Biofuels in Perspective

120 Biofuels
Territory-wise, the market is of global reach, with varying motivations for the different
regions:
� In industrialized countries, diesel fuel is expensive due to some high taxation via excise
duties, which to the appeal of plant oil fuel.
� In rapidly emerging countries, energy shortages will increasingly limit the growth potential
– unless alternative sources of energy are made available.
� Developing countries typically combine excellent conditions to grow suitable oil fruits
(such as jatropha) with low labour costs. The possibility of farming oil fruits could
even open doors to energy exporting ambitions and support agricultural activities in the
poorest countries of the world, even in semi-arid areas.
Plant oil technology originates from Germany. But even there, the market is still in its
infancy: In 2005, the plant oil quota of the total German fuel mix amounts to just 0.4 %. In
the last two years, this market has at least doubled in Germany. In other countries, where
this technology is still virtually unknown, growth rates can be expected to be significantly
higher.
The rapidly growing market attracted numerous plant oil technology suppliers. Consequently,
the competitive environment lost some of its transparency and – in some cases
– credibility. C ompetition among plant oil technology suppliers can be distinguished
according to technical capabilities and market focus:
� Suppliers of conversion solutions for ‘older’ diesel engine technology (chamber diesel
engines and traditional directly injecting engines) are manifold and mainly located in
Germany. Typically, suppliers within this segment are not engaged in research and
development activities but follow ‘me-too’ approaches to convert outdated diesel engine
technology. Since new vehicles nearly exclusively use more demanding common rail or
unit injection systems, this ‘me-too’ segment will fade in the near future.
� Conversion solutions for ‘modern’ diesel engines – with either common rail or unit
injection systems – are only provided by a handful of mid-sized companies which are
mainly located in Germany: some of these already reach out to other countries via foreign
sales partnerships. ELSBETT, for instance, has sales partnerships in a dozen countries.
7.3.2 Market Drivers
Plant oils are quite a suitable fuel for engine operations – without any relevant negative
impact on engine performance and fuel consumption. However, the benefits of the plant
oil option are much more fundamental than mere fuel cost savings.
Due to increasing supply shortages, fossil fuel prices are expected to rise steadily.
Within this decade, current fossil fuel exporters such as Great Britain and Malaysia will
follow countries like China and Indonesia, which already turned from fossil fuel exporters
into import. In order to close this supply gap. the remaining exporting countries need to
increase their exploration activities and to improve extraction technology. This cost-driving
development shall be accompanied by a narrowing market supply and by persistent political
risks and uncertainties, as exemplified by Iraq, which – according to its proven reserves –
is ranked the fourth biggest fossil fuel exporter.