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Thematics :

Does the “infrastructure” aspect have to be taken into account when choosing industrial bioeconomy projects?

Following the last two BioWorld Congresses in North America (16-19 June 2013 in Montreal and 12-15 May 2014 in Philadelphia), it appeared to me that there is a more pressing concern concerning infrastructure. This notion is rather more inclusive than simply the issue of access to resources as an important part of cost structuring (the question of the cost of collecting and transporting the biomass to the biorefinery as a factor in economic feasibility).

The question of access to markets, whilst less frequently discussed, can be just as important. In the United States, for example, one of the obstacles to the large-scale distribution of domestic biofuels is the absence of a network of pipelines between the mid-west and the great consumer centres, since the network runs from the ports to the large urban areas. In Europe, the distribution of E 85 is a considerable problem, because there is a “chicken and egg” situation: few cars are “flex-fuel” equipped and few service stations are able to sell large volumes of the fuel. The result is that as the different thresholds cannot be overcome (trucks to trains to pipelines camion) in economically satisfactory conditions, the market is in decline.

One option which has appeared in the United States is that of avoiding the question of infrastructure costs as much as possible (in addition to those of construction time, obstacles resulting from local opposition, regulatory procedures etc.) by choosing projects that combine nearby resources and nearby markets.

Will this trend come to Europe? Perhaps to a lesser degree insofar as the concentration of markets and resources is different. We will see. Another possible consequence would be increased interest in Europe for converting refineries into biorefineries, since these former refineries are already connected to rail networks and pipelines (and they may be advantages to be gained by converting some of them rather than closing them).

These questions are also raised with respect to other alternative fuels such as hydrogen or electric vehicles. Cf. Stevens B., Schieb P-A, OECD Workshop on Developing Infrastructure for Alternative Transport Fuels and Powertrains, November 2012, oecd. org/futures/synthesisreport.

Is greater critical mass necessary for European industrial bioeconomy projects?

The public-private BIC consortium is about to be launched, and it is more than welcome. It is the only large-scale PPP project in the Horizon 2020 programme, with €3.8bn committed between 2014 and 2020. The partnership should be an exemplary one. Excellent news. Yet an impartial observer might wonder whether a project 10 or 20 times larger would not be desirable.  Of course, the partnership’s aim is to show the way via its well-known “flagship” projects, not to organise Europe’s programme.

The question arises at a time when a number of countries and operators are planning large capacity biorefinery projects, requiring an investment of $5bn each. The American Milken Institute report of February 2013 mentioned this: the construction of 10 mega-biorefineries over the next ten years, to capture 20% of the bio-based petrochemicals market.

In fact this raises two questions, not just one: is it necessary to design mega-biorefineries to attain the same economies of scale as those of oil refineries? How many do we need to build in Europe to reach critical mass?

Unleashing the Power of the Bio-Economy, Financial Innovation Lab. Report, Milken Institute, Feb. 2013, page 3.

Do we first need to improve our understanding of the economic, social and environmental properties and models of the biorefinery?

The answer is yes. If we are to convince industrials, investors, governments, the public and the analysts that biorefineries are really the way forward, we need a vast array of global studies, we need to be able to compare them, to monitor them over time etc. The confidentiality of data is a major issue. Biorefinery owners will have to be persuaded to give up at least part of the data, because very little is in the public domain, and (by the way) these studies receive public funding. This reasoning is beginning to see the light of day, and a number of governments, such as those of OECD countries, are strong supporters of this initiative.

The NEOMA Business School Chair in Industrial Bioeconomy is just finishing such a study, on the Bazancourt-Pomacle Biorefinery, thanks indeed to the open-mindedness of the cooperatives VIVESCIA and CRISTAL UNION. We presented our finding to the Biorefinery Week/EFIB Conference in Reims on 30 September 2014, and the French version of the report was published on the same day.