Abengoa corporate blog

Food vs. Biofuels: Are biofuels the cause of the rise in food prices?

2008-09-24T13:12:40+02:00

Criticism of biofuels has become more intense in recent months. At first, certain sectors with vested interests purported technical reasons in arguing against them. In spite of numerous reports showing the contrary, critics questioned, for example, low energy efficiency and minimal greenhouse gas reduction involved in the use of biofuels. Condemnation later took on a more environmental guise. It was thus asserted that biofuels destroy aquifers and may cause deforestation. Given that these criticisms were easily countered by the bioenergy industry, the attacks became even more radical, opting for accusations of great social significance, by claiming that biofuel production increases food prices, and, through an exercise in absurdity, going so far as to state that biofuels cause world hunger and give rise to slavery; in short, “their use is a crime against humanity”.

Due to the tremendous social significance that this debate has taken on, I would like to dedicate this article to demonstrating how very limited the impact of biofuel production is on rising food prices.

According to The Economist commodity price index, the price of raw materials (energy, metals and food) has increased by 170 percent since 2006, with the rise in food prices being the most significant: 190 percent. This has coincided in time with the debate stirred in Europe on approval of the directive that would require a biofuel use quota of at least 10 percent in 2020. And opponents have shown themselves eager to accuse biofuels of being the cause behind the dramatic increase in grain prices. Curiously enough, rice, which is not used as raw material to produce any kind of biofuel, is the cereal that has shown the second-highest price increase.

Source: The Economist

Knowing that the price of a good in a free market is determined by the balance between supply and demand, I would like to analyze which fluctuations in cereal demand can be attributed to biofuels, how supply has been altered, and why. In order to simplify matters, let us look at particular examples in the case of bioethanol.

World fuel bioethanol production in 2007 totaled 13.1 billion gallons (49.5 billion liters), representing approximately 2.5 percent of the total liquid hydrocarbon market , coming primarily from four places: the United States, Brazil, the European Union, and China (corn).

Country	Ethanol production (million gallons)	Main cereal crop
United States	6498,6	Corn
Brazil	5019,2	Sugar cane
EU	570,3	Wheat
China	486,0	Corn
Rest of the world	527,6	Misc.
Total	13.101,7

Source: Renewable Fuels Association

World demand for corn grew at a rate of 15.5 Mt per year between 1990 and 2007, and wheat demand rose at a rate of 4.9 Mt per year. Supply, however, has fallen behind, as 14.8 Mt of corn have been produced annually, and the annual figure for wheat is 3.2 Mt. This has made world grain stocks go down, and, therefore, their price has risen in order to adapt to the resulting narrow market.

But the imbalance between supply and demand is not due to bioethanol, since the cereal used for its production during the 2007/08 season represented under 3.5 percent of total cereal consumption worldwide, from which we must take away the 30 percent which goes back to the food chain through the sale of DDGS, a bioethanol byproduct with a high protein value serving as a food substitute in livestock feed. Moreover, the increase over the previous season in cereal demand for biofuels (19.9 Mt) was absorbed by a fivefold increase in production.

This imbalance cannot be attributed to a decrease in the exports of producing countries either, since, for example, the United States, the main corn exporter, increased exports of this grain, and Brazil did likewise with sugar. The European Union (EU), on the other hand, has slightly lowered its wheat exports, although, given that cereal consumption for ethanol in the EU represents less than 2 percent of the total, and considering that fallow land has been used partly for energy crops, the contribution to the impact on price is negligible.

The true causes behind the increase in cereal prices are both the decrease in supply and the rise in demand, reasons that have absolutely nothing to do biofuels. This has made the stock-to-use ratio, a measurement for determining surplus level with respect to total demand, reach an all-time low for cereals.

Lower supply and higher demand

Cereal supply has dropped for two basic reasons. First, since the amount of farmland has decreased, partially due to countries’ policies geared toward slowing down food production, as well as to the loss of arable land in the former Soviet Republics (more than 23 million hectares have fallen into disuse since 1990). And, secondly, because productivity of the land has also decreased, primarily as a result of bad weather and as a consequence of the all-time low prices that have taken away the incentive for investment in technological innovation.

In turn, demand has increased, especially due to the change in eating habits in Asian countries. This change in dietary practice has brought about a rise in per capita virtual consumption of cereal, as, where an individual once ate a kilo of rice per day, he or she has now substituted it for a quarter of a kilo of meat from an animal that has ingested hundreds of kilos of cereal as its food source over the course of being raised. It can take up to 9 kilos of cereal to produce a kilo of meat.

Furthermore, there are strictly economic effects that have also had an impact on cereal prices:

Entry of investment funds into the market, the aim of which is to take advantage of the volatility of the price of cereal for purposes of speculation, thus making funds act as market accelerators, further increasing product volatility and peak prices.
Devaluation of the dollar, which has caused its value with respect to raw materials to fall, clearly resulting in an increase in the price of raw materials, as they are quoted in dollars.
Increase in the price of oil, with a direct impact on the cost of fertilizer, seed, and cereal transportation.

Other regulatory considerations must be added to the equation, such as higher tariffs in certain cereal- and fertilizer-exporting countries (Russia, Argentina or China), as well as lower tariffs for imports to the European Union and India. And we must not forget the protective policies involving international commerce of the developed countries that have removed incentives enabling developing countries to suitably develop agricultural technology.

It must also be emphasized that any minor impact that biofuels might have on the price of raw materials would affect food prices even less appreciably. This is due to the fact that the price of raw materials represents just under 20 percent of the total price of the food product. The remaining 80 percent is attributed to the cost of labor, packaging, transportation, advertising, energy, depreciation, debt amortization, taxes, or profits. In fact, as we have pointed out above, there are studies showing that the impact on rising food costs of higher gasoline prices is up to three times greater than if what were to increase was the price of corn. And we must also take into account the other negative effects that the rising price of oil has on importing countries; among others, the consequences in terms of inflation, loss of competitiveness, and unemployment.

The reality is that biofuels are not the problem, and, if we keep allowing certain interest groups to claim otherwise, we will be wasting the opportunity they present for world sustainability. Bioethanol can aid in developing agriculture in underprivileged communities, where 70 percent of the population depends directly on the land, through the development of more resistant and productive crops.

Furthermore, given that it is produced using local raw material, it can also help oil-consuming countries to ensure fuel reserves in the face of instability in oil-producing countries by containing the price of oil, reducing the payment balance, and enhancing energy independence. In addition, from the environmental standpoint, it is the only renewable source of energy with the short and medium term capability of contributing to a significant reduction in greenhouse gas emissions.

And we must not forget the greatest benefit to the consumer: in a fully developed market, such as that of Brazil, filling up the tank with bioethanol instead of gasoline costs half the price. Any takers?

^[1]In calculating the percentage, it has been taken into account that world crude oil production totals 73.7 million barrels daily, or, in other words, 1.13 trillion gallons per year. Given that approximately 0.47 gallons of refined fuel are produced from a gallon of crude oil, this means that the annual world liquid hydrocarbon market totals approximately 530 billion gallons.

Carlos Bousoño Crespo
Director of Corporate Social Responsibility

The United States and CO₂ Emissions

2008-09-09T11:08:04+02:00

The United States, with the largest economy on the planet, is the country that releases the highest net levels of greenhouse gas emissions into the atmosphere each year^[1] . Nevertheless, the U.S. shies away from the only existing global treaty on emissions reduction, the Kyoto Protocol. This document, signed by more than 170 countries around the world, represents an international agreement that seeks to reduce the emission of six greenhouse gases by five percent with respect to 1990 between 2008 and 2012. Gases that are subject to Kyoto restrictions are carbon dioxide (CO₂), methane gas (CH₄), nitrous oxide (N₂O), hydrofluorocarbons (HFC), perfluorocarbons (PFC) and sulfur hexafluoride (SF₆).

Scientists have concluded that greenhouse gas emissions, coupled with deforestation, are producing a change in our planet’s climate, giving rise to effects such as the rise in average temperatures, sea level and the salinity of its waters; increased frequency of torrential rains and heat waves, and lower snowfall rates.

The chief rationale which the U.S. administration brandishes in rejecting the Kyoto Protocol is the economic cost that its application as a system of mandatory caps would entail. There are U.S. analysts that have worked out the figures for measuring the impact in terms of job losses or reduced household income^[2] .But these calculations fail to take into account how fortified economic sectors linked to halting climate change, such as renewable energies or specialized consulting, for example, can offset these impacts. Nor do they factor in the economic burden caused by the effects that climate change is already having on society, as highlighted in the Stern Report on the economics of climate change.

Another point of discrepancy aroused by the Kyoto Protocol has to do with the treatment of developing countries and their exemption from the mandatory caps established under the protocol. The United States demanded from the beginning that the emissions of these countries be limited as well, in anticipation of the effects that the fierce competition from emerging economies such as China or India could have on the country.

The U.S. government, altering between Republicans and Democrats, has used varying political discourses with regard to the problem of climate change, but in practice, it has always upheld its veto of Kyoto in real terms. As a matter of fact, in 1997 the U.S. Senate unanimously passed the Byrd-Hagel Resolution, which specifies that the country would not sign any treaty involving reducing emissions unless it mandated compliance by developing countries as well.

The government presided over by George H. W. Bush signed the United Nations Framework Convention on Climate Change during the Earth Summit held in Rio de Janeiro in 1992, a treaty in which good intentions abound, but one short on explicit commitments, with the exception of disclosure of a yearly national emissions inventory. Signing this treaty has allowed the U.S. government to be present at the Conferences of the Parties, a forum intended to set the course of international policy on climate change.

The administration under Bill Clinton, closer to the environmentalist position, negotiated and even signed the treaty, openly stating, nonetheless, that it would not be submitted for Senate ratification until U.S. demands were met.

George W. Bush finally closed the door to Kyoto when he took power in 2002, in considering that its application could not be entered upon under the terms in which it was drafted. That same year, nevertheless, he announced that his government was committed to reducing CO₂ emission intensity by up to 18 percent in 2012, taking the year 2000 as the base year.

But the alternative plan of the United States differs substantially from Kyoto. On the one hand, it does not establish a system of mandatory caps, but rather the application of more or less indirect measures, ranging from tax incentives to production regulations or commitment to the voluntary emission rights market. And, on the other, the targets for reducing emissions are not absolute as put forth by the Kyoto Protocol; that is, they do not seek a reduction in terms of a fixed amount, but instead establish certain objectives of a new order, referred to as “emission intensity” and defined as the quotient between greenhouse gas emissions and the state of the economy in terms of gross domestic product. This focus aims to minimize the economic impact of restrictions on emissions, allowing them to rise or fall depending on the state of the national economy, but without enabling assurance of a minimal level of environmental protection. The objective of Bush’s plan for reducing emission intensity by 18 percent in 2012 may, in fact, mean that net emissions exhibit an increase, as has been happening over the last few decades.

In 1990, emissions in the United States totaled 6.13 billion metric tons of CO₂eq. And in 2000 they were 14 percent higher than in 1990, reaching a total of 6.99 billion metric tons. Even though total emissions continued to grow, their intensity (that is, the quantity of CO₂eq emissions per gross domestic product dollar) fell during the last two decades. Among the factors contributing to this phenomenon are improvement in energy efficiency, the introduction of information technologies, and the transition from an economy based on heavy industry to a more service-oriented one. All of this led emission intensity to drop by 21 percent during the 80s, and 16 percent in the 90s, so it would not be at all preposterous to think that even though the U.S. target for decreasing emission intensity in 2012 with respect to the year 2000 were met, net emissions will have in fact risen.

In spite of this, the United States has set some interesting initiatives in motion in order to curb climate change, among which the following stand out:

The Energy Policy Act of 2005, which includes tax perks totaling 5 billion dollars until 2010 to provide incentives for investment in energy efficiency and renewable energies. It also covers, among other things, an increase in the proportion of biofuel blends up to 28.4 trillion liters in 2012.
The Green Power Network, an organization started up by the Department of Energy ( DOE), which considers policies of price discrimination for renewable energies and obtaining negotiable certificates, the Renewable Energy Certificates, which make investment in this sector even more attractive by representing an economic incentive for producing energy through clean technologies.
Creation of a national agency, the Climate Change Technology Initiative, in charge of coordinating and developing policies on research and development of new technologies for halting climate change. This represents a national priority, given the country’s interest in becoming a clean technology exporter.
Regional CO₂ cap-and-trade initiatives, among which the Regional Greenhouse Gas Initiative is noteworthy, joining the electric sectors of 10 northeastern and mid-Atlantic U.S. states, or the Western Regional Climate Action Initiative, a cross-border, multi-sector initiative that includes five U.S. states and one in Canada. The goal proposed is to reduce emissions by 33 percent in 2020, which would mean 10 percent over 1990 statistics.
Finally, there are initiatives in the voluntary emissions market whose strength can be summed up in that 68 percent of the customers in this international market are Americans^[3] . Its national landmark is the Chicago Climate Exchange. Here both public and private enterprises voluntarily limit their emissions, generating a very active market of carbon credit trading.

But the preponderant key question is the following: What will happen after Kyoto?

Talks during the thirteenth Conference of the Parties held in Bali last December made it clear that the path leading toward consensus is an arduous one. Tough negotiations gave rise to a minimal roadmap in which the U.S. managed to work in voluntary emission reductions of emerging countries. It must be specified that the U.S. came to Bali as the only major country in the world that is not linked to the Kyoto Protocol after Australia, the other notably absent country, had confirmed its intention to ratify the protocol following its change in government. However, the U.S. was not represented in Bali by only the official position of the Bush administration. Other voices were heard as well, such as recent Nobel Peace Prize winner Al Gore, the mayor of New York or representatives from the state of California, who bore witness to the commitment of a large portion of American society in the struggle against climate change, professing to the entire world that more than 700 U.S. cities have voluntarily committed to reaching the goals set down under the treaty.

The post-Kyoto era will be determined by a host of political factors. Among them, one that seems to be key is the outcome of the U.S. presidential election. Democratic party candidate Barack Obama has shown himself to be in favor of establishing a cap-and-trade system, and has even attached figures to the reductions ^[4]. We must not delude ourselves, however; though no one is questioning the need for the U.S. to participate fully in the future global emissions treaty, it also seems to be quite clear that the Americans will apply pressure and hold out until the last minute, as they did in Bali, so as to promote the interests of the country’s corporations: proposing new avenues for commercializing technologies for emission reduction and carbon capture and storage, and avoiding what they consider to be unfair competition from companies located in countries without mandatory caps.

What is certain is that there is no going back in terms of political and citizen awareness of climate change, and that this very consciousness impels world consensus on tackling a problem of global magnitude that could jeopardize the future of many generations.

^[1] 7,014 TtCO₂eq in 2004 according to the USA Climate Action Report 2006.
^[2] $30,000 USD per household and over two million jobs a year. The Road to Kyoto: How the Global Climate Treaty Fosters Economic Impoverishment and Endangers U.S. Security.
^[3] Survey conducted by New Carbon Finance 2007.
^[4] An 80 percent reduction in emissions by 2050.

Carlos Bousoño Crespo
Director of Corporate Social Responsibility

Regulation and renewable sources of energy: What kind of regulation is needed to promote renewable energies?

2008-08-26T11:43:33+02:00

In the last few years, the media have echoed what scientists had been warning us about for some time: misuse in the utilization of certain natural resources, such as fossil fuels, for instance, is beginning to affect our planet’s climate, leading to future depletion as well.

Renewable energies not only help palliate climate change, but also contribute to reducing the considerable dependence which most of the world’s nations have contracted with the oligopoly of oil-producing countries. Given the scarcity and strategic importance of this energy source, resolving today’s imbalanced situation satisfactorily should be considered by governments a matter of national security, as, regardless of climate change, energy diversification increases nations’ independence with respect to crude oil imports and consequently renders them less vulnerable to the political ups and downs of exporting countries.

To make the transition from today’s energy model, based on fossil sources, to a model in which renewable energies constitute the foundation for supporting the energy mix, governments must provide the initial incentive for the different renewable technologies so that, once technology maturity is reached, the market itself can adjust prices, making them competitive with the fossil alternative.

There are numerous formulas through which governments can encourage this transition. Given that a considerable portion of consumption corresponds to the electric and transportation sectors, we shall focus our analysis on these two areas.

In today’s electric sector, some countries, such as Spain, provide incentives for renewable sources by means of creating a special energy tariff, which makes production viable. And in other countries like the United States, a mandatory percentage of consumption must come from renewable sources, and tax deductions for technological investment are promoted.

Perhaps the best solution, provided that it is adapted to the peculiarities of each country, would be regulation in which energy diversification is controlled by governments through a two-step process. In the first phase, a tariff should be set (with a quota) to encourage investment in technology and enable the creation of a market with sufficient critical mass, such as the case, for example, of the Spanish and German model. Once this has been achieved, the second phase would commence, where the tariff is eliminated and mandatory renewable quotas are established (American model), as this mechanism enables greater economic efficiency.

With regard to the transportation sector, currently most countries tax fuel sales. Transition to a diversified energy model with a strong renewable energy presence must also be driven by governments, establishing mandatory fuel blends, differentiating between bioethanol and biodiesel, and providing funding for the industry to develop the technology. Another way of giving incentives to renewable energies is through the creation of a market of emission rights, a financial instrument which enables control of greenhouse gas emissions by means of economic incentives promoting their reduction. A central authority (typically a government or international body) sets a limit to the total amount of contaminating particles that can be emitted, and, bearing in mind this maximum limit, assigns emission rights to the different businesses within its realm. In this way, companies must choose between reducing their emissions to the designated level or purchasing emission rights (credits) from other organizations that have proven more efficient in reducing their emissions beyond the imposed limit, or from businesses which create them through ecological projects for reducing emissions in developing countries or those with transition economies.

Implementation of an emission rights market, in which price fluctuates, just like in any other free market, depending on existing demand, penalizes the profit and loss account of businesses that contaminate most, and rewards the cleanest, thus helping to achieve a global reduction in emissions at the lowest cost to society. And, in terms of the issue we are addressing here, it represents a mechanism which, if driven forward by governments, will promote increased production of renewable energies in the mid and long term.

In order to establish a suitable regulatory scheme, governments need the advice of both specialists from the energy and environmental sectors, who are most familiar with the costs of the different renewable energies and their potential for improvement, as well as economic specialists, who analyze within a country's framework the consequences that regulation will have for investment in research and development, industry progress and the energy market.

It is important that these types of decisions be analyzed by the numerous agents involved, as the energy sector is a strategic one, and poor planning may compromise a country’s development in the long run.

Carlos Bousoño Crespo
Director of Corporate Social Responsibility

Is it possible to generate clean energy by using coal?

2008-07-29T11:39:23+02:00

Coal is a fossil fuel that is formed through plant decomposition in wet ecosystems. In these environments coal is produced when vegetable remains are protected by mud and water from the effects of oxidation and biodegradation. It is composed primarily of carbon, although it also has small amounts of other elements, such as sulfur.

Although its use dates back thousands of years, it was not until the 18th century that coal began to be used as an energy source by industry and the general population. For more than two centuries it enjoyed a privileged position which was disrupted only by the discovery of petroleum and natural gas. Yet in spite of this, coal is still the most abundant and evenly distributed fossil fuel on the planet, the one most widely used for generating electricity and the primary greenhouse gas contaminant, producing emissions that are somewhat higher than oil and double those of natural gas. The coal burned at a conventional 500-megawatt thermal power plant generates between 3 and 4 million tons of CO₂ annually.

There is no doubt that the search for new energy alternatives is needed more today than ever. Current studies show, with a high degree of certainty, that human actions are causing global warming, which represents a very serious threat to our planet.

In this regard, there is a consensus among the scientific community that the energy sector is one of the primary culprits behind the rise in temperatures on Earth as the result of the emission of greenhouse gases produced from burning fossil fuels. This sector, moreover, is immersed in a process of staggering growth and change due to the addition of new consumers such as China, India, Brazil or South Africa, countries which at present base their industrial development on the technological solutions available, as well as those that are most economical.

Given the importance of the volume of the contaminating emissions that come from coal, we must ask ourselves whether it is possible to generate clean energy from this fossil fuel. In order to achieve this, we would need to capture and store the carbon dioxide emissions derived from coal. In places like Europe, Australia, Japan, Canada and the United States, high investment is being made in research programs for developing capture and storage technologies, which are intended to reduce the emissions of this gas from coal and natural gas plants by up to 90 percent (DOE – Roadmap for CCS Technologies, 2007).

Various alternatives for capturing CO₂ are currently being studied. Each one is at a different stage of maturity and poses its own challenges and advantages:

Clean-up of plant exhaust fumes (post-combustion), either by burning the fuel with the presence of air, in a conventional fashion, or by replacing the air in the furnaces with oxygen in order to reduce the gas volume and further concentrate the CO₂ (oxycombustion).
Coal gasification in order to obtain synthetic gas (hydrogen and carbon oxides) for producing electricity (pre-combustion).

In addition, a second phase is required for achieving secure and permanent confinement of the carbon dioxide captured. The following are worth noting among the existing alternatives:

Geological storage: consisting of direct injection of carbon dioxide into geological formations, such as oil fields, gas fields, saline formations or abandoned coal mines. With this type of storage, which can last for millions of years, carbon dioxide leakage would be prevented through the presence of physical and geochemical mechanisms that would act as natural traps.
Ocean storage: involving either carbon dioxide dissolution through injection into a column of water at a depth below 1,000 meters, or depositing the dioxide on the marine surface at depths of over 3,000 meters. Ocean storage can have a negative impact on the environment because the dissolved CO₂ may return to the atmosphere 500 years later, and also because a portion of the CO₂ may react to water by forming carbonic acid, which produces ocean acidification in the long run.
Mineral storage: consisting of the formation of carbonates following their reaction to elements such as magnesium or calcium. Carbonates are very stable, so the likelihood of re-emission of CO₂ into the atmosphere is practically void, and the raw material needed to produce them is abundant. The only difficulty lies in finding channels for producing carbonates that are industrially viable at ambient temperature and pressure level.

Clean coal, once the presence of sulfur dioxide has been eliminated, and after capturing the CO₂ emissions, has a promising future, as it represents a considerably more environmentally-friendly use than that which exists today. But there are critics who emphasize the negative impact of coal extraction itself, or the dubious management involved in handling the contaminants thereby produced, since geological and ocean storage of CO₂ can be affected by seismic phenomena or human activity. The use of clean coal may be an intermediate step to help mitigate the effects of existing greenhouse gas emissions, and therefore halt climate change. However, over the next few decades it must give way to mass use of truly clean sources of energy such as solar or wind power.

Carlos Bousoño Crespo
Director of Corporate Social Responsibility

What energy will our grandchildren use?

2008-07-03T17:12:35+02:00

There are two different aspects to bear in mind when speculating on the future of energy. First, which will be the energy source? And, secondly, what will the energy vector of the future be? Let us now consider both issues.

In 1960, physicist Freeman Dyson indicated, more or less directly, in an article in Science magazine on the search for extraterrestrial civilizations titled "Search for Artificial Stellar Sources of Infrared Radiation" the importance of solar energy in the development of any civilization. In that article Dyson pointed out that a technologically more advanced civilization than ours would build so-called Dyson Spheres, spherical structures surrounding a star, with the aim of taking maximum advantage of the radiation emitted. Therefore, his idea was that the future of an advanced civilization would necessarily opt for making the most of solar energy.

Among the scientific community, there is an increasingly greater consensus regarding the evolution of the world in this direction: taking more and more advantage of solar energy as an energy resource. We are headed, albeit staggeringly, towards a new era in energy generation defined by making use of solar energy.

And, indeed, the potential of solar energy is currently unparalleled in the world of renewable energy sources. The following data are examples:

As I have already mentioned in a previous article, German scientists Gerhard Knies and Franz Trieb have asserted that it would only take covering a small portion of our hot deserts (0.5%) in order to meet the electrical needs of the entire world. Other estimates indicate that the solar energy available in the deserts is over 700 times the consumption of primary energy in the whole world. In either case, there is considerable agreement among the academic community with the idea that, by using the solar radiation received by deserts alone, both current and future energy consumption of the whole world could be met many times over.
The “Renewables 2050” Report, prepared by the Institute for Technological Research at the Universidad Pontificia de Comillas, states that “the most abundant renewable resources are those related to solar energy: if all solar technologies were put together, energy equivalent to 8.32 times the total energy demand of Spain and Portugal could be obtained in 2050.”

With respect to the energy vector of the future, there are several different approaches. Some consider that hydrogen has the greatest potential for becoming the substitute for electricity. This element is not a source of primary energy, but rather, like electricity, constitutes a means for energy transmission from primary sources to consumers (which is precisely the definition of an energy vector). Today there are two main ways of using hydrogen. The first is its use in conventional thermal processes (internal combustion engines or turbines). In this type of thermal conversion, no contaminating emissions are produced (with the exception of a few H2/air relationships where high temperature produces nitrogen oxides). The second involves the conversion to electricity through electrochemical processes in fuel cells. In this type of conversion there are no emissions.

Although hydrogen also has some drawbacks, there are two characteristics which make it an attractive energy vector:

It is widely available,as it can be produced from numerous raw materials (both renewable and non-renewable).
It is a clean fuel. Depending on its generation (renewable or non-renewable energy), and its use (thermal processes or fuel cells), emission levels will be lower than those of other fuels or even non-existent.

Nevertheless, a more realistic scenario is one where hydrogen is used as a vector that is complementary to electricity, since there are certain applications for which it may make more sense to continue to use electricity instead of hydrogen. It is therefore possible that these two energy vectors will coexist in the future, with the use of one or the other depending on the characteristics that are most suitable for a given application.

And as to the energy of tomorrow, I think solar power is our safest bet. Having stated this, I do not wish to be misinterpreted: there must always be alternative energy sources to complement the use of solar radiation, but I am convinced that a very high percentage of our future energy mix will be based on making the most of the Sun. However, given the economic interests linked to fossil fuels, reaching the point where the Sun and hydrogen provide for 80 percent of our energy needs will not be an easy road to follow. But, as in the words of the motto of the Apollo missions, “ad astra per aspera”: through adversity to the stars.

Carlos Bousoño Crespo
Director de Responsabilidad Social Corporativa

Second-Generation Biofuels

2008-06-16T12:42:59+02:00

We can read articles, reports, interviews and opinion pieces on biofuels¹ in the newspapers on a daily basis. Many refer to them as tools for achieving sustainability by reducing the emissions associated with transportation. But there are other media and authors who, perhaps led by oil interests, have concentrated their efforts on creating a negative opinion of fuels of biological origin from three perspectives:

Energy-based: claiming that their energy balance is negative; that is, that creating a unit of bioenergy takes more than a unit of fossil energy.
Environmental: questioning that their emissions are lower than those of fossil fuels and professing that their production through single-crop farming will lead to deforestation of the planet and loss of biodiversity.
Social: asserting that their production entails that society will choose power production over food.

These arguments are part of the desperate attempt to taint public opinion by a sector that sees how its traditional business is slipping through its fingers, just like what happened, albeit for different reasons, to the tobacco industry.

The first generation of biofuels is more energy-efficient than fossil fuels, environmentally sustainable, and contributes to social well-being, in that it generates local wealth in countries where it is implemented. And, furthermore, it still has a long way to go, in terms of improving crop yields and achieving better efficiency in the process of obtaining fuel itself. Since we have already covered these issues in previous articles, I would like to focus here on my perception of biofuel production within the next ten to fifteen years. To do so, I wish to discuss second-generation biofuels based on lignocellulosic biomass, of which the first commercial plant is soon to be commissioned.

Biofuels have seen an intense history over the last century. In the year 1900 Rudolf Diesel, inventor of the engine named after him, demonstrated the operation of his engine at the World Expo in Paris using peanut oil. And years later, Henry Ford proposed running his Model T on corn-derived ethanol. However, these organic options were soon cast aside in lieu of oil, a fuel of fossil origin, which at that time was cheaper and more abundant. The idea of using biofuels was not taken up until the end of the 20th century, a time in which legislative initiatives began to be enacted in the United States and other countries in order to regulate the emissions associated with transportation and energy diversification, partially driven by the escalating oil prices caused by the prevailing world geopolitical instability. And in response to these initiatives a period of active research in the area of renewable energy sources began, giving rise, in the case of biofuels, to the beginning of industrial production of the first generation of gasoline and gas oil to use the fruits of plants (cereals in the case of bioethanol, and oleaginous seeds in the case of biodiesel) in order to generate fuel. This first generation is allowing the biofuel market to develop. Many technological innovations are yet to be seen over the coming years for improving the efficiency in the process of creating ethanol from grain. In the mid-term, within 15 or 20 years, bioethanol production will evolve towards the utilization of the entire plant as a raw material, constituting more efficient use of biomass. This stage is currently in the research phase.

All plants contain cellulose and lignin, which are complex sugar molecules. The second generation of biofuels consists of ethanol production by means of fermentation of the sugars released from plant cellulose. This release can be obtained through two completely different sets of processes: biological transformation processes, using enzymes to break down the molecules, and thermochemical transformation processes, which utilize high-temperature gases. Using both types of processes, a wide range of biofuels can be produced, such as bioethanol, biomethanol, synthetic diesel oil or dimethyl ether.

To date, there is no undergoing industrial production using any of these technologies, but diverse demonstration experiences are already being explored. The main obstacles involving the use of this technology have to do with technical and economic aspects, as well as the difficulty in terms of the availability of biomass, the primary source.

From the technical standpoint, there are, in both the biological and thermochemical processes, some issues that are still to be resolved. In terms of biological processes, the primary obstacles are the need for optimizing the transformation processes, fermentation of certain fractions of the biomass, the low concentration of the product and water mix, and by-product purification. As far as thermo-chemical processes are concerned, the main issues pending resolution involve feeding biomass to the transformation systems, biomass gasification, gas purification and improving product synthesis systems. These barriers do not impede production, although they render technologies less robust than those of the first generation. Most of these problems have already been solved in the laboratory, even though they need to be implemented in large-scale installations. And in order to do this, pilot and demo experiences must be undertaken in order to accelerate the advancement of the technologies.

The cost of producing second-generation biofuels is still very high compared to that of the first generation, making it necessary to further develop the market of biofuels obtained from cereal in order to thereby defray the cost of the research and development needed to make this second generation commercially viable. This second-generation will almost certainly coexist with the first-generation in hybrid plants fed with both cereal and cellulosic biomass. These high costs are due, in the case of biological processes, based on fermentation and hydrolysis, to the price of chemical and biological processes, as well as enzymes, which make production more costly than that of current technologies. Measures for reducing these costs are based on energy optimization of the processes and on lowering the cost of the microorganisms and enzymes utilized. For thermo-chemical processes, on the other hand, production costs are low, except that of biomass; nevertheless, the estimated cost of plant capital is very high, which has a significant impact on production cost and the required initial investment, although this cost will come down through plant optimization and integration.

Apart from the technical and economic problems, there is the matter of availability of the raw material, that is, biomass. From the technological perspective, biomass consumption levels for making plants economically optimal are quite high. And from the standpoint of resource availability, work is still to be done on promoting energy crops and infrastructures that will enable stable and sustainable biomass supply to plant facilities. In any case, there are sufficient amounts of agricultural (such as straw) and forest (remains from cutting and pruning) waste to enable production during the initial transitory period.

Once developed commercially, the second generation of biofuels will strongly contribute to sustainability for communities. The following are among its main benefits:

Use of raw materials that are not used in other markets. In the case of waste, these raw materials can have a very low cost.
Possibility of using raw materials that require fewer consumable goods in the cultivation phase.
Practically no consumption of fossil energy.
Reduction in greenhouse gas emissions of over 90% with respect to fossil fuels.
Flexibility in terms of the product and the raw material.
Competitiveness in free energy markets with other forms of energy for transportation once optimization of the technologies has been reached. If, in addition, mechanisms for keeping a record of the emissions costs are established, the price would be much lower than that of fossil fuels.

Problems attributed to first-generation biofuels (and those that are continuously echoed in the media) come from the erroneous (and one perhaps based on interest) assumption that the production of cereal-based biofuels will follow a geometric progression “ad infinitum”. These articles given to forebodings of calamity assume that bioethanol will continue to be produced over the next hundred years from corn, wheat, sugar cane or sorghum, and that, consequently, the greater part of the planet will have turned into one big single energy crop that will put an end to biodiversity and cause deforestation and mass world hunger. They fail to take into account the evolution of the rest of the renewable energies, such as solar power or hydrogen, also forgetting that in the mid-term, a second generation of biofuels will have been commercialized and will wholly use virtually any plant species, thus obtaining better energy balances and orders of magnitude in terms of emissions than those of fossil fuels, as shown, for example, by the research conducted by the Energy and Resources Group at the University of California, Berkeley.

Taking everything into consideration, second-generation technologies for producing biofuels will definitively resolve the two most significant issues looming over world economy and the sustainability of our planet: the existing dependence on oil, a resource which is on the way to depletion, and the high levels of the resulting greenhouse gas emissions. To fully develop these technologies, stable and solid support from government administrations is needed in conjunction with private industry, in both research-demonstration programs as well as through crop promotion or financial backing of the first installations. The development of these technologies will ultimately do away with the few arguments held by oil proponents for sponsoring an unsustainable, pitch-black-colored energy model.

^[1]Biofuels are fuels derived from biomass (organic material resulting from a biological process, whether spontaneous or induced, which can be used as a source of energy).

Carlos Bousoño Crespo
Director of Corporate Social Responsibility

Is planting trees the solution to CO2 emissions?

2008-05-23T10:23:29+02:00

Global warming is a real phenomenon that has brought about the rise in temperature of the earth’s atmosphere and the oceans in recent decades. It is caused primarily by the increase in the concentration of greenhouse gases in the atmosphere. While these gases are present naturally in the atmosphere, their concentration varies as a result of human activity.

Carbon dioxide is the main cause of the greenhouse effect. Even though it represents just over 0.03 percent of the gases in the atmosphere, small variations in its balance have a considerable impact on the world's climate.

According to the United Nations, the main causes of climate change, together with air pollution, are the change in the use of soil, desertification and deforestation. In fact, the warming of our planet is due not only to the combustion of oil and gas; deforestation is also responsible for between 25 and 30 percent of the greenhouse gases emitted. Each year, 13 million hectares of forest are lost all over the world, mainly in tropical areas.

Internationally, an agreement has been reached in order to fight climate change, for which the main lines of action have been identified. The two fundamental means set forth are: reducing emissions through mechanisms of clean development and increasing CO2 fixation. As we shall see, tree masses play a fundamental role in the latter, since, as they grow, they capture CO2 from the atmosphere and later store it in their tissues.

Carbon dioxide is found in equilibrium in nature. The flow of this gas in the natural environment is defined in the carbon cycle: atmospheric CO2 is captured by means of photosynthesis in plants (later a food for animals) o through its dissolution in sea water. In turn, living creatures (plants and animals) generate a return flow of CO2 to the atmosphere through respiration, leaving organic residues that settle, giving rise to coal and petroleum. Their combustion releases carbon dioxide into the atmosphere as they are broken down by specialized bacteria that release them through respiration. This process allows us to refer to tree masses as CO2 drains, where this greenhouse gas is captured and stored.

The importance of forest masses in controlling emissions is due to their capacity to store carbon and the amount of time they are able to keep it fixed, which ranges from a year in the case of green organs, flowers and root hairs; to fifty to one hundred years for wood; and thousands of years in the stable humus found in soil.

The IPCC (International Panel on Climate Change) affirms that if suitable strategies for forest conservation are combined with reforestation projects all over the world, forests could become a net carbon drain for the next hundred years, permitting the capture of between 20 and 50 percent of the net CO2 emissions into the atmosphere. Currently, in countries such as Spain, forests absorb around 19 percent of total emissions annually.

In addition to the beneficial effects of plantations and forests on the concentration of CO2 in the atmosphere, their action can also be observed in the soil, in reducing erosion, promoting biodiversity, regulating mountain streams, and generally enriching the biological wealth of the land.

Halting climate change by planting trees entails a threefold strategy:

Conservation: preventing mass deforestation, forest fires and other catastrophes.
Sustainable management: applying techniques to optimize CO2 fixation and have an impact on the quality of wood products.
Reforestation: planting tree masses in deprived lands and transforming farmland.

To confront the existing reality, the Kyoto Protocol serves as an instrument in the struggle against climate change. Its primary objective is to reduce greenhouse gas emissions in each country involved. In order to fulfill the agreement, different channels for emissions reductions have been established: increasing energy efficiency, promoting the use of renewable energy sources, waste management or protecting and creating CO2 drains.

The Protocol patently reflects the importance of forest masses as an instrument for attenuating greenhouse gases by acting as significant carbon drains. And, at the same time, it enables a mechanism for obtaining carbon credits in exchange. In fact, Articles 3.3 and 3.4 of its text expressly acknowledge the significant contribution of soil use, forestation and silviculture for CO2 fixation. The drafting of these articles has unfolded a wide range of alternatives for increasing carbon fixation by means of suitable forest management, making it clear that forest masses represent a key tool for combating climate change.

As usual, there are those who disparage the inclusion of forest activity within the Kyoto Protocol. Some argue that the implementation of these temporary measures will distract attention from the truly important issue: the need to introduce technological and cultural changes to modify the consumption patterns of the industrialized world and to reduce the burning of fossil fuels. Thus, the environmental group Greenpeace, for example, asserts that carbon credits from CO2 drains will allow industrialized countries to continue using enormous quantities of fossil fuels, consequently putting off the definitive solution to the matter of climate change.

Others denounce the possible negative effects of the promotion of planting forests for single-crop farming on soil fertility and biodiversity. And there are organizations that consider the emissions balance of a forest mass to be void or even negative, since they factor machinery and auxiliary industrial energy consumption employed in managing the forest mass into their calculations.

There are numerous studies, nevertheless, that assure the beneficial impact of planting trees. These treatises have established, for example, that a forest mass which lacks proper management has a tendency to neutralize its contribution to carbon fixation, and that only through plantation planning and sorting (eliminating the accumulation of wastes, maintaining constant growth of the mass and replenishing trees that have died) can a positive balance be achieved.

We therefore believe that proper forest management serves to partially mitigate the effect of greenhouse gases by fixing and storing a percentage of them, reduces desertification and deforestation at the same time, and makes silvicultural initiatives profitable. Altogether, this entails an additional advantage for rural economies, the environment and for generations to come.

Carlos Bousoño Crespo
Director of Corporate Social Responsibility

Which solar technology will prevail?

2008-05-08T18:22:26+02:00

Each year the sun irradiates the earth, giving off four thousand times more energy than that which is consumed in the entire world. In fact, German scientists Gerhard Knies and Franz Trieb assert that simply covering a small portion, 0.5 percent, of the earth’s hot deserts with solar collectors would be enough to meet the world’s electrical needs. Whether this figure is exaggerated or not, the truth remains that solar energy is one of the most promising alternatives for ensuring the energy supply in the future, by virtue of its being practically inexhaustible as well as clean.

Solar energy can be used to generate electricity and to desalinate water, or as a heat source; that is, by using it for heating systems or for cooking and bath water. In this article, we will focus on the first of its applications, which, moreover, is the one I believe will have greater impact on the future of energy.

There currently exist a tremendous number of alternative technologies for producing electricity with the sun, although they may be categorized into two groups. First, we have photovoltaic technology, which converts solar radiation into electricity through the so-called photoelectrical effect, thanks to the properties of the semiconductor materials. The most widely used photovoltaic cells are those made of crystalline silicon, although research is underway on the use of new materials.

On the other hand, there is thermosolar technology, based on the conversion to heat of radiated energy, which is subsequently used in a thermodynamic cycle. Its main component is the receptor, the element of the installation through which a fluid that absorbs solar energy circulates. This fluid gets heated and subsequently drives a turbine that generates electricity. In this case, there are also various kinds of installations, yet currently the most noteworthy are the tower collector, the parabolic cylinder collector (PCC) and the parabolic dish.

Therefore, venturing to establish which technology will prevail is really quite complex, mainly because I do not think that one kind will substitute the others for all applications. I believe this, as there are two different parameters that will determine the implementation of the various alternatives: the level of solar radiation in the area under consideration, and the purpose of the installation.

Regarding the first parameter, we must point out that solar radiation obviously varies according to geographical location. Furthermore, the different technologies function better or worse depending on the level of radiation. Thus, for example, thermosolar technology is not viable in places where solar radiation falls below a certain threshold, making the use of photovoltaic technology necessary. In contrast, in areas with a high level of radiation the thermosolar alternative is preferable due to greater efficiency.

With respect to the second parameter, there is a great difference if, for example, the aim is to build a power plant for supplying electricity to a city, compared to a small installation for providing power to a single home. In the first case, thermosolar technology would be the most suitable option, whereas photovoltaics might be the best choice for the other.

Gathering from these reflections, I believe that the future scenario will, in general, be based along the following lines:

In the case of a large electrical power plant (hundreds of megawatts), the aim of which is to provide the supply for a large number of homes or industries, which in addition is located in an area with a high level of radiation, thermosolar technology would be the most likely option.
For medium-size power plants (few megawatts) that form part of a network and are located in an area of high irradiation, the most suitable alternative would be the use of concentrated photovoltaics (in which sunlight is concentrated through the use of optic systems within a reduced area of photovoltaic cells). If the radiation level is lower, conventional photovoltaics would possibly be used.
In small installations for individual consumption, photovoltaic technology would seem to be the most viable choice.

To summarize, we cannot assert that one particular technology will bring an end to the rest. Even though it is almost certain that some of today’s technologies will eventually disappear (either by proving to be inefficient or through replacement by superior options), both the thermosolar and photovoltaic alternatives will coexist, with one or the other being chosen depending on each case, the radiation level and the size of the installation.

Carlos Bousoño Crespo
Director of Corporate Social Responsibility

Four distortions involving biofuels

2008-04-24T19:01:29+02:00

The aggressive media campaign against biofuels that we are witnessing seeks to obfuscate public opinion through fallacies that aim to falsely blame biofuels for high grain prices, the lack of nutritional security in developing countries, deforestation and contaminating emissions. Many of the arguments that I will put forth here are extracted from the report titled “Biofuels and Sustainability: Myths and Realities”^[1], published by the Association of Renewable Energy Producers.

The impact of biofuels on the price of grain

Some argue that biofuel production, as it generates from cereals, makes the demand for the latter increase, and therefore cereal prices rise and are transferred to the cost of food.

Frequently cited as a paradigmatic case, is the rise in the price of Mexican corn tortillas, due supposedly to bioethanol production in the United States. Nevertheless, the reality is that the white corn used in Mexico for producing tortillas comes from local production, and is completely different from the yellow corn used in the United States for bioethanol. And both types of grain have supply and demand curves with their own behaviors. In fact, the main reasons behind the rise in Mexican tortilla prices are strictly local in nature: increased use of white corn for animal feed, which has altered the balance between production and consumption, coupled with a lack of crop development due to structural issues, such as a system of inadequate agricultural credits, subsidy limitations, or a market that is broken up into oligopolies.

According to the report on the agricultural market by the Agriculture and Rural Development Department of the European Commission, cereal production allocated to bioethanol totaled 2 percent in 2007, and will not go beyond 4 percent, the target set for 2010, an amount that is too low to significantly affect prices. Moreover, it must be pointed out that the second generation of biofuels, which will be available mid-term, will no longer be obtained from grain, but rather with biomass from vegetable waste matter (straw, leaves, husks, stalks… ), so, in the mid and long term, the increase in biofuel production will not have any effect whatsoever on the cereal market.

The main causes of the imbalance between supply and demand resulting from the global rise in cereal prices are diverse, and none of them has anything to do with biofuels:

Lower crop yields as a consequence of drought and other meteorological incidents, which have affected some of the world’s main producers.
Growing demand in emerging countries such as China and India.
A rise in speculative practices in world commodity markets (entry of investment funds into this market, representing nearly a quarter of the contracts).
An increase of over 160% in the price of petroleum during the last year, which has an impact on food prices, being two or three times higher than, for example, the equivalent increases in the price of corn.

Nutritional and energy security

Some argue that biofuels will aggravate existing food-related problems in developing countries.

The reality is that the production of raw materials for biofuels represents a chance to develop for the poorest countries, increasing their nutritional security, since the problem of hunger in these countries has nothing to do with a lack of raw materials, but rather is caused by the inadequate distribution of resources. In fact, the rise in world agricultural prices can bring about significant benefits for rural communities in developing countries.

Biofuels likewise represent a great opportunity for impoverished countries to increase their energy security, allowing them to decrease their dependence on oil through local biofuel production. Each year, over 30 billion barrels of petroleum are consumed, which implies a cost, assuming a price per barrel of 100 dollars, of more than 3 thousand billion dollars^[2]. Even a small country like Spain, which uses just over 500 million barrels per year, pays more than 50 billion dollars each year. And it is estimated that energy demand will increase at a rate of 1 percent each year until 2030. However, if in 2020 ten percent of oil consumption were substituted for locally produced bioethanol, the savings entailed for the payment balance would exceed 5.6 billion dollars each year, and could even reach 55 billion annually if oil were to be completely replaced with bioethanol, which would significantly reduce currency flight to countries abroad and benefit the economies of local communities. Biofuels, therefore, represent a tremendous opportunity for reducing dependence on foreign oil and making countries’ own autochthonous energy sources available.

Biodiversity

Some argue that the demand for bioethanol puts Amazon forests in danger due to increased sugar cane farming.

However, biofuels have little to do with deforestation. In the case of Brazil, the area devoted to sugar cane farming for bioethanol production currently totals 6 million hectares, and these areas are located very far from the Amazon jungle. Nor is any interaction likely in the future, given that the land potentially available for agriculture in Brazil –without affecting the Amazon jungle and other protected areas– totals 90 million hectares, whereas the Brazilian government only intends to exploit 17 million additional hectares for sugar cane production. Furthermore, the Amazon area is not good for cultivating sugar cane.

Greenhouse gas emissions, energy balance and energy efficiency

Some argue that biofuels emit more greenhouse gases, are less energy-efficient and have an inferior balance with respect to the fossil fuels they substitute if the complete cycle of production, distribution and use is taken into account.

Contrarily, the life cycle assessment of bioethanol and biodiesel in Spain conducted by the Center for Energy, Environmental and Technological Research (CIEMAT) commissioned by the Ministry of the Environment concluded that the production, distribution and use of biofuels permits significant reductions in greenhouse gas emissions, showing in addition that the energy balance of biofuels is always superior to that of gas oil and gasoline, since their production, distribution and use requires less primary and fossil energy than the energy used by conventional fossil fuels. To this, it must be added that, unlike gas oil and gasoline, which have negative energy efficiency, the energy efficiency of most biofuels is positive; that is, the amount of energy needed for their production and distribution is lower than that which they contain. For example, compared to 95-octane gasoline, an 85% bioethanol blend (E85) represents a 70 percent reduction in greenhouse gas emissions, and a savings of 36 percent in fossil fuel for each kilometer driven.

Biofuels are, at this time, the best available alternative for beginning to replace oil for transportation, reducing its environmental impact, increasing supply security and contributing to the development of local economies. They represent an essential means for combating climate change effectively.

^[1] The document referred to can be accessed at: http://www.appa.es/descargas/Doc_BIOCARBURANTES_1309.pdf

^[2] In this context, one billion dollars refers to USD $1,000,000,000.

Carlos Bousoño Crespo
Director of Corporate Social Responsibility

Do renewable energies impact the stability of the electric grid?

2008-04-09T12:55:59+02:00

The different energy scenarios under consideration today foretell a very significant increase in the world’s demand for electrical power over the next century. Given that this kind of energy hardly lends itself to storage, it is necessary to instantly generate the same amount of energy as that which is required. Therefore, the increase in world demand anticipated for the coming years will force governments to simultaneously increase electrical generation. This increase in output capacity will have to be achieved while taking into account factors such as the volatile prices of fossil fuels, their impact on climate due to the greenhouse gases they emit, as well as the importance of strategic supply security.

IPCC anticipated increase in energy demand and renewable quotas. Two models (MIniCAM and Message) for scenarios of primary energy consumption and emissions in 2095. The role of renewable energy sources. (Source: IPCC, Summary for Policymakers)

Wind and water power and solar radiation represent clean and inexhaustible resources for producing electrical power. Likewise, facilities that use biomass as the primary source of energy for generating electricity or those employing highly energy-efficient co-generation also contribute to meeting the dual objective of protecting the environment and ensuring a quality supply of electricity. According to a study by the Intergovernmental Panel on Climate Change (IPCC), by the end of the 21st century, energy consumption will be 2.5 times greater than it is today, entailing the consequent emissions levels. In order to obtain a reduction in greenhouse gas emissions of around 20 percent (assuming the current power generation pattern holds), 40 to 50 percent would have to be generated with renewable sources of energy. This makes it imperative to investigate whether it is possible to have renewable power plants generate electricity and deliver it to the grid in a stable manner.

In a traditional electric market, estimated demand, based primarily on historical behavior, matches a generation scheme based on the supply that electrical utilities make available to the operator. This demand forecast is adjusted in real time to match the effective consumption produced throughout the day by means of a combination of different generation sources. Today, most of the power generated comes from large thermal and nuclear power plants, which run at a fixed power output level. The necessary adjustments are made by connecting, disconnecting, or varying the output of other generation groups, such as hydroelectric stations.

However, as we have already seen, in order to achieve sustainability generation needs must be covered progressively through renewable, low-emission power plants. These stations pose a challenge to the power grid, as their production is not readily adjustable, due to the limited availability of sunlight or wind, as both sources depend on the number of hours of sunlight and the specific weather conditions at the location of the power plant. And this lack of availability has a direct impact on the adjustment capacity of the grid operator for matching supply and demand, which, we should not forget, must take place instantaneously.

In order to overcome this difficulty, today some countries have begun introducing legislative measures to help support power generation from renewable sources and to favor more stable electrical generation as well. In Spain, for example, there is an additional incentive for companies that produce renewable electricity if they are able to ensure supply continuity during voltage gaps. This encourages generating companies to seek solutions based on energy storage to therefore temper the fluctuations and disruptions associated with renewable power production. An example of these kinds of solutions is pumping water to areas of greater power potential at times of excess grid supply and generation by means of turbines to drive that potential when demand increases. There are many other alternatives which are currently in different stages of development.

Governmental legislative impetus coupled with a suitable policy for promoting research and technological innovation will lead to compliance with a twofold aim: to assure the strategic supply of energy and to guarantee its continuity for future generations. Both will undoubtedly have a positive impact on our countries’ economies and contribute to the well-being of their citizens.

Carlos Bousoño Crespo
Director of Corporate Social Responsibility

Biofuels against Climate Change

2008-03-27T10:33:17+01:00

Judging from front-page newspaper articles, television newscasts, and radio bulletins and phone-in talk shows of late, it is most evident that the issue of climate change has gone beyond the boundaries of the laboratories to the people in the street. I do not intend to issue an opinion on the debates, theories and statements that we have had the chance to read and hear. But I do wish to take this opportunity to provide some information I consider significant regarding the relationship between biofuels (fuels of biological origin whose greenhouse gas emissions are much lower than their fossil equivalents) and climate change. Perhaps, in this way, some may be able to add substance to their arguments.

In the first place, I think it is important to point out that CO2 emissions around the world that come from the transport sector exceeded 5,600 tons per year in 2002, of which more than 4,200 were attributed to highway transportation. Also, CO2 emissions from transportation estimated for 2030 will rise to over 8,500 tons. In turn, the European Union projects an increase in emissions levels from 970.6 to 1,261 tons annually in Europe alone between 2000 and 2030. In other words, CO2 emissions from the transport sector are extremely high and therefore have a considerable impact on the environment.

In view of the situation, it is not at all surprising that biofuels represent the most promising alternative for decreasing the environmental impact of the transport sector. According to the Life Cycle Assessment of Alternative Fuels for Transportation. Phase I, Comparative Life Cycle Assessment of Cereal-Based Ethanol and Gasoline study conducted by the Center for Energy, Environmental and Technological Research of Spain (Ciemat), the use of bioethanol as a fuel delivers a reduction of more than 144 grams of CO2 for each kilometer driven. In fact, there is no other real viable alternative capable of generating similar benefits over the next 20 to 30 years. And we must not forget that the elimination of these gases and local contaminants, such as nitrogen oxide or suspended particles, leads to an observable reduction in the risk of people’s health problems.

And it is a fact, moreover, that biofuels can, on the one hand, help decrease the dependence for energy which most of the world's nations have contracted with the oligopoly of oil-producing countries, and, on the other, they can contribute to lowering oil import expenditure. Each year, over 30 billion barrels of petroleum are consumed, which implies a cost, assuming a price per barrel of 100 dollars, of over 30,000 billion dollars. Even a small country like Spain, which uses just over 500 million barrels per year, pays more than 50 billion dollars each year. And it is estimated that energy demand will increase at a rate of 1 percent each year until 2030. However, if a locally produced blend of 85% percent bioethanol (E85) were used, over 42 billion dollars could be saved each year, which would considerably reduce currency flight to countries abroad.

Before concluding, I think it must be mentioned that biofuels also contribute to sustaining rural populations by giving them options, both as producers of raw material as well as in transformation industries. Specifically, the use of biofuels and increased vehicle energy efficiency are essential in the struggle against climate change and in countries’ achieving greater energy independence. Both objectives are very important for attaining sustainability.

Carlos Bousoño Crespo
Director of Corporate Social Responsibility

Changing Climate Change II:
What can businesses and people do to contribute to sustainability?

2008-03-11T10:02:10+01:00

Sustainability and business

Companies with a focus on the creation of value are good for society: they create jobs, strengthen and value their employees’ abilities, stimulate competition, serve clients, create business for their suppliers, generate wealth, encourage modernization and new business, pay taxes, represent sources of sponsorship, and they promote sustainability and fortify society in general.

In the context of change in a market society, an innovative company is an effective and vital instrument on the road towards sustainability. I am convinced that solutions for sustainability are linked to business initiative, should be based on innovation, and can be carried out more effectively in a market society.

Innovation is not an end in and of itself, as may often be the case for research. Innovation has one mission: transforming society in order to create a better world. In other words, making our socioeconomic system, which today is neither sustainable nor for everyone, a sustainable system for all.

Good business governance is essential for long-term efficiency, and therefore, for the creation of wealth for stockholders and society. In this way, optimal allocation of resources is achieved in a market economy.

Companies play an essential and effective role in the fight against climate change. This role is synthesized in the management of clean production and in the promotion of responsible entrepreneurship, and is implemented through various kinds of actions:

Management of the knowledge of the company’s own emissions: accounting and balance of emissions, tracing the different inputs.
Plan for reducing and minimizing these emissions, raw materials and employed inputs, as well as waste and dumping and their proper management.
Product labeling.
Analysis of the life cycles of products and businesses, with improvement potential assessments.
Innovation.
Alignment of new businesses with sustainability.
A company can, of its own volition, become a neutral emitter, by purchasing carbon funds to compensate its balance of emissions.

Sustainability and people

The citizen’s role in promoting sustainability is essential, especially in democratic societies. Citizens pay taxes and vote for their leaders and their programs. Moreover, through their habits and economic decisions, the sustainability of our existing socioeconomic model is put at stake each and every day. We must also bear in mind that citizens’ actions indeed shape and mold citizenship.

The reality that we are faced with, nevertheless, indicates that citizens have not been taught about sustainability and are neither aware nor well informed, and thus their decisions, regardless of ethical criteria involved, are not in line with sustainability. People must be taught about sustainability and this needs to begin at school.

Each person can contribute to halting climate change through his or her daily actions, by becoming aware of the impact of these behaviors and trying to reduce those with a negative impact. The following are simple yet important actions that we can put into practice:

Reducing energy consumption in the home through low consumption appliances and responsible use of them.
Responsible transportation: efficient cars and driving habits, use of alternative means of transportation, etc.
Reducing the production of unnecessary waste.
Increased awareness of personal emissions. Once we manage to reduce our own emissions as far as possible, we can make a commitment to becoming neutral emitters, acquiring “carbon credits” to compensate the balance.

When these individual actions are put together, they represent a tremendous reduction in emissions with a decisive impact on achieving a sustainable climate.

Carlos Bousoño Crespo
Director of Corporate Social Responsibility

Changing climate change:
What can governments do to support sustainable development?

2008-03-04T12:48:42+01:00

Turning our socioeconomic model, which is neither sustainable nor applies to all, into a society of sustainable development for everyone has become the paradigm of the new century. This great transformation requires actors who are conscious of the need to focus everyone’s efforts on scenarios of sustainable development.

United Nations Agenda 21 establishes the action framework for facing the challenges of the new century through integration of development with the environment. Section III defines the main action groups and the role assigned to each one. In subsequent articles we will present and analyze what is expected of some of these actors, interpreting United Nations guidelines in a practical way. We will begin with governments. For cases at the local level, their program is put forth in chapter 28 of Agenda 21.

Local, regional and even state centers of power must promote sustainable development within their geographical domains, responding to whatever specific situations arise, identifying problems and opportunities and proposing plans of action for smooth and realistic progress from the current situation toward sustainable development. Furthermore, actors must demonstrate their awareness of global or external problems, for example, by facilitating the transposition of regulations as well as the fair and efficient use of common resources. Public authorities in general should play a role of leadership along the way toward sustainability: appraising the situation and creating and proposing scenarios for sustainable development and programs of progress toward these horizons. Ways to achieve this include financing education and research and encouraging private sector initiative in order to promote and accelerate transformation of the system. And, in specific cases, intervention may be called for in order to correct market failures.

Public authorities must also generate and adapt the legal framework in which the economy develops so that the two factors that have traditionally sustained Western economic development, technology and market, are strengthened. To these factors, however, we must add the unavoidable demand for a strong and proactive commitment to sustainable development. To this end, governments, through information contributed by science and the society as a whole, must create and adapt legal and regulatory frameworks, rules of the game, which allow businesses to compete freely. These frameworks must be fair, efficient and should promote sustainable development. Life cycle assessment (LCA) is one of the scientific instruments which should allow governments to make good decisions when establishing these rules of the game for promoting and reinforcing sustainable social and economic development.

Carlos Bousoño Crespo
Director of Corporate Social Responsibility

Water's Future

2008-02-22T11:55:18+01:00

Water: [ME, fr. OE wœter]. n. The liquid that descends from the clouds as rain, forms streams, lakes, and seas, and is a major constituent of all living matter and that is an odorless, tasteless, very slightly compressible liquid oxide of hydrogen H20 which appears bluish in thick layers, freezes at 0ºC and boils at 100ºC…
[Webster’s Dictionary]

Water has played a critical role in the history of humanity: its use has marked the starting point of all great civilizations, born on the river shores. Throughout history, demand for water has increased according to population growth and the degree of a country’s development. The 2003 UN World Water Development Report warns that in 2030 over half of the world’s population will not have access to drinkable water. It is thus evident that water, which has become a scarce resource, is now at the center of a host of economic and social interests worldwide.

Nevertheless, the concern that water’s future awakes has not only to do with our planet’s population growth. The phenomenon of climate change, which affects the environmental panorama, causing severe droughts and alterations in the rainy seasons, in terms of their frequency, location and amount, is a factor in the increased scarcity of the water supply today.

Faced with this scenario, it is no wonder that many of us ask ourselves how we can resolve the problem of water scarcity.

Sustainable generation of water

To date, most of the supply of drinkable water comes from rivers, aquifers and lakes, which inevitably causes an environmental impact on the original water source that increases with demand and has a harmful effect when the water is returned to the natural environment bearing pollution that it did not contain at the point of origin.

This cycle being understood, it seems highly advisable to impose restrictions on both the origin of water sources as well as their use, adhering to a sustainable policy for generating drinkable water. This water sustainability, far from searching for new sites to exploit, which would fuel the race toward unsustainability, must promote exploration of new sources for generating water which, when combined with responsible consumption, will allow permanent regeneration of this precious resource. The recovery of contaminated aquifers, regeneration of waste water, and sustainable desalination are just some of the new sources of water generation towards which countries must, in my opinion, concentrate every effort.

We cannot ignore the problem of the energy cost involved in the generation of drinkable water from water that is not fit for human consumption. This treatment process implies a high cost in energy, which must lead us to opt for water generation processes involving the consumption of clean and renewable energy. In fact, the combination of water treatment technologies, together with the use of renewable energy, seems to be, for the time being, the only solution for resolving the difficult matter of sustainability in the water-energy binomial. This solution, however, will prove effective only when joined by the determination of governments and citizens. Only then will we see a future in which clean, drinkable water is a resource available to all.

Carlos Bousoño Crespo
Director of Corporate Social Responsibility

The life cycle^[1] of bioethanol

2008-02-15T13:34:00+01:00

(or on how this biofuel contributes to increasing petroleum reserves and halting greenhouse gas emissions)

It seems fashionable of late to state that the use of biofuels for transportation hardly reduces CO2 emissions, and that a large amount of fossil fuel is used for their production. In order to ascertain how much truth there is to this, we must consult rigorous analyses carried out by independent researchers in which exhaustive studies have been conducted on both bioethanol CO2 emissions as well as the energy consumption linked to its production and distribution.

The Center for Energy, Environmental and Technological Research of Spain (Ciemat), one of the most prestigious Spanish institutions for research in the area of energy and environmental studies, has developed an exhaustive life cycle for bioethanol ("Life Cycle Assessment of Alternative Fuels for Transportation. Phase I, Comparative Life Cycle Assessment of Cereal-Based Ethanol and Gasoline"), from which the following conclusions can be extracted:

The energy balance for fuel/fossil-based energy consumed during production is (MJ fuel/MJ fossil energy production):

Pure ethanol (E100): 1.49
95 Gasoline without ethanol (E0): 0.848
Using gasoline, 1.75 times more fossil energy would be consumed than by using pure ethanol

The fossil-based energy used in the production and distribution of bioethanol blends is:

Blend of 85% ethanol and 15% 95 gasoline (E85): 1.778 MJ^[2]/km
Blend of 5% ethanol and 15% 95 gasoline (E5): 2,747 MJ/km
Gasoline 95 without ethanol (E0): 2,778 MJ/km

The reductions in CO2 emissions obtained by using ethanol blends, when compared to 95 gasoline, are as follows:

Blend of 85% ethanol and 15% gasoline 95 (E85): 144 g CO2/km
Blend of 5% ethanol and 95% 95 gasoline (E5): 7 g CO2/km
If pure, gasoline-free, ethanol were used, reductions would be even greater than the 144 g CO2/km for E85

According to the article titled “Thinking Clearly about Biofuels: Ending the Irrelevant Net Energy Debate and Developing Better Performance Metrics for Alternative Fuels”, directed by B. E. Dale, of Michigan State University, for each MJ of ethanol used, the consumption of 28 MJ of petroleum is avoided.

In light of this data, corroborated by many other similar studies carried out by prestigious research centers, we may state that the use of bioethanol as a fuel for transportation offers two clear advantages over gasoline: lower consumption of fossil energy in its production and distribution, which increases duration of petroleum reserves 28 times over, and greater reductions in CO2 emissions, which reduces the occurrence of the greenhouse effect.

And the future is even more promising, as these comparisons to fossil fuels are made based on current crude oil use. However, with the increase in demand, and given price evolution, it is foreseeable, in the short term, that heavy crude oils will be exploited which will require high levels of energy consumption for their extraction and refinement. Bioethanol would thus generate even greater benefits as an alternative to highly contaminating fossil-based products.

Furthermore, the potential of new technologies for producing second-generation bioethanol from lignocellulosic biomass with much lower CO2 emissions will allow us to further promote biofuels as a significant tool for improving environmental behavior in the transportation segment. The table below, published by Alexander Farrell^[3], reflects the results of a study that evaluates fossil energy consumption and the reduction in greenhouse gas emissions in producing ethanol from cereal and from lignocellulosic biomass. It can be seen that the comparison of both ethanol from cereal as well as ethanol from biomass show significant benefits over gasoline from an environmental standpoint.

	Total consumption of fossil energy (petroleum, natural gas, coal, etc.)	Petroleum consumption	GHG emissions
	Amount of fossil energy needed to produce a unit of fuel	Amount of petroleum needed to produce a unit of fuel	CO2 emissions needed to produce a unit of fuel
95 Gasoline	1.19	1.10	94
Pure cereal-based ethanol	0.774	0.04	77
Pure lignocellulosic ethanol	0.10	0.08	11

Finally, I think it is important to point out that the CO2 generated during the process of bioethanol production is highly pure, which makes harnessing it very easy and thus contributes to positive environmental behavior throughout the process.

With these considerations, I hope to have contributed to clarifying the positive contribution of biofuels in the struggle against climate change on behalf of sustainable development. I nevertheless anticipate a great deal of debate and confusion regarding the issue, in the short and medium term, partly due to the interest of certain sectors in maintaining the status quo as far as fuels for transportation are concerned.

^[1] Life cycle is a term that was created in order to quantify the environmental impact of a product or material from its extraction from nature to its return to the environment in the form of waste.

^[2] “MJs”, or megajoules, correspond to 1000 joules. A joule is the energy needed to produce one watt of power for one second in time.

^[3] Alexander E. Farrell is a professor and researcher in the Energy and Resources Group of the University of California at Berkeley.

Carlos Bousoño Crespo
Director of Corporate Social Responsibility

Abengoa corporate blog

Food vs. Biofuels: Are biofuels the cause of the rise in food prices?

The United States and CO2 Emissions

Regulation and renewable sources of energy: What kind of regulation is needed to promote renewable energies?

Is it possible to generate clean energy by using coal?

What energy will our grandchildren use?

Second-Generation Biofuels

Is planting trees the solution to CO2 emissions?

Which solar technology will prevail?

Four distortions involving biofuels

Do renewable energies impact the stability of the electric grid?

Biofuels against Climate Change

Changing Climate Change II:What can businesses and people do to contribute to sustainability?

Changing climate change:What can governments do to support sustainable development?

Water's Future

The life cycle[1] of bioethanol

The United States and CO₂ Emissions

Changing Climate Change II:
What can businesses and people do to contribute to sustainability?

Changing climate change:
What can governments do to support sustainable development?

The life cycle^[1] of bioethanol