Biodiesel production in SEE

Biofuels are derived from renewable biological materials such as ethanol from corn starch, corn stover, perennial grasses, woody biomass, and algae, and diesel from soybeans. Replacing fossil fuels with biofuels has the potential to reduce some undesirable environmental impacts of fossil fuel production and use, including conventional and greenhouse gas (GHG) pollutant emissions, exhaustible resource depletion, and dependence on unstable foreign suppliers. Demand for biofuels could also increase farm income.

Currently, the biofuels market in Europe is dominated by the conventional biofuels consisting of those obtained by food-based feedstock, also named first generation biofuels. The production and consumption of first generation biofuels have been limited by the European Commission since 2012, with the low Indirect Land Use Change (ILUC) directive, establishing a cap to the use of these fuels at 5%. The cap is almost achieved and, thanks to new supporting measures, the biofuels market is expected to change in the coming years.

The EU biodiesel market

Total production of renewable diesel (hydrotreated vegetable oil, HVO, and biodiesel) in EU amounted to about 15,7 – 16,6 million cubic meters in 2019, equal to around 14 million tons (considering biodiesel density of 0,88 g/cm3). The production volumes increased slowly over the last 5 years, also thanks to the contribution of hydrogenated vegetable oil.

The most common feedstock consumed for renewable diesel production is rapeseed, excluded from those considered for advanced biofuels production by the revised Renewable Energy Directive (RED II) in the Annex IX. However, the range of feedstocks consumed from 2011 to 2019 changed significantly, following the request of the EU renewable energy directive, increasing the amount of biodiesel derived from used cooking oil (UCO), decreasing the consumption of high ILUC feedstocks like sunflower, rapeseed, and soybean. On the contrary, palm oil consumption increased.

Rapeseed consumption decreased from around 67% in 2011, to 43% in 2019. On the contrary, UCO passed from 7% to 21%. Palm oil share in the EU feedstock for biofuels production also slightly increased, from 10% to 16%. However, the production of HVO, or biodiesel from palm oil can be considered as “advanced” only in case palm oil mill effluent and empty palm fruit bunches are used. During the last decade, the consumption of renewable diesel in Europe strongly increased, going from 14,3 million cubic metres in 2011 to about 19 million in 2019. This consumption growth was well followed by an increase in the production volumes, enabling to avoid a strong increase of the importation, but to increase the export.

Bulgaria

As a strong contributor within the EU, Bulgaria has already committed to the GHG reduction targets as well as the development of renewables recently implemented by the European Commission. As a first step, Bulgaria has adopted the EU Directive 2003/30/EC regarding the promotion of renewable energy and biofuels. The Bulgarian national law for the promotion of renewable energy that was adopted in 2007 regulates the share of biofuels in transportation fuels. In order to comply with the current EU legislation, the law was amended several times according to RED (2009/28/EC).

The last revision of the law was made in May 2019, in order to comply with the sustainability criteria and advanced biofuels of the revised renewable energy directive 2018/2001/EU REDII. The maximum admixture of bioethanol has remained at a fixed figure since March 2019 at 9%. Since April 2019, the share of biodiesel should be on a minimum level 6%, where 1% of this amount must be second generation biodiesel produced form algae biomass, waste biomass from households and industry, agriculture and by-products.

There was a boom of the biofuels sector in Bulgaria during between 2003 and 2012, whereas around ten biodiesel plants and six bioethanol plants were built based on feedstocks from renewable crops (rapeseed, sunflower, wheat and maize). However, despite the fixed quota for mixing of biofuels, and due to the difficult market situation, higher prices of biofuels compared to fossil fuels and the lack of financial support, currently very few of these plants are still existing and mainly producing biodiesel and ethanol for export in other countries. Some of the biofuel plants, which are still under operation, can be summarised as follows: Biodiesel plant in Slivo Pole, 20 km eastwards from Ruse, managed by Astra Bioplant Ltd. with an annual capacity of 60 000 t of biodiesel; this accounts for 60% of the demand for biodiesel in Bulgaria. This company is also able to produce biodiesel from second-generation feedstocks, mainly from kitchen oil and remnants from the production of acid oil; however, the feedstock is mainly imported from Asia and neighbouring countries (Romania and Greece). In Bulgaria, there is currently no plant for the production of advanced fuels being implemented.

Croatia

Renewables in transport are fostered through mandatory blending targets. Authorities demonstrated their commitment by steeply increasing mandatory blending targets, reaching a substantial 8,81% in energy content for 2020 and 6% GHG emissions reduction. Currently, however, it is unclear whether these are implemented. Apparently, and notwithstanding several projects that have been announced in recent years, the blending shall rely on imports. The regulatory framework is rather complete and shall not be considered as a hindering factor.

According to news reports, the three domestic biodiesel production sites are halted, or working at limited extent. Both production and consumption of biofuels have shrunken to almost zero after a promising start in the beginning of the 2010’s. On the other hand, following the global trend, much focus is made on electromobility, which however seems to be hindered by financial constraints that limit market penetration.

Quite some research focused on the biomass potential of the country, mainly in forestry, but also in agriculture and unused land. Currently, there are no commercial-scale bio-refineries in Croatia. Deployment of biofuels has been initially driven by the boost in the demand for conventional biofuels. Incentives being discontinued, the sector is currently stagnating. Envien group has capacities in Vukovar (Biodizel Vukovar d.o.o.), for the production of 35 000 t/y biodiesel from rapeseed oil, but it is unclear whether this site is still operational. The construction of a plant in the port of Ploce with an annual production capacity of 100 000 t of biodiesel from UCO and non-edible animal fat has been discontinued.

Romania

The country has extremely promising biomass potential and several ongoing projects are focusing on its valorisation. However, there are growing concerns regarding the sustainability of Romanian biomass (conversion of primary production for energy purposes, partially driven by the growing biogas production). Biomass is the third contributor in the energy mix with approx. 4 Mtoe, mostly used for biogas production, CHP and heating. A phenomenon that has been recently highlighted in news reports is connected to illegal logging that seems to have grown from individual use to a more systematic depredation of publicly owned forests by criminal groups.

Romania has steeply increased mandatory blending targets that in 2020 were set at 8% for petrol and 6,5 % for biodiesel. The total share of renewable energy used in transport (RES-T) is estimated at approx. 6,5%, which is below the 10% target, but yet quite relevant.

In recent years, Romania increased its production of liquid biofuels, mostly on the account of biogas, conventional biofuel and biodiesel, with installed capacities for approx. 80 Mt/y. According to IEA, RES-T amounts to 5%, while the country is fully compliant with the current targets with a consumption of 91,1 ktoe bioethanol and 206,2 ktoe biodiesel.

Besides existing capacities in conventional biofuels, Clariant has built a new commercial-scale plant for the production of cellulosic ethanol from agricultural residues b. The plant with an annual capacity of 50 000 tons of cellulosic ethanol is located in Podari near Craiova in the south-western part of Romania.

Serbia

Agriculture represents a key sector for the country’s economy, with approx. 5 million ha agricultural land. Agricultural production is predominantly present in the Pannonian plain in the north of the country (cereals, crops) as well as in the hilly central region (fruit, vegetables). Food industry is consequently very relevant (also for export). On these grounds, attempts to develop biorefineries have been made in the past decade, but none of them seems to be currently operational.

Notwithstanding the relevant potential in terms of feedstock availability, technical competences and specific measures for attracting foreign investments biofuels deployment and supply are still extremely limited in Serbia. This owes to different factors spanning from domestic market weakness (low purchasing power and willingness to pay a green premium), to lack of political will to opt for solutions that would entail high social costs. This is also reflected in the lack of incentives for biofuels.

At present, four plants with a total annual capacity of 0,07 Mtoe exist in the country, yet none is currently producing biodiesel. According to estimations, domestic production should have fulfilled approx. 40% of the needs in 2020 (100 000 t/y biodiesel and 17 000 t/y bioethanol). Current installed capacities are slightly lower, yet it is probable that without targeted stimulation the share of imports might be even higher that the envisaged 60%.

Slovenia

Notwithstanding the initial performance and the ambitions, the growth of RES in Slovenia is proceeding at a slightly slower pace. The 2020 target of 25% has not been reached yet, with the country stopping at approx. 21%. Given the relevance of hydropower, though, it is remarkable that 61% of all renewables are “bioenergy” (1/2 of which deriving from wood), while the share of biomass in total energy consumption is 10,7%. While there is an obvious predominance of using biomass for heat generation, CHP is growing. On the other hand, several new HPP have been commissioned or are under development, which will improve the production of electricity from renewable energy sources (RES-E).

The regulatory framework concerning biofuels and bioenergy transposes relevant EU Directives and is complete. Main policy measures to foster the uptake of RES-T and particularly biofuels support mechanism, such as an excise duty relief for pure biofuels (not the blends). The mandatory blending target for biofuels is set at 7,5% in energy content, with no sub-targets. National funding is also provided through the Eco Fund. Moreover, Slovenia developed a series of strategic documents, all aiming at supporting innovation, industrial rejuvenation and green growth, even if there is not yet a specific bioeconomy strategy.

Owing to the relevance of the chemical industry, much emphasis is made on the development of bio-based materials and building-blocks, with some industries actively engaging in resins and coatings.

Notwithstanding the interest for developing the circular economy that the Slovenian policymakers demonstrated in recent years, bioenergy and bioeconomy have not yet taken off in the country. Currently, there are no flagship or commercial scale facilities, nor concrete plans to develop some. This might be due to the limited domestic market and consequent high per capita weight of such investments, but also on more general socio-economic factors.

Nonetheless, Slovenia has consistent research capacities, with particular regards to forestry and the chemical industry, which shall facilitate the deployment of bio-based enterprises, including in the bioenergy sector.