Assessing biofuel risk from field to fuel

People have never been so conscious about consuming eco-friendly products from sustainable feedstock as they are in today’s fight against climate change. Renewable energy has become a very attractive idea. In fact, biofuels are now the most important form of renewable energy for road transportation.

Risk potential

An analysis of the entire life cycle of biofuels, from extraction and processing of raw materials, through to final use and disposal, shows that risk may appear in many places. This can cause investors to shy from the diversity of challenges, despite biofuels’ continuously growing share in the global fuel market and appeal to consumers.

To manage risks effectively, all players in the value chain of biofuels production need to be aware of what risks there are. This is especially important since social and environmental risks must also be considered in this case, in addition to the management of financial, legal, technical and operational risks. A biofuels project must not only generate its forecast production at the expected cost, but also reduce greenhouse gases (GHG) emissions and lower the overall environmental impact.

Considering all factors

When all factors during production are considered, biofuels can cut GHG emissions, but this is not necessarily the case. The environmental impact of biofuels can be reduced – unlike that of fossil fuels – according to the raw materials and production technologies used.

Optimised plant performance and secured quality of feedstock are just two of the many factors to take in consideration. Questions such as how the water consumption can be reduced and a continuous water supply ensured must be answered well before the project starts. It is as important as identifying who will be responsible for the operation and maintenance of the energy facility. Additional challenges become apparent when talking about regulatory compliance. Apart from a number of local regulations, international standards for biofuels are only now being discussed.

A framework for the future

Risk management frameworks allow investors to identify risks, to understand their nature, their probability and their likely impact. Comprehensive technical due diligence and energy project verification are crucial to optimise processes. This sector is still in its infancy and often suffers teething troubles, but with a grounded risk management approach, a biofuel project can combine industrial performance and sustainable development, while remaining competitive and providing sustainable returns.

Author: SGS

SGS is a world leading inspection, verification, testing and certification company. Recognised as a global benchmark for quality and integrity, SGS employs over 56,000 people and operates a network of more than 1000 offices and laboratories around the world. For more information, visit www.sgs.com/industrial.

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