Brazil stands as the second largest producer of ethanol obtained from sugarcane in the international market, having similar energy potential and much lower cost vis-a-vis ethanol from corn of countries such as the USA, and regions such as the European Union (EU), from beet and starch. Table 1 presents the global ethanol production between 2007 and 2012.

In Table 1, it is observed that the USA, Brazil, and Europe account for over 90 % of global ethanol production. The first two countries had similar production scale at the beginning of the period mentioned, occurring an expressive shift in favor of the USA during the period. In turn, EU has doubled its production with­out, however, reducing the difference to the first two significantly.

Brazil is pointed out as a tropical country with continental dimensions, in which the supply of biomass has great potential for use in power generation by Castro and Dantas (2008). In 2007, biomass was the second source of energy used in Brazil, with 31.1 % of the energy matrix, preceded by oil and its derivatives. Considering the national supply, biomass, along with other sources of internal origin, accounted for 3.7 % of the offer, according to the National Energy Balance (NEB) (ANEEL 2008).

According to Tolmasquim (2012), a great part of the Brazilian territory is within the most thriving region of the planet for the production of biomass, not only due to the high degree of sunlight on its territory, but also for its environ­mental conditions. In bioenergy, sugarcane stands out owing to technological advances, both in the agricultural and industrial phases, making ethanol and bio­electricity competitive products internally and externally.

The technological advance was not only due to the energy offer. The flex-fuel vehi­cle, whose engines work on any proportion of ethanol or gasoline, has already been consolidated in the market. Such was the acceptance of the Brazilian consumer that only 9 months after its release in 2003, the fleet of flex-fuel vehicles accounted for 57 % of the national fleet of light vehicles, i. e., about 18 million units (UNICA 2013b).

According to the Center for Sugarcane Technology (CTC) (2005), the biomass of sugarcane may become more important in energetic, economic, and environ­mental terms, with the increasing search for improvements in the production sys­tems of the sugarcane industry.

According to Dias et al. (2009), this highlight is due to the relevance of etha­nol production, its by-products, bagasse (cogeneration of electricity), and straw, as well as most of the biomass residues obtained in the agricultural and industrial activities, which become raw material capable of producing energy.

Among the sources of biomass for electricity generation in the country, sug­arcane is an alternative with great potential through the use of bagasse and straw. The participation of the cane is not only important for the diversification of the electric matrix, but also because the harvest coincides with the dry season in the Southeast and Midwest regions, where the greatest capacity of hydropower in Brazil is concentrated (ANEEL 2008).

Table 2 presents the main secondary sources, being expressively featured the electricity, produced mainly from hydropower and biomass, which have the sus­tainable characteristics due to the low GHG generation.

1.1.1 The Sugarcane Biomass

Both in Brazil and in the international market, biomass has been considered one of the main alternatives for diversification of energy sources and reduction of the use of fossil fuels (ANEEL 2008).

According to UNICA (2013a), there are 64.7 millions of hectares fit to sugar­cane plantation, i. e., 7.5 % of Brazilian cultivable area. However, sugarcane plan­tation occupied only 1 % of cultivable area in 2012. The sugarcane productivity in 2011/2012 harvest was 58.25 ton/ha for an area of 9.6 millions of hectares. The sugarcane production for milling was of 559.2 millions of tons, of which 297 mil­lions of tons of sugarcane were earmarked for the production of ethanol and the rest were earmarked for the production of sugar. It was produced a total of 22.7 millions of m3 of ethanol (8.6 million m3 of anhydrous ethanol and 14.1 million m3 of hydrated ethanol), i. e., about 6.8 m3/ha (UNICA 2013b) (Fig. 1).

In Brazil, there are 327 mills and distilleries allowed to operate for sugar and ethanol production, in which average capacity is about 810 m3/day. These mills are distributed in most Brazilian states, but their concentration is in Middle-South region. The total quantity of workers in these mills and distilleries was 160,984 in 2011 (Portal da Cana 2013; RAIS 2012). According to Shikida (2013), ‘1 ton of sugarcane produces, simultaneously, 120-135 kg of sugar and 20-23 l of ethanol, or if only produce ethanol, the amount is 80-86 l of ethanol’ (oral information).

The Brazilian areas suitable for the cultivation of sugarcane are concentrated in the Central-South region of Brazil (Fig. 2).

The sugarcane production is not adequate to the biome of the Brazilian Amazon or Pantanal, not only because they are protected areas by environmental legisla­tion, but also because they do not have edaphoclimatic conditions for sugarcane cultivation. It is noted that most of the sugarcane units, i. e., mills and distilleries are located in the Central-South and the northeastern coast of the country.

Veiga Filho (2008:3) reinforces this statement saying:

Rodrigues, [coordinator of the Agribusiness Center of Getulio Vargas Foundation] and Marcos Jank, [former] president of UNICA [Sugarcane Industry Union], say that 75 % of the sugar cane expansion occurs in pasture areas, which disallows another aspect of the offensive mounted against Brazilian ethanol. They say that the cane does not represent a real threat to the environmentally critical areas, such as the Amazon.

Chagas (2012) points out that in Brazil, ethanol is used in three sectors of the economy: transport, the chemical industry, and beverage manufacturing. Regardless of its allocation, Brazilian ethanol is more competitive than that pro­duced in other countries due to the large scale, which provides low production cost and low GHG emission, among other factors.

Table 3 depicts the volume of primary sources of biomass used in Brazil in 2011, highlighting the by-products of cane, which represent for more than 78 % of the primary sources.

In Brazil, there is no importation and exportation of sugarcane by-products. These by-products are consumed in the same mills and distilleries which they are produced because their transportation is infeasible. The transport of sugarcane also is infeasible for distance about 50-80 km from the mills (Rangel et al. 2008).

The results of the production cost analysis for fuels are based on scenarios of crude oil prices of Euro 50, Euro 100, Euro 150 and Euro 200 per barrel and under consideration of the technical status for the years 2015 and 2020. Table 5 summa­rises these results.

1. Estimated biofuel production costs in 2015

Our modelling results (Fig. 4) show that in 2015 only biodiesel is able to reach competitive production costs and only at high crude oil prices. Biodiesel made from waste oil can compete with fossil fuels in the Euro 150/barrel and Euro 200/ barrel scenarios. Biodiesel from palm oil reaches competitiveness in the crude oil price scenario of Euro 200/barrel. Production costs for second-generation bioetha­nol are significantly higher than those of fossil fuels in all crude oil price scenar­ios. Furthermore, unlike for other biofuels, the simulation of different crude oil scenarios in Fig. 4 indicates that production costs for bioethanol from lignocel — lulosic waste is largely independent of the crude oil price levels. In addition, our simulation reveals that HVO and BTL are unlikely to be a reasonable alternative to other fuels as their production costs are significantly higher than the others.

2. Estimated biofuel production costs in 2020

At the crude oil price scenario of Euro 50/barrel, the production cost of all bio­fuel alternatives is too high to be competitive (Fig. 5), even when scale and learn­ing effects are considered for 2020. Again, biodiesel made from waste oil seems to be the most promising option. In the Euro 100/barrel scenario, waste oil bio­diesel production costs (Euro-Cent 55 per litre) are lower than those of fossil fuel (Euro-Cent 68 per litre), followed by the more expensive biodiesel made from palm oil (Euro-Cent 81 per litre) and second-generation bioethanol (Euro-Cent 86 per litre). At a market price of Euro 150/barrel, ethanol made from lignocellulosic waste becomes attractive. While production costs for fossil fuel stand at Euro-Cent 99 per litre, second-generation bioethanol can be produced for Euro-Cent 91 per

litre. In this crude oil price scenario, bioethanol is even cheaper to produce than biodiesel made from palm oil (Euro-Cent 98 per litre). However, biodiesel from waste oil (Euro-Cent 64 per litre) remains the most attractive option, cost-wise. The 150 Euro/barrel results are documented in Fig. 6.

First-generation biodiesel and first-generation bioethanol show an increase of overall production costs between 2015 and 2020 despite positive learning and scale effects. This is due to the influence of high raw material prices. One can note that all first-generation biofuels, except palm oil biodiesel, experience increasing production costs. In regard to palm oil biodiesel, advancements in production pro­cesses are capable of overcompensating the rise of feedstock prices.

There is a similar situation with HVO and especially BTL. The combination of relatively high raw material costs and high conversion costs make both types of biofuel uncompetitive. Although significant learning effects between 2015 and 2020 will lead to considerably lower conversion costs, HVO’s and BTL’s poten­tial as a substitute for fossil fuels is virtually non-existent. The related cost-sav­ing potentials are simply not sufficient to compensate the high raw material costs. Consequently, one cannot expect either of these two types of biofuel to be pro­duced at competitive costs, even though both have a higher energy density com­pared with other biofuels and, in particular, bioethanol.

When learning and scale effects are considered, second-generation biofuels seem to be the most promising alternatives to fossil fuels throughout all crude oil price scenarios until 2020. In detail, the most promising options in regard to production costs are biodiesel from waste oil and bioethanol made from ligno — cellulosic raw materials when produced at large scales.

Our results are in line with research from de Wit et al. (2010), who explain this order between those two types of biofuels by lower feedstock, capital and opera­tional costs. Compared to bioethanol of the first generation, the production of bio­diesel is associated with lower feedstock costs. In addition, capital and operational expenditures for the transesterification of oil to biodiesel are lower compared to the conversion process of first-generation bioethanol (hydrolysis and fermentation of sugar/starch crops). This initial advantage of biodiesel over bioethanol, how­ever, may impede the exploitation of positive effects associated with learning and a larger scope and, in consequence, may prevent the use of related cost-saving potentials for bioethanol.

Silvio Vaz Jr. and Jennifer R. Dodson

Abstract Analytical techniques are vital for the development of new added-value materials and products from biomass, such as liquid biofuels, by evaluating the quality and chemical composition of the raw materials and all materials and byprod­ucts in the production process. This also enables the evaluation and implementation of environmental laws and better understanding of the economics of new biomass processes. Different analytical techniques are applied to different biomass feed­stocks, such as sugarcane, soybean, corn, forests, pulp and paper, waste and agri­cultural residues, dependent on the final end biofuel product. This chapter highlights how the use of analytical chemistry can be used as a tool to ensure quality and sus­tainability of the biomass and liquid biofuels, with, some aspects of green analysis also considered.

1 Introduction

The technological development of modern society is increasingly resulting in the need for methods to control products and processes, to ensure that they fulfill quality standards, and to prevent negative impacts on the environment. The increasing demand from society for more sustainable and lower impact products has become important across all aspects of production, including in agricultural sector. The agri­cultural sector has proposed in recent years to reduce the generation of greenhouse

S. Vaz Jr. (*)

Brazilian Agricultural Research Corporation (EMBRAPA), Brasilia, DF, Brazil e-mail: silvio. vaz@embrapa. br

J. R. Dodson

Federal University of Rio de Janeiro (UFRJ), Rio de Janeiro, RJ, Brazil

A. Domingos Padula et al. (eds.), Liquid Biofuels: Emergence, Development and Prospects, Lecture Notes in Energy 27, DOI: 10.1007/978-1-4471-6482-1_9, © Springer-Verlag London 2014

gases through increased yields combined with the application of sustainable practices, e. g., lower tillage per area, a decrease in the use of agrochemicals, and a decrease in the water usage. One example of how agriculture could contribute to reductions in greenhouse gases worldwide is through the use of biomass for bio­energy applications, particularly the production of liquid fuels such as bioethanol and biodiesel from agricultural crops and waste products to replace petroleum feedstocks (Grafton et al. 2012; Norse 2012; Rathmann et al. 2010; Balat and Balat 2009; Goldemberg et al. 2008).

There are four main types of biomass which can be used to produce liquid bio­fuels: oleaginous, sugary, starchy, and cellulosic (International Energy Agency 2013). For instance, soybean (Glycine max) and oil palm (Elaeis guineensis) gen­erate oils for biodiesel production; sugar from sugarcane (Saccharum spp.) and sorghum (Sorghum bicolor (L.) Moench) and starch from corn (Zea mays) can be used to produce first-generation ethanol (1G ethanol); while bagasse, straw, and cellulosic wood are applicable for second-generation ethanol (2G ethanol). Each one has unique structural and chemical characteristics, which therefore require different analytical technologies and approaches to better understand the process­ing of the materials, the products formed and economic aspects. Analytical meth­ods are vital for enabling quality control of raw materials and products, providing accurate knowledge for the regularization of products and markets (Scarlat and Dallemond 2011; Orts et al. 2008). Analytical techniques can therefore support the development of new products and processes from biomass, helping to promote a bioeconomy (Gallezot 2012). Chemical analyses, either based on classical or instrumental techniques, play an important role in the exploitation of biomass as supporting technologies for all stages of biomass processing and for different bio­mass sources, including sugarcane, soybean, corn, forests, pulp and paper, waste and agricultural residues, among others (Feng and Buchman 2012; Sluiter et al. 2010; Orts et al. 2008).

Fundamentally, a liquid biofuel is defined as:

• Liquid state under normal conditions of temperature and pressure (25 °C and 1 atm, respectively);

• Lower vapor pressure and high energy content;

• Presence of oxygen in almost all biofuels;

• Obtained from a chemical synthesis process: biodiesel by transesterifica­tion (Meher et al. 2006); biokerosene by transesterification and esterification, followed by distillation (Llamas et al. 2012); and gasoline and diesel by Fischer-Tropsh (Balat and Balat 2009);

• Obtained from a fermentation process: ethanol by Saccharomyces cerevisiae strain (Balat and Balat 2009), and n-butanol by Clostridium acetobutylicum strain (Lu et at. 2012).

The practical application of analytical techniques for chemical analysis of feed­stocks and biofuels is discussed in this chapter in order to convey their potential use for technical or scientific applications. Alongside, some aspects of green anal­ysis, quality control, and technological trends are considered.

Fig. 1 Some chemical structures of fatty acids from oleaginous plants such as soybean. Author Silvio Vaz Jr

As stated before, like a refinery, it is still possible to obtain other products in the cultivation of microalgae, such as methane, biohydrogen, and ethanol. Some examples of these possibilities are presented as follows.

Methane. Since early studies on microalgae biofuels, the production of meth­ane biogas by anaerobic digestion of biomass was a main focus (Benemann 2012). This microbial conversion (of organic matter into biogas) produces a mix­ture of methane, CO2, water vapor, small amounts hydrogen sulfide, and some­times hydrogen (Gunaseelan 1997 in Huesemann et. al. 2010). This process has been successfully and economically viable despite the recalcitrance of some algal species to biodegradation and inhibition of the conversion process by ammo­nia released from the biomass. (Benemann 2012; Huesemann et al. 2010). For Huesemann et al. (2010),

Methane generation by anaerobic digestion can be considered to be the default energy conversion process for microalgal biomass, including algal biomass produced during wastewater treatment and for the conversion of residuals remaining after oil extraction or fermentation to produce more valuable liquid fuels.

Hydrogen. There are three main processes to produce hydrogen from microalgae: dark fermentation; photo-fermentation, and biophotolysis. The first involves anaer­obic conversion of reduced substrates from algae, such as starch, glycogen, or glycerol into hydrogen, solvents, and mixed acids. The second, these organic acids “can be converted into hydrogen using nitrogen-fixing photosynthetic bacteria in a process called photofermentation.” The latter, a biophotolysis process uses micro­algae to catalyze the conversion of solar energy and water into hydrogen fuel, with oxygen as a byproduct (Huesemann et al. 2010). Although these mechanisms were successfully proven in laboratory scale, they have not yet been developed as a practical commercial process to produce hydrogen from algae (Huesemann et al. 2010; Ferreira et al. 2013).

Ethanol. On the other hand, ethanol can be generated from two alternative processes: storage carbohydrates (fermented with yeast) and endogenous algal enzymes (Benemann 2012; Huesemann et al. 2010). The main process is “yeast fer­mentation of carbohydrate storage products, such as starch in green algae, glycogen in cyanobacteria, or even glycerol accumulated at high salinities by Dunaliella.” A self-fermentation by endogenous algal enzymes induced in the absence of oxy­gen has been reported for Chlamydomonas. Against the very low ethanol yield from both fermentation, several private companies are now reported to be developing ethanol fermentations.

Electricity and Gasification. The microalgae biomass can be dried and com­busted to generate electricity, but the drying process is fairly expensive even if solar drying is employed. The combustion and thermal process can destroy the nitrogen fertilizer content of the biomass and generate elevated emissions of NOx. In addition, the combustion process competes with coal and wood biomass that are cheaper than microalgae biomass (Huesemann et al. 2010). Although expen­sive, this can be a key factor for algae to achieve energetic balance and improve its sustainability. A lot of research is being carried in new and more effective drying techniques in order to reduce costs.

Oil. The significant quantities of neutral lipids, primarily as triacylglycerols, can be extracted from the biomass (green algae and diatoms) and converted into biodiesel or green diesel as substitutes for petroleum-derived transportation fuels. “Lipid biosynthesis is typically triggered under conditions when cellular growth is limited, such as by a nutrient deficiency, but metabolic energy supply via pho­tosynthesis is not” (Roessler 1990 in Huesemann et al. 2010). Further information on algae biodiesel is presented in the next chapter.

Wastewater Treatment. The nutrients for the cultivation of microalgae can be obtained from liquid-effluent wastewater (sewer); therefore, besides providing its growth environment, there is the potential possibility of waste effluents treatment (Cantrell et al. 2008). This could be explored by microalgae farms as a source of income in a way that they could provide the treatment of public wastewater and obtain the nutrients the algae need.

In particular, algae has a potential for recycling nutrients recovered from the wastewater (removing N and P), achieving higher level of treatment and gener­ating biomass. Compared to the conventional water treatment, these processes reduce overall greenhouse gas emissions, burning of digester gas derived from anaerobic digestion.

Biomitigation of CO2 emissions. In the majority of microalgae cultivation, carbon dioxide must be fed constantly during daylight hours. Algae biofuel pro­duction can potentially use CO2 in the majority of microalgae cultivation as car­bon dioxide must be fed constantly during daylight hours. Algae facilities can potentially use some of the carbon dioxide that is released in power plants by burning fossil fuels. This CO2 is often available at little or no cost (Chisti 2007). Thus, the fixation of the waste CO2 of other sorts of business could represent another source of income to the algae industry. This sort of fixation is already being made in some large algae companies in a trial basis though there is a lack of public data of the results yet. Although this is a very promising future possibility, and some species have proven capable of using the flue gas as nutrients, there are few species that survive at high concentrations of NOx and SOx present in these gases (Brown 1996). Public policies could also perform a great boost in this area depending on future CO2 cap and trade emissions or sustainability standards as shown in Chap. “Governance of Biodiesel Production Chain: An Analysis of Palm Oil Social Arrangements”.

in the Liquid Biofuels Industry

D. F. Kolling, V. F. Dalla Corte and C. A. O. Oliveira

Abstract Biofuels have emerged as a source of energy for many countries. Although the interest in developing this industrial sector might be sensitive to mar­ket issues, government policies can influence its supply and demand. This chapter provides a discussion on issues such as the supply, the demand, exports, imports, prices, and future perspectives of the global market of ethanol and biodiesel. We focus on Brazil and the USA, which are the leaders in these markets. We found evidence of a significant increase in the demand for biofuels in several countries, which contributes to their developing energy and environmental security and adds value to their agriculture sectors. Incentive programs for biofuels depend on gov­ernment policies. However, the production of biofuels differs in each country that we studied. The development of the biofuel chain is recent, and the supply depends on the whole structure of it and not exclusively on one institutional agent.

1 Introduction

Biofuel production started in the late nineteenth century when ethanol was pro­duced from corn and Rudolf Diesel’s first engine worked using peanut oil. Before 1940, biofuels were seen as viable fuels for transportation, but low fossil fuel [10] [11]

prices stopped investments and further development in biofuels. Interest in the production of these fuels re-emerged in the 1970s when Brazil and the USA began to produce ethanol on a commercial scale.

Sources of renewable energy are of great importance to national markets. The biomass and biofuel trade has been constantly growing, as it is driven by the increases in oil prices and by incentive policies for using biomass and biofuel to generate energy (Junginger et al. 2010). The dependence on oil and its derivatives has put the world’s economy, energy security, and environment at risk. In recent years, rapid growth in biofuel production has been observed around the world, and this growth has been supported by government policies.

The biofuel industry is a dynamic multi-sector that is involved in the system of fuel production and trade. The interest in developing this industrial sector is gen­erated from investor groups and is associated with economic, social, and politi­cal factors. In addition, biofuel production might be subject to market forces, as it depends on locations, the access to resources and the infrastructure for its genera­tion and distribution.

In addition to the economic aspects, the reduction of CO2 emissions has become an important driver of biofuel development. Interest in biofuels is rising because it represents an alternative fuel that shows superior environmental benefits to fossil fuels. Biofuels are also economically competitive and can be produce on a sufficient scale to impact energy demands considerably (Hill et al. 2006). This chapter provides a discussion on the relevant technical, economic, and administra­tive aspects of the global biofuel industry, and it describes initiatives in different countries.

Traditional biofuel technologies are presented in this chapter, including well — established processes for producing biofuels on a commercial scale. According to the International Energy Agency (IEA 2011), these biofuels are commonly referred to as first generation. The dynamic expansion of biofuel production pro­moted an increasing interest in economic studies that analyze the production, demand, supply, and trade of biofuels. These subjects will be discussed in this chapter.

At the current stage of PNPB, the institutional environment is crucial for the inclusion of oil palm family farmers in this production chain. Thus, the following is emphasized: implementing contracts with oil palm family farmers (a marginal portion of the business). There is tendency for the biodiesel plants located in the north—as well as those planning to initiate this business—to also verticalize their agricultural activities.

In the case presented in this chapter, the system imposes the debt discharge with the retention of the loan payment by the bank itself. Since the company is a kind of guarantor, by applying its own resources in the arrangement, it is consid­ered a sort of partner to the venture.

Given the attributes of the social transactions presented, the bonus system (premium payment for palm oil) is deemed as important to comply with the con­tractual agreement. This incentive encourages bilateral dependence, commitment, and credibility in the continuity of the relationship. The increased frequency of these transactions produces information between the parties, contributing to the agents’ reputation.

During the interviews, it became clear that the participation of the technical staff in the transaction strengthened the family farmers’ trust in the company, espe­cially because of their extensive knowledge of the region.

Thus, the technicians are key figures in the transaction as they are the interface between the purchasing department and the assurance of the supply quality.

The reputation and also the informal ties reinforce the different forms of coor­dination, which are important complementary elements in the transaction. Thus, the agents can build a reputation that increases the assurance that they will act within the expected ethical standards, which favors the investment of the parties involved in the transaction.

The social projects developed with palm were indicated by all respondents as a success case that should be replicated. The minimum quota of SCS to the north of the country is attractive, and, according to field research information, companies have already begun to perform their own mapping of family farmers that could produce palm oil in the Northern region. The goal is to plan an agricultural pro­duction that is in line with the needs foreseen of the processing plants.

There are several production routes for advanced liquid biofuels; however, none have yet reached the fully commercial stage. An overview of the biomass-derived biofuels production is shown in Fig. 1. Biomass is produced via photosynthesis, which is then processed either by biochemical or thermochemical routes to make liquid biofuels like bioalcohols, biodiesel, and biosynfuels. The biorefinery con­cept, usually based on either biochemical — or thermochemical routes, is exploited to produce biofuels from single or multiple feedstocks with value-added co­products and heat and power generation (IE A 2008). In fact, the production of high-value chemicals and bulk quantities of low-value biofuels maximizes the return from biomass feedstock, thereby improving the economic performance of advanced biofuels in a similar fashion as do the oil refineries nowadays. There is no single technology as of now that can use any feedstocks for biofuels process­ing; therefore, on-going research at laboratory, pilot, and demonstration plant is warranted. Such initiative will perfect the processes and technologies tailoring them to different feedstocks. At the moment, it is not clear, which feedstocks,

(Electricity)

Fig. 2 A network illustration to show the applications of products from thermochemical and biochemical conversion routes processes, and pathways will yield the minimal-cost biofuels or otherwise have the maximum potential for cost reductions over time. A network diagram to illustrate the application of products from biochemical and thermochemical routes using biomass feedstocks is shown in Fig. 2.

Both gases and liquid oil products from the reactor were analyzed using a Hewlett- Packard GC equipped with a Supelco Plot Q column and a GC/MS, respectively. Similarly, the liquid oils could also be analyzed using a gas chromatograph with a flame ionization detector while the gaseous products were analyzed using gas chromatograph with a thermal conductivity detector. In addition, some of the car­bonaceous compounds that adhered on the cooling glass tube were eliminated using и-hexane and were measured as waxes. The mass of coke deposited on the catalysts after the degradation was determined by weight difference of the catalyst before and reheating the catalysts at 600 °C for 5 h. In addition, the amount of coke deposit on the catalyst could also be calculated by measuring the desorbed amount of carbon dioxide during temperature programmed oxidation of the used catalysts.

Biofuels have often been seen as a way to enhance the agricultural sector. This is especially the case in the developed world, where locally produced food crops find it increasingly difficult to compete at a global level because developing and underde­veloped nations produce the same at a much lower cost. In these cases, governments provide considerable subsidies, promote low-interest loans and impose various trade barriers to incentivize farmers to produce these crops at a competitive price and thereby sustain their agricultural sector. Given that biofuels, especially first-gener­ation biofuels, rely on edible crops as a feedstock, they create an alternative market for such agricultural products as a valuable input for the energy sector. In this sec­tion, we look at the degree to which rural economies, where farming is the livelihood for most people, are influenced by the burgeoning biofuel industry.

One of the central arguments in favour of biofuels is its contribution to rural development through increased employment opportunities and higher income. It has been estimated that the biofuel industry requires approximately 100 times more labour than the capital-intensive fossil fuel industry to produce the same energy output (Renner and McKeown 2010). This is because there is a wider array of jobs associated with biofuel production. These positions can relate to farming through to biotechnological research. Scaramucci and Cunha (2007) estimated that more than 5 million jobs could be generated in Brazil by the year 2025 if 5 % of global gasoline demand is replaced by sugarcane-based bioethanol from Brazil. Jobs also result from indirect employment, such as those involved in the sales of biofuels and transport of biomass. In 2006, all types of biomass operation in the United States employed about 136,999 people directly and another 310,000 across the supply chain (Domac et al. 2005). While the numbers are substantial, rational­izing pro-biofuel policies simply based on potential job creation can be problem­atic. This is because the net economic benefits depend on a multitude of factors.

For example, production capacity and level of mechanization can influence the scope for job creation. While a heavily mechanized production system increases labour productivity, it also minimizes employment opportunities. Likewise, a large refinery may achieve higher economies of scale, but the number of workers required per unit of output is low. Brazil’s policy to control the rate of mechaniza­tion and provide support for small-scale refineries has assisted with controlling unemployment and poverty in the region (APEC 2010). In 2006, 351 plants were able to provide employment for approximately 700,000 people to produce 17,900 million litres of ethanol from 5.9 million hectares of land. In this context, the Brazilian Social Fuel Seal (Selo Combustfvel Social)[6] initiative, which supports biofuel producers through tax incentives, is worth mentioning here as it promotes diversification of jobs within biofuel-producing regions and encourages the ongo­ing participation of family-based feedstock production firms in the nation’s biofuel industry (Padula et al. 2012). However, large-scale production is crucial for biofuels to compete with fossil fuels (DfID 2007). This may negate the expectations of regional development emanating from the biofuel industry. Indeed, potential bene­fits from new or expansion of existing biofuel facilities are often overestimated. This is because refinery building or expansion provides construction-related jobs to those generally living outside the local area. As a result, most of the initial impact is not felt locally (APEC 2010; Hillebrand et al. 2006; Moreno and Lopez 2008).

Net employment may also vary depending on the land displacement effect. Switching from existing food crops for biofuel production does not always result in additional employment (Jaeger and Egelkraut 2011). Rather, it simply exchanges one market for another. With regard to the impacts of biofuel policy on employment, analysis based on dynamic and long-term general equilibrium adjustments, includ­ing shifts in jobs in agriculture among biomass-producing regions, has found that biofuel policies would not provide any additional economic activity. This is because the increase in bioethanol output would be offset by a reduction in livestock pro­duction (Dicks et al. 2009), especially because land-use changes take effect. Furthermore, de Gorter and Just (2010) claim that higher fuel prices induced by bio­fuel subsidies magnify the inefficiency of the preexisting wage tax by reducing real wages and thus discouraging work. This would reduce labour supply and generate deadweight costs because the tax base becomes eroded as consumers move away from the taxed good and use substitutes. On the contrary, if the land used for bio­fuel production was not in use or was abandoned, any job created would potentially increase net employment and foster economic growth (Diop et al. 2013).

As with employment expectations, it is perceived that biofuels increase the income levels of those engaged in the industry. Parcell and Westhoff (2006) found that, in 2006, the average annual salary of ethanol-related salary was much higher than the average US salary. However, this may not always be the case as earnings and job security can vary significantly across a number of factors. Skilled labour working in technical roles has a much higher income potential than unskilled labour working in the field or in the refinery. In fact, there are fewer white-collar jobs compared to blue-collar jobs. Depending on the type of feedstock, employ­ment opportunities may vary. In the case of Brazil, the high seasonality of sug­arcane production means that the ratio between the number of temporary and permanent workers is significant (DfID 2007). As a result, many workers do not have a biofuel job throughout the year. Failures of biofuel projects are becoming increasingly common, and these failures adversely affect the livelihood of many vulnerable farmers in regional areas (APEC 2010).

While one objective of biofuel policies is to help farmers, landowners stand to benefit the most from increases in crop prices. Crop growers who lease land there­fore only benefit until higher profits associated with rising feedstock prices are captured by higher land values and land rents. Take corn for example. Though dis­puted by Ajanovic (2010), as corn prices rise, domestic pork and poultry producers reliant on this crop to feed their livestock will potentially reduce their international competitiveness, thereby causing a reduction in production levels if higher prices are not absorbed by consumers (Brown 2008). Although the flow of profits from these facilities may initially stimulate rural economies, a rise in crop prices over time owing to demand has the potential to minimize these benefits. There will also potentially be a reduction in livestock farming in these same areas (Dicks et al. 2009), especially as land-use changes take effect. This could eventually work to offset this advantage.

To understand how the biofuel industry has influenced rural development, we look at the employment data of three major biofuel markets, these being the United States, Brazil and the EU (it must be understood, however, that income may vary significantly within the sector itself). If one takes into account that abso­lute numbers of employment may only tell part of the story, unemployment and employment data in the agricultural sector are presented in the form of percentage of total labour force and of total employment, respectively. As can be observed from Fig. 4, bioethanol production/consumption does not seem to have increased employment in agriculture in the United States. Employment in agriculture is relatively stable during the observed period, despite the substantial increase in domestic biofuel production, and has even slightly declined. With respect to the overall impact on employment, the unemployment rate has increased in recent years. Figure 5 illustrates the case for Brazil. Once again, bioethanol production/ consumption has not had the effect of increasing employment in the agricultural sector. Indeed, the employment in agriculture has declined significantly in recent

bioethanol production (‘0000 barrels per day )

times, even though biofuel production/consumption has increased sharply. The reason may be that a greater use of mechanical harvesting has resulted in fewer jobs being generated. Yet there seems to be some positive impacts on overall

employment as a drop in the unemployment rate has been observed since 2006. As in the United States and Brazil, biodiesel production/consumption does not increase employment in agriculture in the EU. Like the United States, employment in agriculture has also slightly declined, despite a significant observable jump in biofuel production and consumption. Furthermore, biofuels seem to have a neutral impact on overall employment (Fig. 6).

So, despite the fact that first-generation biofuels use crops currently grown by farmers within the respective domestic biofuel markets investigated, there is no clear overall benefit with respect to the number of people employed in the agricul­tural sector. While jobs are obviously being created in terms of biofuel processing, the same positive effects do not seem to flow through to the agricultural sector in the economies discussed.

The observations made above have significant implications. As it is eventually realized that more sustainable forms of biofuel production beyond first-generation processes are necessary, this will arguably also have significant impacts on local or regional economies reliant on the growing and processing of particular feed­stocks. In many cases, food crops currently being used for biofuel production will not be optimum for later-generation bioethanol production, which can use all man­ner of biomass (Blottnitz and Curran 2007). Once demand for biofuels grows, the cost equation of producing biofuels from these less energy-intensive crops will undoubtedly force producers to look for crops that can produce the most energy at the least cost (McCormick-Brennan et al. 2007). In many cases, this might mean that regions currently producing biofuel feedstocks will not be well placed to grow the preferred types of biofuel crops. This will clearly have detrimental impacts on economies that are closely tied to long-held agricultural traditions, especially if market conditions continue to militate against their ability to compete with other economies in the open food market. Yet this might be precisely the reason why governments continue to support first-generation biofuels, for moving to later — generation processes brings with it the spectre of moving from labour-intensive to more technology-based production.

Measuring concentration is necessary to analyze the market structure in an indus­try and, thus, to identify relevant elements in this structure, such as competi­tiveness and barriers to entrance, among others. These elements interfere in the conduct and performance of these firms, as well as in the structuring of the mar­ket itself. In order to address the problem of this research, we analyzed the data using two methods that demonstrate the concentration level of companies in their markets: the partial concentration rate (CR) and the Hirschman-Herfindahl Index (HHI).