Driving through the Flanders region of Belgium, graceful wind turbines, green agricultural fields, major waterways and silo-dominated manufacturing complexes meet the eye. Perhaps surprisingly, the area is also home to the largest concentration of auto manufacturers in Europe.

The region churns out about 958,000 cars annually, primarily for export, and the industry employs about one in seven workers in the region, directly or indirectly.

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“This is the most assembly-intensive region in the world. The region produces 1000 vehicles a year per 87 inhabitants,” says Patrick Collignon, general manager at Volvo Europa Truck in Ghent. Within about 150 kilometres, one big city after another is dedicated to assembly, he says.

The region is also focused on biofuel development, perhaps gunning to be the next Sweden, Europe’s leader in bioenergy. With government support, Sweden’s biofuel penetration is estimated at 5.1%, according to the Bioalcohol Fuel Foundation in Stockholm, versus a 1.4% European average. More than 80% of Saab 9-5s sold in Sweden run on E85, a flex-fuel mix of 85% bioethanol and 15% gasoline. Automakers such as GM-Opel and Saab, Volvo, Ford and Renault PSA/Peugeot-Citroën are populating the landscape with biofuel vehicles, plus biofuel pumps are being installed.

Impetus for action

January signals the start of production for a new breed of biofuel producers in Flanders, located in the Port of Ghent strip (it is the second largest port in Belgium, after Port of Antwerp). The impetus for action is coming from the EU, the world’s largest biodiesel producer.

An EU commission set a target of a 5.75% blend of conventional fuels with organic ones by 2010 to help meet the Kyoto Protocol’s targets for reducing greenhouse gas emissions. The EU also wants biofuel production to reach 15 million tons by 2010. By 2020, the EU expects a 20% alternative fuels substitution. It says that 90% of emissions increases by 2010 will come from transportation.

“[Belgium’s] target is to build a bioenergy-based economy, in which biofuels will play a leading role,” said Dr Wim Soetaert, a professor in bioscience engineering at University of Ghent. He collaborates with Flemish bioenergy leaders, including producers, refineries, government and the auto industry.

Dr Soetaert said oil prices would inevitably go up, even if there were temporary fluctuations. International prices have hovered at €60-€72 per barrel, up from €25 in 2000, he said.

Words like sustainability, biomass and renewable energy have crept into the popular business vernacular. Talk of investments in bioenergy resources is heating up. Although solid figures are not available, Dr Soetaert estimated that more than $2bn was being invested in biofuel development annually in Europe.

Bioenergy valley

Belgium intends to show that it is serious. Last year, Flanders, the country’s economic hub, dedicated a ‘bioenergy valley’ along the Port of Ghent. It is close to giant automotive producers General Motors-Opel in Antwerp, Ford-Genk, Volkswagen-Brussels, and Volvo Cars and Volvo Trucks in Ghent; and near to distribution centres for Honda Europe, Toyota and others. About 280 logistics and parts suppliers, many in industrial parks, serve the automakers.

The bioenergy valley is a public-private partnership to expand bioenergy use and, it is hoped, end oil dependence. “It’s industry on a big scale,” said Dr Soetaert.

Five biofuel production facilities and supporting industries ring the port’s waterway, identifiable by their new warehouse-type structures and massive gleaming silos. They include Bioro Biodiesel Refinery, Alco Bio-Fuel for bioethanol, Cargill for storage processing and distribution, energy company Electrabel, and Axtoll with storage and processing facilities. In nearby Evergem, Oleon NV produces biodegradable chemical components from renewable resources.

“It’s the largest greenfield port site in Belgium-Luxembourg, including containers, terminals, agribulk, storage and biofuel producing sites,” says Bioro Biodiesel Refinery executive Lode Speleers. Bioro joined in a recent venture with Cargill NV to invest €62m. The joint venture represents the only Belgian project for producing biodiesel fuel from rapeseed on the same site, the company said.

Oleon has invested €20m in biodiesel production in its nearby port facility, slated to begin in January 2007. Oleon is the number three oleochemicals producer in Europe, holding a 17% market share.

Chris Depreeuw, managing director of Oleon, says Europe leads North America, the second largest user of biofuels, in production. “It started with diesels, now it’s biodiesels in Europe. Don’t underestimate the agricultural economy. It’s strong here. It [biofuel expansion] will continue for economic reasons.”

The trick has been to get key players – automakers, government, biofuel producers, energy and oil companies – to work together on the complex issue of alternative energy. As a result of an extended EU directive, Belgium hopes to produce about 250 million litres a year of bioethanol and 380 million litres a year of biodiesel fuels between 2007 and 2013, according to Ruben Lecok, Flanders’ adviser on labour and industrial policy.

Local investment

Fientje Moerman, Flemish minister for economy and foreign trade, told a foreign press mission in September that the auto industry intends to invest more than €800m in local assembly plants (GM, Ford, Volvo Cars, Volvo Trucks, VW, Van Hool, Jonckheere). About €384.3m in 2006 is pegged to increase to €452.5m in 2007, she said.

Ms Moerman said that Belgium is committed to helping the auto industry remain competitive and maintain its workforce and clean up its green act. “Innovation is the best way to shore up industry,” she said.

Mr Lecok said: “These investments are, among other things, the result of a 12-point action plan as a government support policy for the auto industry. Reduction of labour costs, more innovation and a manageable energy bill are the bullet points of this action plan.”

The automotive task force that developed the 12-point plan last July is offering more than industry band-aids. The government recently announced that taxes on shift work were being lowered to 5.63% with a goal to increase reductions to 10.7% in 2007. A flexible working week is also under development.

Ford, with its 235,000-unit plant in Genk, Belgium, is a proactive player on the bioenergy scene. “Ford of Europe believes that biofuels can play an important role in making mobility more sustainable,” says Jo Declercq, a Ford spokesperson.

“We have two bioethanol-powered flexible fuel vehicles in our current European product portfolio – a Ford Focus and a Ford Focus C-MAX flex-fuel vehicle.” The bio-powered vehicles operate on regular petrol and E85, or any mixture of the two.

Future thinking

The company is dedicating about 70% of its research resources to environmental and safety issues, aimed at optimising the sustainability of future products, according to Andy Taylor, Ford Europe’s environmental director in London. In July 2006, Ford announced a £1bn (€1.5bn) investment to develop a range of environmental technologies in the UK for Ford, Jaguar, Land Rover and Volvo cars, he says.

To date, 40% of all Ford sales in Sweden are flex-fuel models, and the two models are increasing sales in more European markets – 10 currently, says Mr Taylor.

General Motors claims to be the world’s leading manufacturer of flex-fuel vehicles that run on E85; that is helped by sales of more than two million vehicles, mainly in Brazil, with 80% biofuel use, and North America. In Europe last year, Saab became the first premium brand to offer a vehicle powered by E85: the Saab 9-5 2.0l BioPower, according to Jean Wibaut, manager, GM EU affairs.

New-fuel cars

All new GM car models are equipped to operate on a 5% ethanol blend (E5), says Mr Wibaut. “E85 offers a major breakthrough in terms of reductions in CO

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emissions on a well-to-wheels basis. GM’s flex-fuel technology automatically senses and runs on any combination of gasoline or ethanol up to E85. This means that where E85 is not yet available, the customer can still fill up on gasoline,” he says.

“Widespread availability of E85 would make a significant immediate reduction in CO

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emissions,” Mr Wibaut contends. “As 10% blends are made available, GM is prepared to make the further investments to enable vehicles to operate on these fuels.”

Freddy De Mulder, managing director at GM Opel-Antwerp, says GM’s global financial situation is not hindering Europe’s technology investments. “If we scale down on technology development, we would be killing ourselves,” he says. Oil prices could be three times as much in the future as today, he warns.

Meanwhile, the Volkswagen Group, Europe’s biggest automaker, is looking at future energy needs such as second-generation biofuels. In September, VW Group CEO Bernd Pischetsrieder dismissed current biofuels as “totally pointless” and “unsustainable”, having a worse CO

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balance than conventional petrol.

Biomass fuels

“VW is promoting fuel concepts for second-generation biomass fuels that are easy to blend with other fuels and thus help reduce CO

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levels,” says Mr Pischetsrieder. “The current situation is totally unsatisfactory, both from the environmental and economic standpoint.”

Barriers still exist to producing more bioenergy-compatible vehicles, carmakers say. The main ones are production cost and distribution infrastructure, according to Mårten Wikforss, media vice-president at AB Volvo, Gothenberg, Sweden. Customers have not yet flocked to the biofuels.

“Demand obviously also plays a crucial role here. To achieve critical mass and economy of scale, the demand from customers must be there. Generally speaking, the industry has more technology available than is being asked for by customers,” says Mr Wikforss.

According to Mr De Mulder: “Consumers generally are not willing to pay extra to drive an environmentally friendly vehicle running on biofuel that costs more at the filling station. With its mindset on environment, it’s not surprising that Sweden has taken the lead in Europe in providing a policy with the appropriate incentives. But Europe needs more countries following this example.”

VOLVO BUILDS CO2-FREE PLANT

Volvo’s truck plant in Ghent is a dramatic example of bioenergy conservation in the auto industry. There, Volvo Europa Truck NV is readying its production facility to be carbon-dioxide free, beginning in late 2007. Volvo dubs it the “factory of the future”.

“Volvo Truck will be the first totally CO

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-emissions free production plant in Belgium, maybe in Europe and the world,” says Patrick Collignon, plant general manager.

Mr Collignon, who worked in GM plant management, including in the US, joined Volvo in 1995. His office is heated by solar power. “My office is completely green, powered by solar cells on top of the roof.”

Volvo Truck partnered with Electrabel, Europe’s energy company, this year to invest $10 million in its CO

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emissions elimination activities. The path to zero CO

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emissions has meant reducing energy consumption by 23%, while truck production increased from 26,228 to 30,377 units last year, Mr Collignon says. The plant, which employs flexible, lean manufacturing and team management principles, expects to produce 36,000 vehicles in 2007.

Volvo will rely on biomass to replace natural gas for hot water and heating in the refurbished plant. Factory boilers will use bio-oil and wood pellets for heating, and solar power for light during daytime hours between May and October. The plant will go from about 11,000 tons of CO

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emissions from heat energy and electrical consumption to zero. Electricity will come from three wind turbines on the Volvo site and purchase of green energy, cutting about 6900 tons of emissions.

“We hope to be inspiring, and other companies will pick up the ideas,” says Mr Collignon. “The technology is there. It’s a matter of having the courage to move in this direction.”

A similar effort is under way in Volvo Truck’s plant in Tuve, Sweden.

Since 1999, Volvo Truck has custom-built Mack Trucks and Renault and Volvo Aero vehicles, and produced construction industry equipment at the Ghent facility.