THE ROLE OF POLICY IN MITIGATING RISKS OF SECOND GENERATION BIOFUEL PROJECTS

摘要

Because of perceived technology risks, biofuel projects employing advanced production technologyrnturning lignocellulosic feedstock into second generation biofuels face a much higher cost of capital compared tornprojects using conventional, first generation technology. To overcome this investment hurdle and achieve arnsignificant contribution of second generation to the biofuel mix in Europe, a certain level of policy support will bernrequired in the short to middle term. A number of policy options and combinations were tested for their effectivenessrnand efficiency in bringing advanced biofuels on the market. A high initial investment subsidy together with therndouble counting mechanism, the latter already proposed in the European Renewables Directive, can achieve a marketrnshare of almost 20% by 2020 at a policy cost of less than 1 billion eur. However, to fulfill its purpose best, doublerncounting must be discontinued when learning effects have lowered the cost of the technology sufficiently to competernwith first generation, otherwise it reduces the long-term size of the biofuel market and suppresses the productionrnvolumes of advanced biofuels.