stakeholders All stakeholders relevant to the production and marketing chain should be involved, have common under standing on their respective complementary roles Key issues towards successful biodiesel production chain

22. Clean Fuel and Vehicles in Central & Eastern Europe & Turkey-Szentendre-27-28 October 2005 22 Policies framework & incentive mechanisms Needed to be put in place :  In order to identify & set targets  Ensure the financial attractiveness of oil crop plantations to farmers  Enabling market creation by exempt biodiesel from taxes to be competitive with regular diesel  de-taxation depending on the market segment to be promoted  Promote private sector participation  … Key issues towards successful biodiesel production chain

23. Clean Fuel and Vehicles in Central & Eastern Europe & Turkey-Szentendre-27-28 October 2005 23 Feedstock availability, price,.. Devising a strategy to ensure availability & avoid price fluctuations : storage, multi-feedstock,.. Breeders, agric. researchers, extensions workers, farmers & unions are important Stakeholders to ensure best practice leading to best varieties & higher yield Private enterprises encouraged to participate Key issues towards successful biodiesel production chain

24. Clean Fuel and Vehicles in Central & Eastern Europe & Turkey-Szentendre-27-28 October 2005 24 Marketing strategy, segment Determining options : –pure 100% for certain market segment (agr. Machinery´s or city bus fleet) –blend, in all engines without modifications, does not need separate distribution system Which segment? –City transport: less harmful emissions –Lakes & rivers: fast biodegradability –Drinking water areas: zero toxicity Key issues towards successful biodiesel production chain

25. Clean Fuel and Vehicles in Central & Eastern Europe & Turkey-Szentendre-27-28 October 2005 25 Process technology & quality control  Highest & guaranteed quality to the standard  Ability to process multi-feedstock to accommodate fluctuation of feedstock price by selecting the least expensive  Highest efficiency = 100% conversion of oil (the most expensive input) to biodiesel Key issues towards successful biodiesel production chain

26. Clean Fuel and Vehicles in Central & Eastern Europe & Turkey-Szentendre-27-28 October 2005 26 Plant site selection  To lower transportation costs of feedstock & products  E.g., near water transport facilities for large scale, in vicinity of oil mills, etc.  Access to services  … Key issues towards successful biodiesel production chain

27. Clean Fuel and Vehicles in Central & Eastern Europe & Turkey-Szentendre-27-28 October 2005 27 There is a need to match between the benefits of establishing biodiesel production chain and the needs of CEE countries, especially: decreasing co2 emissions cleaner air Loss of state income due to biodiesel is compensated with tax income from economic activities and job creation through out the whole chain Conclusions

28. Clean Fuel and Vehicles in Central & Eastern Europe & Turkey-Szentendre-27-28 October 2005 28 Lead, so2, co2,… Clean air 123 Three complementary ways to reach the goal of clean air: 1- Using cleaner fuels (un- leaded, de-sulpharized) 2- Less fuels/more efficient engine 3- Using Environmentally friendly fuels/biofuels CO2 Conclusions

29. Clean Fuel and Vehicles in Central & Eastern Europe & Turkey-Szentendre-27-28 October 2005 29 Way forward-Possible next steps On national level 1.To compile information on the present situation regarding plans/strategies for the use of boidiesel in each country 2.For interested countries, a study could be undertaking to determine the potential for establishing biodiesel industry.

30. Clean Fuel and Vehicles in Central & Eastern Europe & Turkey-Szentendre-27-28 October 2005 30 Way forward-possible next steps On national level 2.Main components of the study are:. –Feedstock Supply Analysis; –Present Diesel and/or petrol Fuel Market –Scenarios for Future Diesel and/or petrol Consumption & Potential biodiesel Market Share –Accordingly, determining the capacity of production, potential stakeholders,…

31. Clean Fuel and Vehicles in Central & Eastern Europe & Turkey-Szentendre-27-28 October 2005 31 Way forward-possible next steps On regional level 1.Raising the awareness and sharing knowledge through networking and forum activities 2.Exploring regional cooperation on the production of biodiesel

32. Clean Fuel and Vehicles in Central & Eastern Europe & Turkey-Szentendre-27-28 October 2005 32 Thank you! Fatin ALI MOHAMED Energy and Clean Production Branch UNIDO F.alimohamed@unido.org Tel. +43 1 26026 3279