Thursday, September 07, 2006

Volkswagen Pushes for Second Generation Biofuels

Source: Volkswagen AG.
BERLIN, Germany - As part of its fuel and powertrain strategy, Volkswagen is backing innovative second-generation biofuels and is calling on politicians to develop a sustainable tax model providing a secure framework for investing in the development and market launch of these new fuels.

"The present assessment regarding the sustainability of first and second-generation biofuels is entirely unsatisfactory, both in economic and environmental terms. One biofuel is not the same as another: some first-generation biofuels can best be described as a ‘wolf in sheep’s clothing’. Some of them have a worse CO2 balance than conventional gasoline fuels, but nevertheless still bear the name of ‘biofuel’", Dr. Bernd Pischetsrieder, Chairman of the Board of Management of Volkswagen Aktiengesellschaft, commented in Berlin on Thursday. "First-generation biofuels receive tax incentives from scarce budget resources and consequently constitute a bad investment. That cannot be considered sustainable in either the ecological or the economic sense of the word."

Press release continues after the jump.


Volkswagen has for many years been working intensively on concepts for reducing fuel consumption and substituting fossil energies. "Our fuel concept is based on second-generation biofuels which can be produced from biomass, are to a large extent CO2 neutral and do not compete with food production," Pischetsrieder added.

Second-generation biofuels are now on the threshold of commercialization. "In technical terms, second-generation biomass fuels are easy to blend with other fuels and thus help to reduce CO2 levels in the short term", said Pischetsrieder. Relatively high manufacturing expenditure means that second-generation biofuels cannot yet be produced economically on a large scale. Production costs alone for the cellulose ethanol process are currently higher than the costs for both mineral oil-based gasoline and conventional bioethanol. Long-term conditions that also provide a financial incentive for greater CO2 efficiency are needed in order to bring these second-generation fuels to market despite these obstacles and to encourage the further development of the process to bring costs down.

"With a sustainable, holistic tax model offering market-oriented incentives, second-generation biofuels can establish itself on the market," Pischetsrieder said. Apart from taking CO2 efficiency as a yardstick, he also called for further sustainability criteria, oriented for example to factors such as the use of fertilizers and pesticides, the protection of rainforests, social standards, employment potential and security of supply, to be included in fuel taxation. "Excessive subsidization and the misallocation of politico-economic resources must be avoided," Pischetsrieder commented. Volkswagen has developed a tax model catering for both CO2 efficiency (primary criterion) and the sustainability criteria he outlined. Volkswagen believes that such a system could encourage tax harmonization in Europe.

"Volkswagen is already working on concepts for the industrial production of second-generation biofuels and is willing to encourage their production through substantial investment," Prof. Dr. Jürgen Leohold, Head of Group Research at Volkswagen, said. He added that Volkswagen welcomed the German government’s plans for a lower tax rate on Biomass-to-Liquid and cellulose ethanol fuels until 2015. "However, we doubt this is sufficient for the long-term planning security needed for major investment, "Leohold added.

New biofuels bring significant reduction in carbon dioxide emissions

Second-generation biofuels include SunFuelâ , a synthetic Biomass-to-Liquid fuel, and cellulose ethanol, which can be produced from whole grains or various kinds of agricultural residue such as corn stover. First-generation biofuels, such as biodiesel or bioethanol, are mainly produced from the grain kernels only. Second-generation biofuels triple the yield per hectare and, unlike first-generation biofuels, do not compete with food production.

Volkswagen cooperates closely with other automakers, bio-tech companies and mineral oil corporations in developing fuels. Volkswagen supports the development of promising processes and is already working on powertrains that can run on biofuels: Volkswagen has developed the fully synthetic SunFuelâ diesel fuel together with CHOREN Industries GmbH and other partners. By using biomass, the CO2 cycle can be almost completely closed and greenhouse gases cut by approx. 90 percent. With regard to gasoline fuels, Volkswagen is cooperating with partners such as the Canadian Iogen Corporation, whose process for producing cellulose ethanol offers a similarly high CO2 reduction potential.

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