BP Biofuels CEO Presents Sugar-Based Vision

by Kris Bevill (Ethanol Producer Magazine) Growing biofuels mandates will require 220 “world-scale” cellulosic biofuels plants to be operational in the U.S. by 2020, according to Phil New, CEO of BP Biofuels. The head of the oil giant’s biofuels division presented his company’s vision for the future of biofuels at a recent International Sugar Organization gathering in London. He said BP believes the world is witnessing a coming of age of the biofuels sector. Federal mandates in the U.S., Europe, Brazil and elsewhere will continue to drive biofuels demand. In the U.S. alone, this will require $100 billion of new investment and 220 new commercial-scale cellulosic production facilities over the next decade.

The U.S., China and other large consumers of transportation fuels are focused on sourcing their fuel locally, New said, which could result in biofuels accounting for up to 20 percent of the world’s transport fuels market by 2030. BP believes sugar-based biofuels will represent the majority of these types of fuels and if demand follows the predictions, sugar-based fuels will become the world’s third largest sources of liquid hydrocarbons by 2030. “Delivering this scale would mean that the projected annual growth in volumes from the global biofuels industry between 2010 and 2030 will outstrip the best that any individual OPEC or non-OPEC oil producer has been able to achieve in growth terms over the past five years,” New said. “So the opportunity for sugar producers and biofuel producers is clear.” READ MORE Download speech

Excerpts from speech: ... Given the scale and importance of the task – and the huge investments required – I cannot overstate the importance of stability and predictability in the regulatory regimes that governments have put in place to support these bold visions. We in the industry are being asked to mobilise resources on a large scale, with long lead times, and, in many cases, significant technology risk. We do not ask for regulatory support in perpetuity, but consistent, stable regulation through the period of transition to a large scale and competitive Biofuels sector is an essential precondition for progress.

...At BP, we don’t believe that industrial scale biofuels are appropriate in ‘early’ developing world countries for many years yet.

We believe the business risks are too great to make it a competitive, commercial choice for those countries and participants compared to more developed or developing nations. We believe a two-track approach is appropriate. Small-scale, local biofuels industries can play an important role in these ‘early’ developing countries as a cash crop, inter-cropped with other subsistence crops.

This creates small local markets; it increases the resilience of local economies and populations; and it increases the resilience of that country to the irregular supply and price of energy which in turn increases its resilience to energy’s impact on food prices because a lot of what drives food price is the price of oil. Large-scale, international biofuel industries also add resilience and are complementary to the development and benefits of local biofuels activities in developing countries.

Biofuels at scale act to dampen international energy prices; they lower a key input cost to food; and deliver major greenhouse gas reductions. Over the longer term, industrial-scale biofuels are not in competition with food crops. If the industry is to compete with $50 oil it can only grow sustainably at scale by utilising the lowest cost useable land – not the premium cost, prime arable land such as the cornfields of the US mid-west.