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R&D investments in transport biofuels

An interpretation of the R&D investments broken down per technology as shown in the following needs to take into account the associated uncertainties described in section 'Analysis of uncertainties'. In specific cases these may be higher than the actual differences in the R&D investments between individual technologies, therefore impeding a direct comparison between different sectors.

Transport biofuels have become a priority in the EU policy over the past years with a rapidly growing market. This is reflected by an important research budget of €347 million in 2007. This figure is not restricted to research into 2nd generation biofuel production pathways that are a priority within the SET-Plan, but comprises all transport biofuel technologies. Unlike for many other technologies, the Member States with the largest public R&D budgets in many cases do not coincide with the countries that host the headquarters of biofuel-research intensive companies.

The public share of R&D investments remains low with only 23% of the total budget (see Figure 15). EU funds through FP6 amounted to around €13.5 million on an annual average, which compares well to the assessment in Kutas et al. (2007).

The limited share of public R&D investments may not only be due to the relatively elevated maturity of biofuels, but may also be explained by data restrictions:

  • Public research budgets for first generation biofuels would naturally be limited considering the relatively high degree of maturity of these technologies. However, due to the potential negative impact of these starch- or oil-based fuels on food prices and the environment, advanced biofuel processes are increasingly being considered as the more promising future pathways. As research into those '2nd generation biofuels' has only recently become a (public) priority, it is reasonable to assume that it is not yet fully reflected in the national R&D budgets that are based on budget decisions taken some years ago.
  • Furthermore, the data suggest that some Member States may not explicitly disclose R&D on biofuels, but rather allocate it under the category bioenergy-related research. In 2007, the total R&D investment in bioenergy for the EU Member States reaches €245 million only €65 million of which is allocated to transport biofuels. For this reason, the overall bioenergy-related public national research budgets are also shown in Figure 15.

Results biofuel

Figure 15: Approximate R&D investment in transport biofuels from industry and public sectors (R&D investment in bioenergy is also included as supplementary information)

Source: Own analysis based on IEA RD&D statistics and official information from some Member States; FP6; EU Industrial R&D Investment Scoreboard

Note: Some EU Member States are not IEA member and do thus not figure in the database; for others no data are available. R&D investments of Portugal and Slovakia cannot be displayed at the current scale of the chart. No annual average estimated for Belgium due to a limited number of data; Irish data refer to the year 2006.

Corporate R&D investments into biofuels are €269 million, based on an assessment of the R&D expenditures of 23 companies. Compared to the roughly estimated 2006 figures, this would mean an increase of some 10% to 20% (note the uncertainties related to such a comparison as explained in box 3). The companies included in the analysis consist of specialised biofuel companies, large car manufacturers and oil companies, with the latter two accounting for the larger part of corporate R&D investments. Unfortunately, no figures could be obtained for a number of important biodiesel and -ethanol producers.

Within the limits of data accuracy a regional breakdown indicates that corporate R&D investments do not necessarily originate from companies with headquarters in countries that show a high public R&D budget. Indeed, all countries with high public biofuel-related R&D budget are home to companies with substantial research investment for biofuels (i.e. Germany, France, Denmark, Sweden, Spain and Austria). But at the same time, the assessment finds that substantial contributions also come from British and Finnish companies, even their public budgets do not explicitly allocate funds to biofuels R&D. A slightly better match would thus be obtained between the location of corporate and public funds, if the total public bioenergy-related budgets were considered instead of transport biofuels only, which may be a sensible proxy for some countries that do not explicitly reveal figures on biofuel R&D (see bullet point 2 above).

If we assume the turnover of the EU biofuel industry to have been in the order of €6-7.5 billion in 20071, the results of the present report (€269 million) would imply an R&D intensity in the order of 3.6-4.5%. This R&D intensity may seem elevated at first glance if compared to the results for the wind energy and PV sectors. However, it seems more plausible when considering that manufacturers of automobiles/parts, which are among those companies interested in biofuel research, have a relatively higher R&D intensity (4.6%) than most energy-related sectors.

The comparison with the SRS project results indicates that the present analysis may be overly optimistic. According to that project, corporate R&D expenditures in bioenergy amounted to less than €50 million in 2005. It is important to consider that biofuel research has gained in momentum over the last years, which may account for parts of the difference. Furthermore, the approach used in the present assessment allocates R&D expenditure to the site of the headquarters. As such, all research done by large EU-based oil companies active in biofuels research (e.g. Shell, BP, Total) or car manufacturers (e.g. Volkswagen) is allocated to the EU.

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1 Note that no official figure could be obtained for the turnover of the EU biofuel industry. For this reason, it had to be approximated by two distinct approaches. Firstly, multiplying the EU biofuel production figures with the typical market prices for bioethanol, biodiesel and pure vegetable oil would result in a turnover of some €6 billion, yet disregarding benefits from the sale of co-products. Secondly, the turnover of the German biofuel industry (BMU, 2008) has been extrapolated to the total EU on the basis of Germany's contribution to overall EU biofuel production (data based on EUROBSERV'ER, 2008c). This would result in a turnover of almost €7.5 billion.