Transition Champ: How Biofuels Are Helping Set the Transport Sector on the Path to Net Zero

March 03, 2023

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(bp) bp is deepening its investment in bioenergy, including biofuels. Our SVP of biofuels growth, Nigel Dunn, explains their importance in the transition to net zero, the progress we’re making in this space, and why bp is perfectly positioned to succeed

Biofuels are an important part of bp’s own transformation plans, so where do they fit in the transition to net zero?

Transition is the key word here. At bp, we’re clear on the end goal – delivering secure, affordable and lower carbon energy to help the world reach its net zero ambition. This won’t happen overnight and there’s no single solution to the challenge. We are in action to help to solve problems for our customers both now and in the future.

Biofuels are a great example of this. They’re unusual in the sustainability agenda in that they’re already available and don’t require consumers to make a change. To give you an example, the same engine in your car that runs on mostly fossil fuel works with biofuels, too. The same is true for the trillions of dollars of existing infrastructure around the world – terminals, pipelines, storage tanks – which does not require to be replaced.

“This is why they’re often called ‘drop-in’ fuels – they drop into existing infrastructure and engines to deliver lower carbon transport straight away.”

It means we can make significant cuts to emissions levels in the near term, while other solutions, such as electric vehicles or hydrogen, ramp up in demand.

Where is the demand for these fuels coming from?

Today, the biggest demand is from ground transport, such as cars, vans and heavy goods vehicles. Drop-in biofuels are an easy way for our customers to decarbonize and, over the next decade, we expect demand to rise quickly. Currently, biofuels are used in low-level blends of fossil and non-fossil fuel. Take E10* as an example, that’s 10% ethanol and 90% gasoline. Drop-in, advanced biofuels can reach much higher blend levels, delivering up to 80% reductions in carbon emissions on a lifecycle basis. As countries around the world adopt these fuel blends, demand will be strong and sustained.

If biofuels are used in part as a stepping stone towards other lower carbon alternatives, do they still have a role to play longer term?

Absolutely. To start, biofuels will still be a key source of energy for ground transportation in many parts of the world where other lower carbon solutions are cost prohibitive. But hard-to-abate sectors, such as aviation and marine, will likely be reliant on biofuels to reduce their carbon footprint for decades to come.

Take the aviation industry. Sustainable aviation fuel (SAF) has enormous potential for biofuels. Today, the industry produces approximately two thousand barrels per day (kbd) of SAF, but the market demand for aviation fuel is close to 700kbd. The principles are the same for a plane as for a car – no change is needed to the existing jet engines or associated infrastructure. The only difference is that jet fuels go through even greater technical scrutiny and validation to ensure they’re safe for use, taking longer to develop – and rightly so!

Other types of energy – such as hydrogen or electricity – are being developed for aviation, but they’re a long way off. Both may happen in the future, but at least initially they’re likely to be reserved for short-haul flights with limited passengers. Of course, low carbon hydrogen and renewable electricity both have important roles in making lower carbon biofuels, but, in short, biofuel is the key long-term play in the decarbonization of aviation and we aim to be a sector leader in its supply.

Let’s talk about our strategy for biofuels. What progress are we making?

Our biofuels strategy reflects our approach to the transition – we’re looking to make quick, cost-effective wins where we can, without losing sight of what’s needed to meet future demand. The best way to explain this is to think about the different ways you can make biofuels.

Right now, the simplest, cheapest option is to process bio feedstocks through our existing refineries producing a bio/fossil fuel, co-mingled product. That’s where we’ve started – we’ve been up and running for quite some time producing biofuels and have established a profitable business model. We are increasing our co-processing capability where practical, like the recent expansion we have announced at our Cherry Point refinery, but there are limits to how far we can go with a conventional refinery.

We are, therefore, in action to develop standalone HEFA biofuels (Hydroprocessed Esters and Fatty Acids) – a term that covers biofuels made from used cooking oil, beef tallow, rapeseed oil, amongst others.

Doubling renewable diesel production at Cherry Point

We are planning major projects involving a multi-billion-dollar investment across five existing bp facilities – our refineries at Rotterdam in the Netherlands, Lingen in Germany, Castellón in Spain and Cherry Point in the US, as well as our import terminal at Kwinana in Australia – with the aim for all five to start up before 2030. These projects are expected to make a significant contribution towards bp’s aim to produce around 100,000 barrels of biofuels per day by 2030.

That said, in the longer term, and particularly with the demand for SAF anticipated to be so strong, there simply won’t be enough waste and residue streams to keep producing these fuels. So, we are also exploring alternative pathways.

One of these is using alcohol – specifically, ethanol – to make SAF. This is more complex and potentially more costly to produce. There are lots of separate steps involved and the full process has never been done at scale. We’re pretty far down the road in designing the first commercial end-to-end, ethanol-to-jet fuel facility.

Another option is to use municipal solid waste – or rubbish. Again, this is potentially costly to produce, but the world will need these alternative pathways to keep up with demand. Here, we’re a part owner in Fulcrum, a biofuels company that has recently become the first to to turn municipal solid waste into a synthetic crude for making fuel at scale.

The five biofuels

What are biofuels? A form of renewable energy produced from organic materials used to produce transportation fuels, heat and electricity. There are five main kinds of biofuel

Renewable diesel (RD): Also called hydrogenated vegetable oil (HVO) - is produced from used vegetable oils, wastes and residues by co-processing hydroprocessed esters and fatty acids (HEFA) feeds with fossil fuels or through standalone bio units

Sustainable aviation fuel (SAF): Chemically very similar to fossil fuel, and will need a range of technologies and feedstocks to meet demand

Bioethanol: Primarily a blending component for gasoline-powered vehicles

Biodeisel (FAME): A blending component for diesel-powered engines made from vegetable and animal fats, and blended with fossil diesel

Biomethanol: A blending component for gasoline, with potential to be used as a marine fuel

Beyond that, we’re always investing in innovation to explore new options. We’re interested in the viability of electro fuels, or e-fuels – a circular process combining CO₂with hydrogen to produce jet fuel. It’s in the very early stages of development, but it has huge potential.

This combination of near-term and longer timeline opportunities is the basis of our biofuels strategy, giving us huge momentum in this net-zero pathway.

It all sounds very exciting, but what is it about bp that makes us best placed to succeed here?

When you think about all the different working parts involved in the production and marketing of biofuels, you begin to see why we’re in such a strong position.

It starts with the feedstock. Producing a global supply of biofuels means you need to be world class at sourcing the raw materials – and managing the associated risks. You can’t just go to one place in one market, meaning it takes an established global network to make this happen. This is exactly what our trading and shipping organization does – and we’ve proven we’re very good at it.

Turning to the manufacturing of biofuels, these are capital-intensive, complex projects to design, build and operate. At bp, we’ve been building complex projects for 100 years and have a track record of doing this in a safe, efficient and timely way.

The final point is about the end customer – this is really important. We already have an established customer base that we know very well – we’re scaling up, not starting from scratch. For example, we’re selling jet fuel to airlines today. The difference is that we’re becoming their decarbonization partner, capable of meeting their requirements now and in the future.

Because we’re an integrated energy company, we can help customers to transition on their terms – moving to biofuels, EVs, hydrogen, wind and solar. There are not many companies on the planet capable of all that.

Any final thoughts to leave us with?

This is a great opportunity for bp, and an important part of how we’re helping the world to transition to net zero.

Today, we can already provide our customers with a cost-effective way to help them decarbonize while delivering on our own transformation plans. The market demand for biofuels is only going to grow, and we have the capabilities, capital and scale to succeed in this space like no other.

Why it matters

Biofuels are a vital part of the energy mix for the world to get to net zero. They can help to decarbonize hard-to-electrify sectors like aviation and heavy road transport. The demand from customers for bioenergy is already here, today, and it is growing too.

There isn’t a single solution to decarbonize the world’s energy systems, so bioenergy is going to play an important role alongside other forms of lower carbon energy, like wind, solar and hydrogen. That’s why bp is investing in all of these areas to help accelerate the energy transition.

*E10 is gasoline containing up to 10% (v/v) ethanol and up to 3.7% (m/m) oxygen. READ MORE

Tags

Sustainability ESG (Environmental Social Governance) Carbon Dioxide (CO2) carbon capture and utilization (CCU) electrofuels (e-fuels) Marine/Maritime Bio and Renewable/Sustainable Fuel (SMF) Methanol/Biomethanol/Renewable Methanol biodiesel ethanol/bioethanol FAME (Fatty Acid Methyl Ester) Canola/Rapeseed tallow animal fat HVO (Hydrotreated vegetable oil) used cooking oil (UCO) MSW (Municipal Solid Waste) Biocrude/Green Crude/SynCrude oil refineries Australia Netherlands HEFA (Hydro-processed esters and fatty acids) Spain Washington Renewable Diesel/Green Diesel/HVO/Paraffinic Diesel BioRefineries/Renewable Fuel Production alcohol-to-jet (ATJ)/ethanol-to-jet (ETJ) Germany Investing UK (United Kingdom) market forces co-processing markets/sales Jetfuel (Sustainable Aviation Fuel (SAF)) Big Oil/Oil Majors Aviation Fuel/Sustainable Aviation Fuel (SAF) Biofuel Carbon Intensity (CI)/Carbon Footprint

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