1. Introduction
Global environmental problems have become serious issues in previous decades, and global warming is the oneof them that people are aware of. It is widely accepted that global warming is caused by fossil fuels and therefore fossil fuels should be replaced with clean energy sources to reduce carbon dioxide and greenhouse gas emissions.
In addition, energy demand today is much higher than ever before and it will increase by fifty percentages in the next 20 years according to Energy Information Agency (IEA) report.
The main alternative energy sources to fossil fuel are biofuels which have received much attention worldwide and they have already generated 45% of all energy from natural fuels in Brazil.(Sims & Taylor, 2008)
The most widely used biofuel is the first generation biofuel which is make from plants like sugarcane, oilseed. By using these kinds plants, ethanol and oil can be produced.(Ahmad, Mat Yasin, Derek, & Lim, 2011)
In this essay, innovations in biofuels will be divided into 3 sectors with examples illustrated.

2. The Innovation Dimension 3.1 Innovation Type
Innovation can be divided into four types: production innovation, process innovation, position innovation and paradigm innovation. (Tidd, Bessant, & Pavitt, 2005)In the biofuel sector, product innovation and process innovation are widely used. Product innovations are changes in the products which an organization offers. Process innovations are changes in the ways in which they are created and delivered. 3.2.1 Product Innovation
Product innovations take place when the market requires new features of the established product. (Tidd, Bessant, & Pavitt, 2005)For example, first generation biofuel has been used as vehicle energy source for decades and become mature. However, it was not able to apply in the aircraft engine. New regulations were made for airline industry recently and a great demand for airplane biofuel emerged.
Biofuel producers decided to change ingredient of the currently used biofuel so that these new features would be available for airplane engines. And these changes would not need to upgrade the manufacturing process much.
Air BP Copec is one of those biofuel companies that develop specific biofuel for airplane turbines. The fuel is made from vegetable oil and met the strictest technical standards. Compared to normal biofuels, jet-A biofuel formulated to remain liquid in sub-zero temperatures and stable when heated to high temperatures. Also, it has to meet standards in terms of density and calorific value. 3.2.2 Process Innovation
In addition to the production innovation, some companies use process innovation thatcan change the production process. These process innovations reframe the way of producing biofuel so that higher productivity, improved purity and lower power consumption can be achieved.
MIT chemical engineers and biologists have devised a way that is able to boost biofuel production by about 260 percent by an innovation on the product process. It is entirely new production process without traditional chemical reactor systems. Engineered yeast is employed in the production process so that isobutanol synthesis takes place entirely within mitochondria, cell structures that generate energy and also host many biosynthetic pathways. Yeast produces isobutanol in a series of reactions that take place in two different cell locations. The synthesis begins with pyruvate, a plentiful molecule generated by the breakdown of sugars such as glucose. Then scientists engineer the metabolic pathway’s enzymes to express a tag found on a mitochondrial protein, directing the cell to send them into the mitochondria. This enzyme relocation boosted the production of isobutanol by 260 percent, and yields of two related alcohols, isopentanol and 2-methyl-1-butanol, went up even more — 370 and 500 percent, respectively.(Avalos, Fink, & Stephanopoulos, 2013) 3.2 Incremental vs. Radical
Another innovation dimension is the degree of novelty that is involved in the innovation activity. Innovation can take place at the individual level by making improvement on the products. It could also exploit an entire new value chain. In biofuel industry, both continuous and discontinuous innovations exist. 3.3.3 Incremental innovation
Incremental innovation happens along with original adaption of available technology and makes changes that remain within the boundaries of the existing market and technology or processes of an organization and carries lower financial and market acceptance risks. (Tidd, Bessant, & Pavitt, 2005)
Since the first appearance of biofuel, there are few discontinuous shifts in the biofuel sector, but the incremental changes take place all the time. One of the main reasons that original biofuel products arenot able to be used worldwide is that the first generation biofuels relay heavily on food crops and the price has to rise due to competition with food crops.
Based on the production technology of the first generation biofuel, second generation is developed. Unlike the first generation biofuel which is made from plants like corn or sugarcane, the second generation biofuel is produced from cellulose which means feedstock can be fully used. Instead of using food crops as the source, second generation biofuel has much lower impact on food production than the first generation biofuel. 3.3.4 Radical Innovation
Unlike the instant incremental innovation activities happen in the biofuel sector, radical innovations happen occasionally. But they redefine the space and open up new opportunities. At the same time, they challenge the exiting players to reframe what they are doing in this new game.
Algae biofuel is a great advancement. It is not simply incremental innovation on production process like the changing from the first to second generation biofuels; however, it creates a totally new production process using algae as material, and the final product has the same quality compared to the fossil fuel.
The appearance of the algae biofuel shifts the value chain of current biofuel. The raw material, algae, is no longer from land plant, changing the traditional supplement routes, and it is almost 30 times more energy production per acre as compared to the land required by other conventional plant to produce biofuels. This innovation creates new forms of planting raw material and new methods of pre-treatment. The production process is also changed by using new biotechnology applications which exploit completely new possibility on production processes. The final product is entirely new and is much better than current biofuels. It produces much less Nitrous Oxide than the current biofuel. Also, unlike current biofuels, this few biofuel can be adapted to nearly all kinds of engines without limitations. This is a radical innovation in the biofuel sector.

3. Knowledge and Innovation 4.3 General description
Knowledge comes from multiple sources in the sector of biofuels. The innovation in biofuel is not a simply in-house activity by an individual company, but supported by many universities, research institutes and companies. Scientists, researchers and engineers collaborate on the development of new products, production processes and even distribution methods. There are examples like the ‘Yeast production process’ mentioned above and the project run by Siemens and USDA that will be illustrated later. However, it is more about manufacturer innovation in biofuels. Users do not able to innovate on the biofuel;instead,they couple with the manufacturer to invent the suitable fuel that is able to cope with their engines. Like other industries, there are both tacit and codified knowledge used in biofuel industry.
It is one thing to point out that unlike the trend of moving from learning-by-doing to learning-before-doing in other industries, learning-by-doing still plays dominant role in the biofuel innovation. 4.4 Learning by doing
Leaning by doing means the knowledge is obtained from running the process. Some knowledge can only be learnt in this way. Although it may create higher costs than learning before doing, it leads to high fidelity results.
Transferring the process to the plant when it is still immature and developing and refining it there (learning-by-doing) should be the more efficient approach. Refining the process and adapting it to the idiosyncrasies of a particular plant are most likely to require learning-by-doing in the factory setting. (Pisano, 1996)
Here we will take the development of second generation biofuels as an example. These second generation biofuels are not mature and they have good potential for cost reductions and increased production efficiency levels as more experience is gained. (Sims & Taylor, 2008)
There is no available infrastructure for implementing the second generation biofuel. Although there are some supports currently offered for the first generation biofuel that can be used for the development of the second generation biofuel, they are not always in alignment from feedstock supplement to the finial commercialized biofuel products. So the implementation route cannot be designed in advance completely.
Films use learning by doing to gain knowledge and re-design the route. According to the IEA report ‘ From 1st to 2st Generation Biofuel Technologies: An overview of current industry and RD&D activities’, companies choose to implement in a small scale first so that they are able to learn and then implement these knowledge into a larger scale. In the learning by doing process, knowledge is gain in sectors listed below:
Learning by doing process is able to help films gain a better understanding of currently available feedstock and more experience in the production of dedicated feedstock. Companies may rely on such knowledge to design a better material supplement route and optimize the yields and reduce the costs.
Secondly, large scale biomass gasification is lack of cost effective and reliable methods in the practice. Base on the fact of this, researcher institutions and films have begun to develop reliable technologies that have high availability and produce standardized biofuels without significant additional cost.
Thirdly, films learn to improve the efficiency and lower the costs of the biofuel synthesis process. They also begin to focus on the process integration as all the setbacks, costs and co-benefits as well as the rural development, employment have to be taken account. In addition, co-products offer the potential profit. Companies need to take these factors into consideration to optimise the overall revenue, and these factors cannot be predicted before the actual implantation of entire biofuel value chain.
Learning by doing provides knowledge that helps films In this regulation, governments to develop a complete infrastructure of the second generation biofuel from raw material to the final biofuel products received at the customers. This would suggest that biotechnology projects, on average, are relying more on a development strategy of 'learning-by-doing' in the actual commercial production environment. (Pisano, 1996)

4. Managing Innovation Process 5.5 Demand Pull
The environment issue has become a big topic in the previous decades. People are seeking for green and sustainable energy sources. Governments and company alliances set goals to reduce the emission of greenhouse gas.
One of the most powerful regulations was made by EU to promote the use of renewable energy sources. In this regulation, the proportion of renewable energy source should be rise to a minimum 10% in every member states in 2020. Considering the fact that the main renewable energy sources in EU are biofuels, this regulation effectively promotes the use of biofuels.
Companies also make their goals for using sustainable biofuels. Several fuel producers and European airlines including Air France-KLM have signed the agreement ‘Biofuel Flightpath’. In this agreement, biofuels consumption in the aviation sector should reach 2 million tons by 2020. Lufthansa has already deployed an Airbus A321 running exclusively on a 50:50 synthetic biofuel-kerosene blend and the other using conventional Jet A1.
Using biofuels is becoming a trend and this is a great push for the innovation of biofuels. 5.6 Collaborative
Collaboration has become a very useful and important tool for innovation activities. Companies regard collaboration as an effective way to reduce the cost and time of technology development or market entry, the risk of development and to promote shared learning.(Tidd, Bessant, & Pavitt, 2005)Incorporate feedback processes are both within and among companies. Collaboration also integrates upstream with key supplies and downstream with demanding and active customers.
Collaborative innovation is one of the most important innovation processes in biofuel industry. Films cooperate with other organizations like research institutions, upstream suppliers and downstream customers.
The example mentioned in the process innovationis the collaboration with Shell Global Solution. It is one of the projects under their agreement in the research and development of sustainable energy.
The development of second generation biofuel is also kind of collaboration work. I will take the collaboration between Siemens and USDA (United States Department of Agriculture) as an example. They signed an agreement to improve the process used to convert non-food based feedstock into biofuel intermediates like biodiesel.
This project was based on the fluidized bed system that heats the biomass in a reactor and converts it to liquid biofuel. This system was provided by USDA Eastern Regional Research Centre (ERRC) and installed a distributed control system a distributed control system (DCS) designed by engineers from Siemens to control the manufacturing system as well as any kind of dynamic system. They implied new node-specific technology so that data was gathered from nodes distributed throughout the system and exchange information between each node.This innovation greatly increased the production efficiency and had a better control over the whole production process.
Moreover, collaboration has a great effort on the development of small companies. A project run by three local oil recycler Oregon Oils Inc., fuel producer Beaver Biodiesel LLC and distribution company Whole Energy Fuels Corp. is primarily working to efficiently supply fuel to meet the discretionary blending market in the Portland metro area. By collaboration, reduced cost of production and distribution of biofuels can be achieved. It showed that small businesses are able to benefit from cooperation by providing highly efficient service and they can band together to survive in this energy market.

5. Discussion and Conclusion
The sector of biofuels is a huge industry with a bright future. There are many continuous innovations as well as a few radical innovations. Incremental innovations continuously improve the productivity, efficiency, quality and reduced costs. With these improvements, biofuels has become much more mature and playmore important roles. Radical innovations reframe this industry like the third generation biofuel has changed the current biofuel value chain.
Both two kinds of innovations happen in products and production processes. They happen in the biofuel innovation life cycle, beginning with intense innovations on products and then process innovations and ended with the integration and standardization.
Learning by doing is a very important knowledge source. Many biofuel industry technology improvements, reduced costs and efficient implement are from operation experience. Although the prototypes come from patterns and some knowledge that are already obtained, they need to be changed when they have the practice experience which cannot be predicted.
Innovations in biofuel are initially driven by the demand of the market and regulations. The awareness of environment issues will still push biofuel industry forward.
The sector of biofuel is a large area and no film is able to dominate the whole market and do the main development tasks. So companies collaborate with other organizations to develop new technologies so that the time, cost and risk can be reduced.In order to reduce the cost of supplement, production and transportation, companies cooperate within the value chain to optimise the business performance. Biofuel production companies also collaborate with user to invent new types of biofuel so that they meet the market needs and gain competitive advantage.
As a very important innovation process, collaboration is widely used for a better response to changing customer and market needs. Also, it reduces the time, cost or risk in the development.

6. Reference
Ahmad, A., Mat Yasin, N., Derek, C., & Lim, J. (2011). Microalgae as a sustainable energy source for biodiesel production: A review. Renewable and Sustainable Energy Reviews, Volume 15, Issue 1, pp 584-593.
Avalos, J., Fink, G., & Stephanopoulos, G. (2013). Compartmentalization of metabolic pathways in yeast mitochondria improves the production of branched-chain alcohols. Natural Biotechnology, doi:10.1038/nbt.2509.
Pisano, G. (1996). Learning-before-doing in the development of new process . Research Policy 25, 1097-1119.
Sims, P., & Taylor, M. (2008). From 1st to 2st Generation Biofuel Technologies: An overview of current industry and RD&D activities. Paris: International Energy Agency.
Tidd, J., Bessant, J., & Pavitt, K. (2005). Technological, Market and Organizational Change (Third Edition). Sussex: John Wiley & Sons Ltd.