Opportunities in alternative energy research
Six months ago in an article entitled “A sobering experience” I stated that Malaysia should follow a niche strategy in Biotech investing and one of the areas with great potential was Biofuel, made primarily out of palm oil. So I am really pleased at the recent surge in interest in Biodiesel in Malaysia.
The move towards alternative energy has taken Europe by storm. Germany is currently the leader in Biodiesel manufacturing and usage while others like Britain have adopted wind energy as the main alternative. Today the Toyota Prius is one of the best selling cars in the USA thanks to its energy efficient engine, which combines traditional fossil fuels with electricity generated through the braking process. Even fuel cell, wave and solar technology are all seeing far more interest these days. The world is undoubtedly moving towards the use of alternative energy in all aspects of life due to two reasons, environmental, to protect and preserve the environment and commercial because of rising fossil oil prices.
Biodiesel usage in the European Union has increased significantly because of regulations that require EU nations to increase Biodiesel consumption to 2 % of total fuel consumption by end 2005 and to 5.75 % by end 2010. Currently only Germany is close to meeting these regulations underpinned by lower fuel taxes and high usage of diesel vehicles in Germany. In the UK there are also tax benefits in using Biodiesel but delivery of Biofuel to the public is limited, as most of the petrol stations have not converted to cater to Biodiesel. This is bound to change as the government is committed to meeting EU requirements.
While environmental concerns drive government policy on fuel consumption, commercial factors have driven consumers to seek cheaper fuels like Biodiesel. At the recent peak of US$71 per barrel of crude oil, petrol prices surged to historic highs in most Western nations. In the US petrol prices rose to almost US$ 3.00 a gallon (about 4 litres) while in Britain they rose to almost £ 1.00 a litre. Imagine paying RM 7.00 a litre for petrol and you will realise the pain that this is causing consumers and business.
According to the International Energy Agency, the transport sector will see the largest rise in oil consumption in the next 25 years accounting for 3 times as much as all other sectors put together including industry and power generation. Yes, while everyone can fly these days, they also lead to higher fuel consumption in the transport sector. The Agency also believes that low oil prices are no longer possible in future due to huge underinvestment by oil companies and the possibility of dwindling oil reserves globally. Just to keep up with oil demand for the next 25 years, oil companies have to invest up to US$ 3.5 trillion through to 2030. This is very unlikely based on past investment records.
As long as crude oil prices stay above US$ 56 a barrel, Biodiesel and other forms of Biofuel are commercially viable, provided vegetable oil prices do not rise too much. Currently most of the Biodiesel consumed globally is actually a blend of fossil diesel and Biodiesel, made from rapeseed oil, soy oil or palm oil in 95: 5 (B5) or 90:10 (B10) ratio. It is interesting to note that the first diesel engine built by Rudolph Diesel in 1893 ran on peanut oil, the first ever Biodiesel. Diesel engines are therefore eminently suited to run on Biodiesel.
While Biodiesel from palm oil is the cheapest form of Biofuel, there are several constraints that make it less suitable for use in Western nations. Palm oil based Biodiesel has a relatively high Cold Filter Plugging Point (CFFP) of plus 11 degrees Celsius compared to minus 5 Celsius for rapeseed oil. The melting point is also higher at an average 34 Celsius compared to 5 Celsius for rapeseed. This makes palm oil based Biodiesel unsuitable for use in the colder climates of Western Europe especially in winter. Thus chemical additives are added to the blend to enable usage but this is still not adequate. Hence only the B5 blend is suitable but in Germany the greatest tax relief is obtained from pure Biodiesel, i.e. 100% Biodiesel without any fossil fuel.
This creates an opportunity for alternative fuel technology development and this is where Malaysian technology and research firms can do more. While organisations like the Palm Oil Research Institute of Malaysia (PORIM) have already been doing Biodiesel research there are still many areas of research that are open to private companies and researchers. Making palm oil Biodiesel more suitable for use in Western nations is just one of the possible areas. Other areas include improving the production processes to increase production of Biodiesel from crude palm oil, making the process cheaper or faster or even improving its storage and delivery capability. The holy grail of Biodiesel would be creating pure Biodiesel that could be used in current fossil diesel engines without the need for converters, thus making Biodiesel the true alternative energy fuel of the future.
Research into not just palm oil based but also vegetable oil based fuels is still in its infancy in the West. While other alternatives like fuel cells hold much promise, the reality is that Biodiesel is the one true immediate alternative fuel that’s not just environmentally friendly but perhaps in the near future also commercially viable. We certainly cannot use wind or wave technology for transport and solar energy and fuel cells are still far from becoming a reality but Biodiesel is here today and for the largest palm oil producer in the world this may be the one great opportunity to play a major role in the fuel not of the future but of the present.
The move towards alternative energy has taken Europe by storm. Germany is currently the leader in Biodiesel manufacturing and usage while others like Britain have adopted wind energy as the main alternative. Today the Toyota Prius is one of the best selling cars in the USA thanks to its energy efficient engine, which combines traditional fossil fuels with electricity generated through the braking process. Even fuel cell, wave and solar technology are all seeing far more interest these days. The world is undoubtedly moving towards the use of alternative energy in all aspects of life due to two reasons, environmental, to protect and preserve the environment and commercial because of rising fossil oil prices.
Biodiesel usage in the European Union has increased significantly because of regulations that require EU nations to increase Biodiesel consumption to 2 % of total fuel consumption by end 2005 and to 5.75 % by end 2010. Currently only Germany is close to meeting these regulations underpinned by lower fuel taxes and high usage of diesel vehicles in Germany. In the UK there are also tax benefits in using Biodiesel but delivery of Biofuel to the public is limited, as most of the petrol stations have not converted to cater to Biodiesel. This is bound to change as the government is committed to meeting EU requirements.
While environmental concerns drive government policy on fuel consumption, commercial factors have driven consumers to seek cheaper fuels like Biodiesel. At the recent peak of US$71 per barrel of crude oil, petrol prices surged to historic highs in most Western nations. In the US petrol prices rose to almost US$ 3.00 a gallon (about 4 litres) while in Britain they rose to almost £ 1.00 a litre. Imagine paying RM 7.00 a litre for petrol and you will realise the pain that this is causing consumers and business.
According to the International Energy Agency, the transport sector will see the largest rise in oil consumption in the next 25 years accounting for 3 times as much as all other sectors put together including industry and power generation. Yes, while everyone can fly these days, they also lead to higher fuel consumption in the transport sector. The Agency also believes that low oil prices are no longer possible in future due to huge underinvestment by oil companies and the possibility of dwindling oil reserves globally. Just to keep up with oil demand for the next 25 years, oil companies have to invest up to US$ 3.5 trillion through to 2030. This is very unlikely based on past investment records.
As long as crude oil prices stay above US$ 56 a barrel, Biodiesel and other forms of Biofuel are commercially viable, provided vegetable oil prices do not rise too much. Currently most of the Biodiesel consumed globally is actually a blend of fossil diesel and Biodiesel, made from rapeseed oil, soy oil or palm oil in 95: 5 (B5) or 90:10 (B10) ratio. It is interesting to note that the first diesel engine built by Rudolph Diesel in 1893 ran on peanut oil, the first ever Biodiesel. Diesel engines are therefore eminently suited to run on Biodiesel.
While Biodiesel from palm oil is the cheapest form of Biofuel, there are several constraints that make it less suitable for use in Western nations. Palm oil based Biodiesel has a relatively high Cold Filter Plugging Point (CFFP) of plus 11 degrees Celsius compared to minus 5 Celsius for rapeseed oil. The melting point is also higher at an average 34 Celsius compared to 5 Celsius for rapeseed. This makes palm oil based Biodiesel unsuitable for use in the colder climates of Western Europe especially in winter. Thus chemical additives are added to the blend to enable usage but this is still not adequate. Hence only the B5 blend is suitable but in Germany the greatest tax relief is obtained from pure Biodiesel, i.e. 100% Biodiesel without any fossil fuel.
This creates an opportunity for alternative fuel technology development and this is where Malaysian technology and research firms can do more. While organisations like the Palm Oil Research Institute of Malaysia (PORIM) have already been doing Biodiesel research there are still many areas of research that are open to private companies and researchers. Making palm oil Biodiesel more suitable for use in Western nations is just one of the possible areas. Other areas include improving the production processes to increase production of Biodiesel from crude palm oil, making the process cheaper or faster or even improving its storage and delivery capability. The holy grail of Biodiesel would be creating pure Biodiesel that could be used in current fossil diesel engines without the need for converters, thus making Biodiesel the true alternative energy fuel of the future.
Research into not just palm oil based but also vegetable oil based fuels is still in its infancy in the West. While other alternatives like fuel cells hold much promise, the reality is that Biodiesel is the one true immediate alternative fuel that’s not just environmentally friendly but perhaps in the near future also commercially viable. We certainly cannot use wind or wave technology for transport and solar energy and fuel cells are still far from becoming a reality but Biodiesel is here today and for the largest palm oil producer in the world this may be the one great opportunity to play a major role in the fuel not of the future but of the present.
17 Oct 2005
posted by Dr. Siva at 10:57 PM
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