Averting a bioenergy bubble

Based on the paper J. B. Cruz, R. R. Tan, A. B. Culaba, and J. B. Ballacillo (2009) “A dynamic input-output model for nascent bioenergy supply chains.” Applied Energy 86: S86 - S94.

(First of two parts)

Fuels derived from agricultural crops are collectively referred to as biofuels or as bioenergy. Specific examples include electricity generated from combustion of wood grown in plantations, alcohol derived from fermentation of starchy or sugar-bearing crops (bioethanol) and chemical derivatives of vegetable oil (biodiesel). In recent years, bioenergy has become increasingly popular all over the world due to two key trends. Firstly, the supply of conventional fossil fuels, particularly petroleum, has been very volatile, and prices have exhibited a steady upward long-term trend. Thus, net energy importing countries such as the Philippines have developed interest in producing viable substitutes from indigenous resources. For instance, bioethanol from sugarcane or corn can partially potentially displace gasoline imports, while biodiesel from coconut can do the same for diesel. Secondly, growing concerns about climate change, which is caused mainly by carbon dioxide and greenhouse gas emissions from fossil fuel combustion, has stimulated international interest in renewable energy. Bioenergy is inherently carbon dioxide-neutral since photosynthesis during plant growth fixes carbon from the atmosphere. This is the same carbon that is then returned to the atmosphere once the plant-derived fuel is burned. Thus, it is possible to achieve a steady state in which there is no net release of carbon dioxide from bioenergy-based systems (although capacity expansion results in additional greenhouse gas releases from land use change).

Despite these advantages, bioenergy systems are nevertheless recognized to have some drawbacks. The most obvious one is that cultivation of plants for production of energy or fuels necessarily diverts agricultural resources away from the equally important function of food production. For countries such as the Philippines, with a large and fast-growing population, rising standards of living (and thus, energy demand), low agricultural productivity, and limited land resources, large-scale use of food crops for fuel production will be untenable in the long run. For example, if the entire coconut crop of the Philippines is used solely for the production of biodiesel (leaving nothing behind for other applications), the entire output will only be enough to reduce diesel imports by about one-sixth. In reality, of course, the Philippines’ coconut output is needed for conventional applications (e.g., production of edible oil and soap). Thus, due to supply limitations, it is difficult to envision coconut-based biodiesel completely displacing diesel. Because of this inherent limitation, there has been plenty of interest in recent years in Jatropha curcas, a crop that yields a non-edible oil seed that is suitable for fuel production. Furthermore, J. curcas is said to be able to grow on marginal land that is unsuitable for the cultivation of other commercial crops. It has hence been touted for some time as a highly promising energy crop, leading to interest in developing a local J. curcas-based biodiesel production infrastructure. Unfortunately, much of the investment has been directed at increasing production capacity of J. curcas plantations. The trend has been reinforced by the ease of cultivating the crop, and the availability of large tracts of idle land all over the country. On the other hand, investment in the downstream supply chain, i.e., in facilities to extract oil from J. curcas seeds and eventually convert the latter into useable biodiesel, have not grown at any significant rate. Thus, the Jatropha industry is in the precarious situation of having upstream (farm production) overcapacity and downstream (fuel production) undercapacity. Significantly, such imbalances have also been observed in other nascent, or emerging, bienergy supply chains elsewhere in the world.

(To be concluded)

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Dr. Jose. B. Cruz Jr. is a distinguished professor of Engineering at the Ohio State University, USA. He has published seven books and more than 300 journal articles, conference papers, and book chapters on sensitivity analysis, use of feedback for maintenance of near-optimality, and dynamic games. He obtained a BS degree (summa cum laude) from UP Diliman, a MS degree from the Massachusetts Institute of Technology, and a PhD degree from the University of Illinois at Urbana-Champaign, all in Electrical Engineering. He is a member of the National Academy of Engineering (USA) and a Corresponding Member of the National Academy of Science and Technology (Philippines). He served as vice president for technical activities and also for publication activities of IEEE. He has received many awards including the American Automatic Control Council Richard E. Bellman Control Heritage Award, and the IEEE James H. Mulligan, Jr. Education Medal. He can be contacted at [email protected].

Dr. Raymond R. Tan is a full professor of Chemical Engineering and University Fellow at De La Salle University, Manila. His main research interests are process systems engineering, life cycle assessment and pinch analysis. He is the author of over 40 published and forthcoming articles in ISI-indexed journals in the fields of chemical, environmental and energy engineering. He is also the recipient of multiple awards from the National Academy of Science and Technology and the National Research Council of the Philippines. He can be contacted at [email protected].

Dr. Alvin B. Culaba is a full professor of Mechanical Engineering, director of the Center for Engineering and Sustainable Development Research, and university fellow at De La Salle University, Manila. He is a member of the National Academy of Science and Technology, vice president and Engineering Division chairman of the National Research Council of the Philippines, and former president of the Philippine American Academy of Science and Engineering. He is also one of the country’s leading experts in energy and environmental systems engineering. He can be contacted at [email protected].

Jo-anne B. Ballacillo is a former research assistant at the Center for Engineering and Sustainable Development Research at De La Salle University, Manila. She received her MS in Environmental Engineering and Management from De La Salle University, Manila in 2008 and her BS in Chemical Engineering from the University of the Philippines, Diliman in 2004. She can be contacted at [email protected].