ECN publication
Improving the investment climate for second generation biofuels
Published by: Publication date:
ECN Policy Studies 26-10-2009
ECN report number: Document type:
ECN-M--09-139 Conference Paper
Number of pages: Full text:
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Presented at: 17th European Biomass Conference & Exhibition, Hamburg, Germany, 29 juni 2009-3 juli 2009.

Second generation technologies that use lignocellulosic biomass as feedstock for biofuels production are expected to deliver significant amounts of sustainably produced fuel. However, they come at the price of significant capital costs and certain risks. In this study we explore the different risk profiles of first and second generation technologies, as perceived by lenders and investors in the biofuels sector, link them to their respective cost of capital and assess how the latter influences their market penetration rates, under different combinations of finance structure and specific incentives for second generation. The preliminary results of our model-based analysis show that because of the current technology risks associated to second generation and their capital intensity compared to first generation, they will require continuous considerable support to deliver significant amount of advanced biofuels towards meeting the demand for renewable fuels.

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