EU Emissions Trading Scheme Boosts Biofuels

Launched in 2005 as a measure to combat climate change, the European Union Emissions Trading System (EU ETS) was the world’s first large scale emissions trading scheme using a market-based approach to controlling pollution by offering economic incentives for reducing pollutants. The EU ETS, which currently oversees over 10,000 installations in the energy and industrial sectors, set its sights on extending these measures to the airline industry in 2012. The time has now arrived to take steps to bring airlines into compliance with EU ETS standards, and as of Monday, February 6, emissions from both international and domestic flights arriving and departing from Europe’s airports will either have to pay for their emissions of CO2, or switch to lower carbon advanced biofuels.

United States commercial airlines reportedly strongly resisted the EU ETS, but were unable to prevent its progress, and now that it is in place, airlines have no alternative but to comply. On the upside, the new rules present a huge opportunity for the biofuels industry in the United States and elsewhere. US biofuel manufacture is likely to be further boosted by the US military, as it moves away from petroleum in favor of biofuels.

Advanced, or second-generation, biofuels have the same chemical composition as traditional petroleum products, but are superior in that they have a lower sulfur content and less particulate, and therefore burn cleaner. This also means that advanced biofuels can be used in existing engines, stored in existing storage tanks, and transported along existing pipelines, making the switch from petroleum easier than would have been the case with the first-generation biofuel ethanol. Moreover, advanced biofuels can be manufactured from a wide spectrum of sustainable non-food products such as municipal solid waste, agricultural waste, waste oils and fats, and even wood residue, as well as high-yield energy crops grown specifically to manufacture biofuels.

Proving the effectiveness of advanced biofuels, the US military has flown some of its state-of-the-art jets on biofuel, with the US Navy pushing an FA-18 Hornet faster than the speed of sound powered by biofuel. So, while the demand for biofuels is increasing, customer commitment to facilitate planning and finance for increased production is a problem manufacturers need to overcome. Financial incentives to meet European Commission Emissions Trading System requirements may help to overcome these problems, as military and commercial aircraft switch from traditional petroleum to advanced biofuels in the interests of slowing down the harmful effects of global warming.