Biofuels gain within fuels mix could be slow, study says

Biofuels could make up 10-15% of the global fuels mix in 20 years, although getting to the level will be more difficult than some might expect, consultant Accenture said in a recent report.

Paula Dittrick
Senior Staff Writer

HOUSTON, Sept. 11 -- Biofuels could make up 10-15% of the global fuels mix in 20 years, although getting to the level will be more difficult than some might expect, consultant Accenture said in a recent report.

"The pain of going from start up to global market will be greater than expected," for biofuels producers, said the report, which forecasts an increasingly diverse fuels market in the future.

Melissa Stark, a senior executive in Accenture's Energy industry group, said the ultimate scale of the biofuels industry remains unknown.

"Our research shows that government policy and technology developments are the biggest uncertainties," Stark said. "Technology will continue to improve the economics of biofuels development, but the industry will also have to deal with competing technologies such as plug-in hybrids."

Competing technologies
Competition for biofuels is expected to come from various sources, not just gasoline and diesel. Government regulations are expected to accelerate the competition as markets adjust to mandates for a cleaner fuel mix in a low-carbon economy, Accenture said.

Growing diversity in transport fuels will be provided by a diverse group of players, including agribusiness and chemical companies. There are many different producers and types of biofuels.

Most integrated oil companies have no agriculture or biofuels production so they obtain biofuels through long-term contracts. Some majors have set up academic collaborations and established joint ventures with smaller companies developing future biofuels.

"International oil companies have the potential and ambition to be involved in all transport fuel technologies," the report said. "Other nontraditional sectors, such as chemicals, will have a narrower interest in the kind of projects they will pursue over the next 10 years."

Plug-in hybrid electric vehicles (PHEV) are under development and could be available by 2010. Electric technologies will involve utilities. Automotive manufacturer GM is collaborating with nonprofit Electric Power Research Institute to focus on infrastructure requirements for PHEVs.

Electricite de France (EDF) is installing recharging points for PHEVs on roads, streets, and parking lots in France, Accenture said. EDF also has a partnership with Elektromotive to install charging point in the UK.

PHEVs could be powered by blended biofuels, but ultimately PHEVs are expected to primarily compete with biofuels in a fuel-on-fuel competition, Accenture said. PHEV give drivers the choice of electricity, biofuel, or either gasoline or diesel.

Meanwhile, automotive manufacturers are introducing flexible-fuel vehicles. Most gasoline cars on the road can take up to 10% ethanol while diesel vehicles can take 5-10% biodiesel. Warranties continue to vary by vehicle manufacturer and country.

Contact Paula Dittrick at paulad@ogjonline.com.

More in General Interest