The perspective of biofuels consumption in Bulgaria
Worldwide, fossil fuel consumption still spreads within customers and business and represents approximately 79% of the world’s energy consumption. Regardless of the introduction of new, environmentally friendly and energy-efficient technologies, these fuels are key sources of greenhouse gas emissions. These facts are the grounds to presume that the real alternative to fossil fuels, are renewable energies. Their use will help prevent serious climate changes. Existing significant biomass (about 65% of all renewable energies) in the EU provides an opportunity for its sustainable use in the production of biofuels.
Promoting the use of biofuels in consumption and transport will allow for larger-scale biofuel production, which is a prerequisite for wider application of biomass. In addition, by encouraging the use of biofuels, new opportunities for sustainable rural development within Europe’s agricultural policy may be created.
Biofuels in pure form or as mixtures may be incinerated at existing motor vehicles, using the existing system for the distribution of fuels for such vehicles. Mixing biofuels with petroleum products may also allow the reduction of potential costs in the system for distribution within the European Community.
The real situation in Bulgaria and European measures with regard to biofuels
Among the targets set by the European Commission for the reduction of harmful emissions in transport and environment, there is an idea to significantly reduce or eliminate the incentives for biofuels produced from food or fodder crops. Such change, if adopted, will strongly affect Bulgaria, which is one of Europe’s largest rapeseed producers – the main raw material for this type of fuel. Bulgaria is also among the countries that produce biodiesel and bioethanol from similar crops, although data shows that it does not use its full capacity. If the produced fuels and the rape (in Bulgarian “рапица”) are considered, the value of this market is over one billion BGN.
Currently, however, legislative proposals are under consideration on a European level, according to which the production of the so-called “first generation” biofuels from rape, sunflower, sugar beet, etc., need to be replaced by biofuels from the so-called “biofuels from second generation” – the ones that are produced from agricultural and forest waste and residues such as shrubs, straw, etc. The general idea is to make this change by 2030, including by removing incentives for first-generation fuels.
On the other hand, on November 30, 2016, the European Commission (EC) published a new legislative proposal (RED II) for the period 2021-2030. The RED II progressively caps the use of food-based biofuels. The blending rates for advanced biofuels are stepwise increased between 2020 and 2030, which aims to boost the market for these non-food based biofuels. The RED II also includes additional harmonized sustainability criteria for products from biofuels to biomass. The proposed sustainability requirements are a potential trade barrier for the import of wood pellets.
It shall also be mentioned that biofuels industry in Bulgaria is still at an early developing stage. This is mainly related to the size of economy and lower consumption of fossil fuels, as well as with the lack of encouraging business and economic environment for production and use of biofuels. The fossil fuels market is dominated by very few companies, which do not have an economic interest in the use of biofuels as no sufficient stimulus was provided by the legislators.
Despite this, there are already several established and proven biofuel producers. Bio raw material has become one of the leading ideas of many oil and gas companies. The raw material extraction itself is by transesterification of vegetable fats, which are a residual product extracted in the form of glycerol. Increasingly, there is also interest for micro-bio fuels, or so-called biofuels based on micro-organisms. Such are bacteria, microalgae, cyanobacteria. Their yields are 40 and 300 times higher than conventional eco-fuels. Statistics show that 83,675 metric tons of oil equivalent of biodiesel was consumed in 2015 in Bulgaria. The amount of bioethanol consumed was significantly smaller compared to biodiesel.
European legislative framework and its introduction in Bulgaria
In the 90s, the first steps were taken by several European countries in the field of biofuel production and consumption. Subsequently, this initiative was supported by the other EU Member States as one of the options for securing energy supply. In 2000, the Green Paper “Towards a European strategy for the security of energy supply” proposed the ambitious target of 20% of alternative fuels (biofuels, natural gas, hydrogen) to be achieved by 2020. On 8 May 2003, Directive 2003/30/EC on the Promotion of the use of biofuels and other renewable fuels for transport was adopted.
In view of the European legislation and in compliance with the commitments and recommendations of the EC in Bulgaria, the Renewable and Alternative Energy Sources Act was adopted by the Bulgarian legislator. One of the main public relations governed by this law is related to biofuels and energy from renewable sources in transport. The underlying objectives of the law are promoting the production and consumption of biofuels and renewable energy in transport. They shall be achieved by the introduction of schemes supporting production and consumption of electricity, heating and cooling from renewable energy sources, the production and consumption of gas from renewable sources, and the production and consumption of biofuels and energy from renewable sources in transport.
The law also provides for that persons who place on the market liquid fuels of petroleum origin in transport are obliged to offer fuels for diesel and petrol engines mixed with biofuels as a percentage as follows: from 1 September 2018 – fuel for petrol engines with a bioethanol or ether content produced from bioethanol, at least 8% vol.; and from 1 March 2019 – fuel for petrol engines with a bioethanol or ether content produced from bioethanol, at least 9% vol. Within two months after the expiration of the abovementioned terms, final distributors shall be obliged to place on the market the fuels for diesel and petrol engines in compliance with the requirements for minimal content of biofuel. They shall also declare at the points of sale the percentage of biofuels in liquid fuels of petroleum origin where it exceeds 10% by volume of bioethanol, and 7% by volume of biodiesel.
Advantages and disadvantages
When examining the entrance of biofuels in consumption and transport, the real question to ask is, do the advantages of biofuels outweigh the disadvantages or at least do they put them ahead of fossil fuels considering the needs of business and society.
The consumption of biofuels includes mainly the following advantages:
- They will lead to a drop in carbon dioxide emissions and other harmful substances emitted into the atmosphere that contribute to global warming;
- The creation of biofuels will make countries like Bulgaria more independent because currently they import oil from other countries;
- The production of eco-fuels will favor regions of aggregate dependence;
- The processing of cellulosic raw materials will contribute to the populated areas of agricultural crops;
- Biofuels are produced through methods that completely exclude sulphur and thus can eliminate this component of acid rain;
- Biofuels have the potential to be cheaper than gasoline and other fossil fuels;
- When biofuels are burned, they produce significantly less carbon output and fewer toxins, making them a safer alternative to preserve atmospheric quality and lower air pollution;
- Production of biofuel may have as a side product heat and electricity for own use or balancing the market.
Availability may be the driving force in adoption of alternatives energies, making biofuels the next logical choice while other alternatives are still under development.
The disadvantages of biofuels are:
- Growing crops eligible for biofuels is depleting water and soil;
- Agribusiness is the largest pollutant and provoker of global warming because of the chemicals used to support it. There are strong indications that the process to produce the biofuel – including the machinery necessary to cultivate the crops and the plants to produce the fuel – evolves carbon emissions;
- According to some allegations, the extraction of bio-energy has a greater energy resource;
- Obtaining organic crops will lead to the felling of forests;
- Organic farming will increase hunger in third-world countries;
- The creation of bio-crops leads to a significant rise in food prices;
- To refine biofuels to more efficient energy outputs, and to build the necessary manufacturing plants to increase biofuel quantities, a high initial investment is often required;
Anyway, by developing more strict measures and strong control, it is possible to overcome the disadvantages of biofuels and make them suitable for widespread consumer consumption and achieve higher environmental impact.
Bulgaria is a country heavily dependent on the import of primary energy resources and at the same time has good potential and sufficient areas for growing energy crops, raw materials for the production of biofuels. The process of growing raw materials, the production of biofuels, and their distribution is difficult, but at the same time an opportunity for the development of this relatively new business in the country. The potential for biofuel production is based on the primary biomass, secondary biomass and the residuals or the organic wastes. The utilized vegetable oil and fat are a good example for the possibilities of the secondary biomass.
According to surveys, Bulgaria has enough land to ensure the production of biofuels with the raw materials required for this purpose, without the food industry being adversely affected. According to analysts, the production of biofuels should become a national priority. With regard to agricultural crops, Bulgaria is in a favorable position to reduce dependence on fossil fuels. In Bulgaria, over 2 million tons of oil crops are produced annually, with people’s food needs not exceed 500,000 tons. The remainder is exported and processed outside the country. With appropriate incentives for biofuels, the domestic market can use over 100,000 tons of biodiesel per year for which 250,000 tons of oilseeds will be processed. This will be a significant contribution to the economy of our country. By stimulating the production of biofuels in Bulgaria, employment will also be created for farmers, transport companies, processors, servicing companies, thus creating employment, economic activity, paying salaries, taxes, etc.
As a conclusion, the fact remains that biofuels are a reliable alternative energy resource. For Bulgaria, biofuels represent an alternative to petrol and diesel fuels, which allows the dependency on the import of fuels to be reduced and contribute to the security of energy supplies. The replacement of petroleum fuels by biofuels is one of the possibilities for utilization of the renewable and alternative energy potential of the country. It will also result in a more rational use of agricultural land and the utilization of land currently not used for cultivation within the country. At the same time, the whole process is connected to distribution and use of biofuels will contribute to creating more jobs, especially in underdeveloped regions within the country.
Konstantin Ivanov, Associate
Deloitte Legal Law Firm, Bulgaria