Do Biofuels Need a Government Lift?

Conservative research estimates say that second generation biofuels could meet between 10 and 25% of our energy supply needs by 2050 – potentially, all that is required is some investment from the private sector and we could be pushing new developments to meet that target.

And therein lies the problem.

Private investment is reticent. Developing biofuels comes at a sizeable cost and to take it to the next stage requires something beyond what the government and public sector finance can normally supply. There’s also a fair amount of risk involved. Biofuels are unproven in the big, wide world and finding the right, supportive private sector investment to take on that kind of risk has so far proved fruitless.

The recession hasn’t helped the lack of enthusiasm, even with the research suggesting that biofuels could contribute a large amount to our energy economy.

The key for further development is to get beyond the laboratory stage to a demonstration model production facility that can make biofuel on a large enough scale to encourage viability. According to the Carbon Trust, moving to this stage could cost as much as £100 million and while, at university level, there is a great deal of expertise this hasn’t been passed on to producing plants that can mass manufacture enough fuel for a hungry market.

There are plenty of start-up companies working in symbiosis with university academics but can they get to the next, and perhaps most vital, stage. The Carbon Trust believes that this is unlikely without long-term funding through the public purse. This is needed, in the absence of significant private investment, to take biofuel technologies from the lab, through to pilot and demonstrating that it can be produced in sufficient quantities to satisfy demand.

Not having the possibility to fund beyond the pilot stage may well put a lot of biofuel innovators off. What would be the point if there wasn’t the money to take their ideas beyond the next stage, no matter how much research and results were behind them?

According to the Carbon Trust there is a requirement to provide the funding and that can only be done by a change in policy. What is needed is enough money that provides a gateway from beginning to end. Grants, loans and risk capital could be combined to get the right biofuel products to the first production stage. The benefit of doing this is that it could bring about a sea change from future private investors and kick start the popularity of biofuels as a viable energy source.

Without it, biofuel technology could languish behind other low carbon options that have received more generous private funding. A lot depends on whether we believe that biofuels have a future. At the moment, they are produced in small quantities at relatively large expense by small businesses working with the shackles on.

The gap between working on a pipe dream and getting commercial involvement that takes the biofuel industry to the next level is, at the moment, too wide to cross.