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Monday, January 08, 2018

Can We Afford Renewable Energy?

Over a decade ago we got involved in the development of the biofuels industry in Europe, when it began to take off in earnest there.

At that time estimated profits from biodiesel production created considerable enthusiasm, which at one point turned euphoric with new production facilities being announced almost on a weekly basis.

What was not to like? Europeans would get to drive their cars using green, very low-carbon, seemingly affordable fuels, saving the environment in the process. And investors would make a ton of money.

However, reality turned out to be rather more complicated than that, much to the chagrin of those investors. Production margins were quite volatile and very difficult to hedge into the future. All that new demand ended up spiking the prices of vegetable oils – the key biodiesel production input – way above those of fossil fuels. Entire domestic production complexes went bust as a result, prompting governments across Europe to eventually implement a range of support measures to make biofuels part of the fuel mix.

Biodiesel became the biofuel of choice in Europe for many reasons. It can be used as a blend component for diesel or replace it completely (typically referred to as B100, or biodiesel 100%). Both options were available in many pumps across Germany, the industry's pioneer and largest European market by far at that time. Despite being staunch environmental supporters and relatively wealthy, when the price of a liter of B100 was higher just by one cent German consumers immediately switched to its fossil fuel counterpart.

In other words, when push came to shove the willingness to pay for a "green" premium was not there - even in one of the most environmentally conscious countries in the world. This stunned us at the time.

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3 comments:

Anonymous said...

Biofuels are not a renewable energy, they are an invention of the progressive left

Anonymous said...

If not used within 6 months biodiesel will gum up the injectors and result in a HUGE repair bill. I speak from experience.

Anonymous said...

9:21

Home made bio diesel has a high water concentration that will kill any of teh high pressure components of the fuel system.
Professional bio diesel should not be used in a concentration greater than 15% of total fuel