The Next Big Thing?

There is an old saying: if it sounds too good to be true, it probably is. When it comes to biofuels made from crops such as wheat, corn or rapeseed, many are saying that adage fits like a glove.

Biofuels were once seen as a near perfect tool to reduce emissions from cars and trucks. While cars would still spew out greenhouse gases, if they ran on biofuel, at least the plants that made their fuel would have soaked up CO2 while they were growing.

"In the beginning, it sounded very good," said Dietmar Oeliger, a traffic policy expert at the German environmental group NABU. "You didn't have to change your cars or your life system. Instead of using fossil fuels, you take something different and everything can stay the same."

Problem is, he added, it didn't work out the way it was planned. Despite huge government subsidies from EU countries to push biofuels -- around 2.6 billion euros in tax subsidies in the EU in 2006 -- their green credentials turned out to be questionable at best.

According to a report entitled "Biofuels: Is the Cure Worse Than the Disease?" by the Organization for Economic Cooperation and Development (OECD), conventional biofuel technology provides greenhouse gas reductions of less than 40 percent, which when other factors are taken into account, means that biofuels' disadvantages can often outweigh the benefits.

"If you take the whole production process into account with some of them, the use of land, water, fertilizer, etc., they don't perform very well in mitigating CO2 emissions," said Michael Zirpel of the International Transport Forum, part of the OECD. "Some are even worse than fossil fuels."

A serious rethink

European countries are beginning to rethink their biofuels enthusiasm and are rolling back some of their generous subsidies. The EU is also starting to reconsider its commitment to these so-called first-generation biofuels.

Recent reports have linked rising food prices and rainforest production to biofuels, as farmers grow crops for fuel instead for human consumption. The UN Special Rapporteur for the Right to Food Jean Ziegler even called large-scale production of biofuels "a crime against humanity."

The EU's once highly touted goal of having 10 percent of transportation powered by biofuels by 2020 is no longer set in stone, since Brussels did not foresee the problems that could arise.

"Biofuels were at the center of praise at the beginning, and now they're in the center of criticism," said Barbara Helfferich, spokeswoman for EU Environment Commissioner Stavros Dimas. "Now it's not biofuels in and of themselves, it's what kind of biofuels and how we produce them."

Hopes for the second-generation

As politicians and policy makers begin toning down their tributes to first-generation biofuels, they're not giving up on the concept altogether. What didn't work the first time around, the thinking seems to be, might succeed on a second try.

In a small town about a half-hour's drive from Dresden, some leading political and industry leaders gathered recently. German Chancellor Angela Merkel was there, along with Daimler CEO Dieter Zetsche, Volkswagen boss Martin Winterkorn and Rob Routs, a high-ranking executive at Shell. They've gathered at what Choren Industries claims is the “the world's first commercial production plant to convert biomass into synthetic diesel fuel.”

Instead of using rapeseed, wheat or corn, Chroen will use forest residue and waste wood to produce its Sun Diesel, which it claims is head and shoulders above anything on the market today.

"We would be triple A if judged by Moody's," said Tom Blades, head of Choren. "Compared to fossil fuels, we actually lower the CO2 emissions in the product lifecycle by over 90 percent."

It is an enticing claim and one which industry leaders, particular from the German car industry, are eager to support. They are already under pressure to reduce their emissions to abide by European Union guidelines and Merkel's government is reported to be waging a rearguard campaign to delay implementation, reduce penalties and ease the burden on the country's luxury automotive industry. Second-generation fuels could help the car industry meet climate-protection goals without it having to make too many sacrifices.

Could work, maybe

"Synthetic fuels from biomass have the potential -- and we're still talking about potential -- to become a central pillar in climate-friendly energy supply," said Angela Merkel.

But the word "potential" is key here, since second-generation biofuels are not yet proven, nor market ready.

According to the OECD, it remains to be seen whether these new fuels will become economically viable over the next decade, if ever. They will need large-scale subsidies for the foreseeable future. High costs are still a major factor.

There are logistical challenges of transporting biomass material to large production facilities, which could impose a floor on costs that would be difficult to lower. And there is the land issue. For large-scale production, there are fears that farmers would be tempted to turn fields over to tree plantations for second-generation biofuels instead of wheat or rice fields -- a scenario which, again, could affect food availability.

Dieter Oelig of the environmental group NABU worries that there is too much focus on this new generation of fuel, and not enough on energy or automobile efficiency and other strategies that could be put in place now.

"Maybe in 20 or 30 years or 40 years, we have a big potential (for second-generation biofuels), if they work," he said. "But in 40 years, we need to have a lot of answers that are clear. Otherwise, we'll have a very big problem."