* EU shift away from food-based biofuels will need big
* EU will need millions of tonnes of non-food biofuels to
* Investment incentives currently not enough
HAMBURG, Sept 25 Large new investment incentives
will be needed to promote the development of alternative
biofuels after the European Union's move to curb the use of fuel
derived from food crops, a unit of Royal Dutch Shell Plc
said on Tuesday.
The executive European Commission announced a major shift in
biofuel policy on Sept. 17, saying it plans to limit crop-based
biofuels to 5 percent of transport fuel. Campaigners had argued
that existing rules were taking food out of people's mouths.
In a biofuels study presented on Tuesday, Deutsche Shell
said companies would need help with the costs of developing and
producing new second-generation biofuels to meet that goal.
"Existing incentives are currently not sufficient to
simulate the extensive and strategic new investment for the
large-scale technical introduction of second-generation
biofuels," Deutsche Shell said.
Biofuels made from food crops such as grains, sugar and
vegetable oils, often called first-generation biofuels, had been
expected to make the biggest contribution to meeting an EU
environmental protection target that 10 percent of all transport
fuel should come from renewable sources by 2020.
The EU's new proposals, however, envisage the remaining 5
percent of biofuel output to reach the 2020 target will come
from biofuels derived from waste products, grasses, the inedible
parts of plants or a range of other non-food feedstocks
"There will be possibilities to increase the use of
second-generation fuels, however these targets are ambitious,"
said Joerg Adolf, chief economist of Deutsche Shell.
"We will need research and development of second generation
biofuels. We will also need large production plants," he added.
"Currently we have some second generation pilot plants but we
will need production in millions of tonnes not in hundreds of
thousands of tonnes."
Shell and others are researching several types of second
generation fuel production.
"We see that such large scale industrial plants need three
to four years lead time including planning, investment and
planning permission," Adolf said. "I would not expect the major
flow of new (second generation) plants to come on stream until
This was partly why Shell regarded the latest EU plans as
ambitious, he said.
Details of the new EU plans have still not been published,
but Adolf said it was possible that the existing policy of
double-counting the volumes of biofuels produced from waste fats
towards the overall biofuels-use total could be expanded.
Second-generation biofuels are currently about twice as
expensive as the fossil fuels they should replace, said Uwe
Fritsche of German research institute IINS, which undertook
research for the Shell study. Prices would need to be reduced.
"Some transport modes such as ships, aircraft and trucks
need bioenergy to reduce their emissions because of lack of
alternatives," said Fritsche. "Biofuels still have a role."
Shell did not call for an end to use of the controversial
higher bioethanol/gasoline blend in Germany, called E10.
The German government in 2011 raised the maximum permitted
level of bioethanol blended in gasoline to 10 percent from 5
percent as part of a programme to protect the environment by
cutting CO2 emissions, But the blend has struggled to raise
sales and has been criticised as helping to raise food prices by
consuming grain for its production.
The higher blend "has partly established itself in the
market" and is expected to continue its development, Shell said.