The future of fuel - What is bio-methane and is as a viable alternative to diesel?

The Future of Fuel Richard Bones, Senior Consultant, Total Logistics 5a Market Place Wokingham Berkshire RG40 1AL United Kingdom www.total-logistics.eu.com The Future of Fuel What is bio-methane and is it a viable alternative to diesel? It appears too good to be true that organic waste can be re-processed and used as an alternative to fossil fuels. This white paper explores the following: Is bio-methane truly a substitute for diesel? How compelling is the business case? How can the haulage industry transition towards zero-carbon? Bio-methane Anaerobic digestion (AD) is nothing new. Bacterial decomposition is fundamental to many of the biological processes essential for life, none least the digestion of food. It has been exploited on an industrial scale since the 19th century, as a means of treating effluent in densely populated areas. As the technologies advance, and the need for sustainable energy grows, businesses and local authorities alike are looking increasingly towards developing AD as an enterprise to re-process waste whilst generating fuel. The primary product of AD is bio-gas; secondary products can also include low-grade solid fuels and fertilizers. This bio-gas can be cleaned to produce bio-methane and used as a natural gas substitute. The carbon footprint of this fuel depends on both feedstock materials and the assumptions made regarding `carbon boundary`. In particular, quantifying the carbon footprint of the upstream supply is complex. However, it is widely acknowledged that bio-methane is one of the few truly zero-carbon fuels. Bio-methane is quite simply methane produced biologically, rather than from a fossil fuel source. It can be used as a direct substitute to natural gas, which itself is >80% methane. This serves as a major advantage over some of the other alternative fuels because the existing gas infrastructure can be used. Alternative low-carbon fuels Bio-ethanol and bio-diesel are both established renewable alternatives to fossil fuels. Natural gas, or at least its derivatives (CNG and LNG), are also used as a low-carbon alternative. The relative advantages and disadvantages of each alternative are summarised in the following table: 1 Advantages Disadvantages Cleaner fuel, ~15% less Specialist engine or CO2 per mile travelled conversion required Lower noise, ~3db (50%) Fuel tank requires about twice reduction the space of a conventional Liquefied natural gas Fuel nearly half the price petrol/diesel tank (LNG) per litre Lower MPG and slight loss in At current prices the cost performance (power) per mile is 70-75% that of Cost benefit is subject to petrol differential duty and tax As per LNG except: As per LNG except Gas can be compressed at Very limited filling Compressed natural point of use, enabling the infrastructure gas (CNG) existing grid infrastructure Fuel tank requires about four to be exploited times the space As per CNG except; As per CNG except; Price and availability subject Bio-methane Zero-carbon to scale of production Sustainable source Marginally lower energy density than natural gas Potential 90% reduction in carbon, more typically 35-65% reduction in carbon, Petrol engine conversion depending on the processing simple method Can be blended directly Bio-ethanol Price comparable, determined with petrol, so compatible by production method, oil price with existing re-fuelling and tax. infrastructure Decrease in fuel efficiency of 15-30% Food versus fuel debate Diesel engine conversion 50-60% reduction in carbon relatively simple Typically more expensive than Bio-diesel Can be blended directly diesel, due to high production with diesel to use existing and refining costs. re-fuelling infrastructure Food versus fuel debate 2 Bio-diesel remains the most widely used low-carbon fuel in haulage. Being derived from vegetable oil, (most commonly rapeseed, palm or soybeans) it can be grown in many regions across the globe. Engines are readily converted, and can retain the ability to run on conventional diesel, making the transition much simpler. However, there are a number of associated issues: High production costs continue to prevent it from becoming a commercially viable alternative to diesel. Significant energy is required for growing, harvesting and refining. Environmental mismanagement has resulted in deforestation. The huge growth in demand (and value) has resulted in vast areas of rainforest being cleared, negating the net carbon benefits. The “food versus fuel debate” further challenges the social acceptance of this alternative fuel. Is it right that third world countries produce and export vegetable oil fuels, whilst they are unable to feed their own populations? Negative publicity aside, there are many success stories. For example, waste vegetable oil is used to fuel the vehicles servicing a well known fast food retailer. Bio-methane is becoming increasingly viable as a low-carbon fuel of the future. As the scale of demand grows, additional feedstock supply will be required. The good news is that a wide variety of organic matter (biomass) can be used. However, commercial viability is another consideration. At this time, within the UK at least, production of bio-methane is small-scale. How realistic is bio-methane as a fuel of the future? Anaerobic digestion is not the most glamorous of investments. Large scale production is capital intensive, with a long pay-back period and the nature of the processing and by-products can make it challenging to find suitable sites. There is however a number of advantages. Synergies with waste disposal mean that investment in AD tends to be public-private partnerships (PPPs), under-pinned by private finance initiatives. Under such schemes Local Authorities sub-contact waste disposal through long term arrangements of typically 20 years. Effective segregation of waste streams is essential, as determined by kerb-side collection strategies. The longer-term potential and sustainable nature of AD is of great interest to a number of forward thinking companies. Joint ventures are a mechanism to pursue strategic ambitions whilst mitigating commercial risk. Dual-fuel vehicles offer a pragmatic transition path to bio-methane. Vehicles run on either gas or diesel at the flick of a switch, retaining the flexibility of diesel, whilst allowing lower-carbon alternatives to be phased in as the costs and infrastructure allow. At this time dual-fuel haulage is small-scale. In the UK there are about one hundred vehicles currently on the road. However, there is an appetite for many hundreds more. The supporting infrastructure is consequently fairly small: Chives fuels have ten liquid bio-gas stations across the central motorway network Howard Tenens operate three CNG sites in Andover, Boston and Aveley (London) 3 Hardstaff operate one CNG filling station in Nottingham All of these stations allow access by prior arrangement, with gas sold at market price. There is a desire amongst these providers to increase dual-fuel and grow the shared infrastructure. What are the alternatives for road haulage? UK road haulage generates 26 million tonnes of carbon per year. Alongside this massive environmental liability, recent rises in oil price serve as a stark reminder of the long-term upward trend. The desire to reduce carbon footprint and reduce dependence on fossil fuels are powerful incentives to invest in low-carbon transport. Efficiency savings have an important role to play, for example: Network design to minimise pallet-miles High cube vehicles (double deck trailers) Vehicle aerodynamics (tear-drop design) Optimising routes and back-loading However, such initiatives will only take us so far. Our reliance on diesel remains. Multi-modal transportation has merits in certain networks, and for specified lanes, however it lacks the flexibility and service offered by road haulage.