Professional Documents
Culture Documents
a growing alternative
Ian Dobson
London, 7 September 2007
Introduction
1
Regulatory Drivers
Energy security
Climate change
Rural development
30%
penetration by 2030
Cost
Quality
meaning industry
growth is reliant on:
Technology
Solutions
Availability
Sustainability
Regulatory
Support
Region
Demand type
Rationale
US
Mandate
30
EU
Mandate
Brazil
Economic
16
China
Mandate
India
Mandate
0.5
E10 in 2012-17
Japan
Mandate
1.7
Other Asia
Mandate
1.2
ROW*
Mandate
TOTAL
~60 b gals
2 a material component
Up to
30%
penetration by 2030
2005 10
Diesel
340
2015
35 40
30
2005
220
2020
40
70
80
2030
385
60
120
175
% of total conventional
gasoline replaced
Year
Replacement % replaced
ratio
2015
0.8
8-10%
2020
0.8
7-13%
2030
0.8
13-28%
2015
274
Potential biodiesel market
Billion gallons of biodiesel p.a.
410
2020
2005 1
305
2015
466*
2020
2030
Actual
Pessimstic
Medium case
Optimistic
4 6 10
6
Year
Replacement % replaced
ratio
2015
0.92
1-4%
2020
0.92
1-5%
2030
0.92
2-5%
16
352*
2030
% of total conventional
diesel replaced
12
20
Cost
Quality
Availability
Sustainability
The biofuels industry is being created through the fusion of the two most important
primary industries in the world agriculture and energy
Petroleum Value Chain:
Exploration
Transport
Refining
Blending/
Retail
Cultivation
Harvest
Process
Distribution
Cultivation
Harvest/
Transport
Processing/
Refining
Production
Blending/
Retail
5.59
3.75
3.75
3.54
3.26
2.74
2.71
2.97
3.20 3.33
2.19
1.82
1.49
1.47
1.00
Sugar cane
(Brazil)
Diesel $1.11
(untaxed at $40)
Gasoline $1.08
(untaxed at $40)
Corn (US)
Sugar beet
(EU)
Wheat
(EU)
Rapeseed
(EU)
Jatropha
(India)
Soya (US)
Demand
2011 forward
2006 to 2011
0.6
EU
ethanol
EU
biodiesel
U.S.
ethanol
Brazil
ethanol
Europe constraints
Distribution need ethanol
infrastructure for distribution, blending
and retail
Ethanol max feedstock limit
reached with 5.75% target.
Bio-diesel max limit from rapeseed
will be 1.1ban galls short of target; B5
will limit further penetration
0.4
1.7
1.1
5.3
5.2
3.8
4.5
US constraints
Distribution - rail car production
capacity backlog of ~3 years
Growth limited by construction
Economics Increasing corn price
will erode margin and limit growth to
RFS and mandate volumes
Brazil constraints
Distribution - Trucking is primary
method, despite long distances and
limited capacity resulting in high costs;
limited port facilities
Risk management lack of paper
market for hedging will limit exports
Feedstock Limit
2.7
Europe constraints
Feedstock Limits include use of
50%set aside land and crop
optimisation; Potential for 1.2 bn gall
ethanol if cereal exports used; then LC
required; increasing imports of veg oils
for biodiesel
Capacity insufficient indigenous
feedstock for announced capacity
Ethanol demand beyond 10% - will
require FFVs and E85 distribution
3.2
2.4
3.8
4.5
2.9
16
15
5.8
US constraints
Corn supply max 15-17 gallons
then LC technology needed
30 Distribution river barge limited
reach, ageing infrastructure
E85/FFVs to exceed 15 bn galls
(10% vol) will require E85 distribution
priced at energy parity and FFVs
7.3
??
Brazil constraints
Trade Policy Tariffs in demand
markets will limit investment in exports
Domestic markets rapid growth in
FFVs limit export volumes
6
Blending
limitations
Supply chain
implications
meaning industry
growth is reliant on:
Technology
Solutions
Regulatory
Support
Regulatory
Support
Public
Goodwill
+
Positive
Benefits
Biofuels
Industry
Sustainable
Growth
Regulatory
Withdrawal
Unsustainable
Growth
Societal
Concern
Negative
Consequences
meaning industry
growth is reliant on:
Technology
Solutions
Regulatory
Support
Challenges
Technology Solutions
Cost
A Energy Crops
Availability
B Lignocellulosics
Quality
C Plant Modification
Sustainability
D Advanced Conversion
10
11
B
Lignocellulosics:
25-100% yield improvements* in 5-10 years.
Brazilian sugarcane will remain competitive (economics &
GHG)
3.00
2.50
Production
Cost $/gall
2.00
1.50
1.14
1.00
0.91-1.20
1.03
0.50
2006
2016
Conventional
Fermentation
2006
2016
Lignocellulosic
Fermentation
Opportunities:
Genetically modified plants
which are less thirsty
Plant decomposition triggered
by UV-light
13
Vermont
North Dakota
Maine
Minnesota
Oregon
Idaho
US Corn
South Dakota
Wyoming
Nebraska
Nevada
Utah
Colorado
California
Arizona
Brazil
Kansas
Sugar
Oklahoma
New Mexico
Wisconsin
US
Michigan
Energ
Iowa y
CropIllinois Indiana Ohio
New York
West
Virginia
Brazil
LC
New Hampshire
Massachusetts
Rhode Island
Connecticut
Delaware
Maryland
Virginia
Missouri
Kentucky
Tennessee
North
Carolina
South
Carolina
Arkansas
Mississippi
Alabama Georgia
Texas
Louisiana
Florida
14
Relative
Energy
Content
86%
100%
67%
Conventional
Engines Max
Blend %
100%
80%
60%
40%
20%
0%
25%
20%
15%
10%
5%
0%
17%
10%
Ethanol Butanol
16