Bioenergy is one of the largest renewable energy sources worldwide and also one of the most important energy pillars in the future energy mix. Raw materials from biomass can be converted into different forms of energy via various chemical, biochemical, mechanical or thermochemical processes, such as cooling, heating, electricity production or the production of biofuels.
- The carbon neutrality and versatility of bioenergy give it an important role and place it at the center of the energy transition as a major source of renewable energy
- Securing the supply of sustainable biomass and the trade-off between using available resources for food versus fuel purposes are key challenges in bioenergy development
- In the Netherlands there is no role for bioelectricity because here the supply of biomass gives priority to chemicals and materials, followed by biofuels for transport
Introduction
Bioenergy is one of the largest renewable energy sources in the world and one of the most important energy sources in the future energy mix. Bioenergy is unique because it offers alternative sustainable fuels that do not require major changes to existing infrastructure. The use of biomass for energy purposes existed long before the fossil fuel era, but in traditionally inefficient applications such as the direct combustion of wood to make fire or in open stoves. Modern sustainable bioenergy is based on the use of improved fuels such as pellets, wood chips and others in modern equipment to produce heat, electricity or biofuels.
This analysis focuses on different sources of bioenergy, its role in the transition to a low-carbon economy, the challenges associated with bioenergy development and the current situation in this field in Europe. We end this analysis with the bioenergy landscape in the Netherlands.
From biomass to bioenergy
Bioenergy is usually extracted from biological material that comes from living or recently living organisms, the so-called biomass. Biomass therefore supplies the raw materials for bioenergy. Vegetable biomass is usually used for energy purposes. The main raw materials include residues from forest clearing, residues from agricultural processes (e.g. wood waste, willow corn and corn stover, small pine trees, manure, forest residues, sugar cane, macroalgae, used vegetable oils), energy crops and waste, especially municipal solid renewable waste.
Raw materials from biomass can be processed via various chemical (esterification, hydrogenation, steam reforming and others), biochemical (fermentation and anaerobic digestion), mechanical (extraction, fiber separation, pressing, upgrading and others) or thermochemical (combustion, gasification, pyrolysis and hydrothermal upgrading) processes. are converted into various forms of energy such as cooling, heating, electricity production or the production of biofuels such as biogas, biojet fuels and maritime biofuels (see here for more information). The graph below summarizes the channels from bio-based raw materials to different products.
Benefits of bioenergy
Bioenergy has many advantages. First of all, there is the renewable and circular nature of bioenergy, where all the carbon released has already been naturally captured during plant growth. Bioenergy is therefore carbon neutral. Bioenergy can therefore act as a substitute for fossil fuels and prevent carbon emissions from entering the atmosphere. Furthermore, unlike fossil fuels, biomass is more evenly distributed around the world, allowing bioenergy production to be spread across different geographic areas, reducing vulnerability to energy supply shocks. In addition, bioenergy is a versatile energy source that can be used to produce fuel, heat or electricity. Also, the use of bioenergy does not require major changes to the existing infrastructure. Finally, for some sectors with few viable clean alternatives, such as aviation and maritime, biofuels are the main alternative energy source during the transition period. Moreover, the development of bioenergy can be a stimulus for rural development. All these benefits put bioenergy at the center of the energy transition as an important source of renewable energy, as we will see below.
The role of bioenergy in the energy transition
Global bioelectricity capacity has grown rapidly with an increase of 127% between 2010 and 2022. Most of this increase has been in Asia, particularly China. In 2022, China had 34 GW of installed biopower capacity, the largest in the world, followed by 17 GW in Brazil and 11 GW in the United States. China's bioenergy generation reached 137 TWh in 2022, with municipal solid waste and forest and agricultural biomass as the main feedstock.
According to the International Energy Agency (IEA), traditional bioenergy use will decline in the NZE (Net Zero Emissions) scenario around 2030, while by 2050 more than 60% of supply will come from sustainable waste streams (see the left graph below). Furthermore, global electricity production from bioenergy is expected to increase more than fivefold in the NZE scenario, as illustrated in the graph below (right).
The versatility of bioenergy gives it an important role in the energy transition, as it can be used by many sectors. The share of bio-based electricity in the global energy mix is expected to increase to 4,5% (currently 2,3%) in the IEA Announced Policy Scenario (APS) by 2050. For the European Union, bioelectricity capacity is expected to in 2050 by 25% and 175% respectively in the STEPS and ASP scenarios, keeping the share of bioelectricity in the energy mix in 2050 close to the current level of around 6% in these scenarios. Furthermore, the use of synthetic and biofuels for international mobility, especially for aviation (using Sustainable Aviation Fuel (SAF)) and maritime shipping (using biomethanol), is indispensable to reduce emissions in these sectors (see here For more information). Biogas and bioheat are also essential for the transition of the built environment and some industrial processes to climate neutral. To read further about the different types of bio- and synthetic fuels, see the previous analysis on the ABN-AMRO site.
The European Union supports the use of bioenergy for electricity and heating through the revised Renewable Energy Directive (RED-II). Accordingly, the total European energy supply from modern bioenergy increased by approximately 2022% in 33 compared to 2010.
Sustainability challenges for bioenergy
Like any other energy source, there are still a number of challenges associated with bioenergy. To begin with, securing the supply of sustainable biomass is the most important determining factor for the development of bioenergy in the future. In Europe, the technical potential of biomass (ie the available arable land for specific bioenergy crops divided by the total land) varies widely from country to country, with the highest potential in Eastern European countries such as Ukraine, Slovakia and Poland. The Netherlands is one of the countries with low potential, as shown in the graph below (left). The graph shows the technical potential within Europe, but what we need to look at is whether this potential is also technically and sustainably possible.
One of the biggest challenges for a sustainable supply of biomass for energy purposes is the trade-off between using available sources for food versus fuel purposes, given the existing capacity limits (nationally speaking). In this context, the conversion of certain food raw materials to biofuel production will have an upward effect on food prices. Another challenge is the possibility of land use change, which could have direct and indirect impacts such as biodiversity loss, deforestation and the conversion of rainforests for the production of biofuels from food crops, which would lead to higher overall carbon emissions. This means that emission reductions from the energy sector are offset by lower natural absorptions. Moreover, there is an intertemporal issue with biopower: it takes decades for the CO2 released by wood burning to be absorbed back from the air. It should be borne in mind that future regulations in the EU will focus on life cycle emissions of CO2eq rather than just CO2. In addition, the fact that nitrogen and other harmful substances are also released when burning biomass will also be taken into account.
To address some of these challenges, the European Commission has set out its sustainability criteria in its RED-II directive, distinguishing between land use and end-use criteria, as illustrated in the previous figure (right). These criteria complement other relevant policies, such as EU ETS, LULUCF regulations, air quality legislation, common agricultural policy and Ecodesign regulations. Furthermore, in its most recent revised version of the RED in 2023, the European Commission emphasizes the need to align policies with the principle of cascading use for bioenergy. This principle prioritises the material use of biomass over energy use, which in turn guarantees fair access to the biomass feedstock market for new innovative solutions for a sustainable bioeconomy (see here for more information).
An additional challenge for bioenergy is the correlation between biofuel prices and raw material costs, which causes bioenergy costs to vary from country to country. The table below shows the Levelized Cost of Energy (LCOE) for bioelectricity in different regions (left). The table shows the lowest LCOE in regions with abundant biomass resources such as India and China, while Europe has a higher LCOE on average compared to other G20 countries. At the same time, as shown in the graph below right, the investment (left column) and operational costs (right column) of various bioenergy technologies in the EU will decrease during the transition period. However, the rate of decline compared to renewable energy sources is low, especially between 2040 and 2050.
The bioenergy landscape in the Netherlands
The Netherlands is a very densely populated country with limited biomass resources, meaning that most of the biomass comes from imports, residues and waste. Until 2012, bioelectricity had the lion's share of renewable energy in the country, which is now dominated by solar and offshore wind power. The challenge in scaling up bioenergy in the country is the limited availability of raw materials, which limits the potential capacity of power plants in the country. The Netherlands aims for a total share of renewable energy of 27% of the final energy demand in 2030, which is higher than the European mandatory share of 14% stated in RED-II. According to Statistics Netherlands, renewable energy sources will account for 15% of final consumption in 2022. About 40% of the supply of renewable energy comes from biomass (109 PJ), followed by wind energy (77 PJ) and solar energy (63 PJ).
Dutch land use for different purposes is illustrated in the following graph (left). The largest sources of Dutch biopower are co-firing, followed by renewable household waste (see next graph (right)). In general, there is a negative attitude towards biomass combustion in the Netherlands, which is reflected in the reduction of financial support for biomass energy and heating. No further growth is therefore expected in the coming years unless policy changes. This was reflected in the climate agreement signed in 2019, which mainly focused on strengthening and expanding solar and wind energy capacity and phasing out coal production by 2030, which will also mean the end of the use of biomass in large-scale power plants .
In terms of regulations, the Netherlands adjusted its biomass policy in 2020, focusing on the cascade principle for the use of biomass sources. Accordingly, Dutch biomass growth prioritizes the use of biomass for chemicals and materials, followed by transport biofuels (heavy road, aviation and shipping), while it is recommended to reduce the use of biomass for heating and electricity generation in the coming years. Furthermore, the Dutch bioenergy approach focuses on efficiently utilizing the value of bioresources through biorefineries.
Author: Moutaz Altaghlibi, Economist Energy Markets & Energy Transition ABN AMRO.
This article appeared on the website of May 21, 2024 ABN AMRO.
