CERAWeek: Biofuels

It’s hard to talk about the future of the oil and gas industry without allowing for the inevitability that biofuels like ethanol and biodiesel will be part of the equation.
This week at CERA, however, there were a range of views concerning how big a role biofuels will play.
On Tuesday, BP’s Chief Executive Tony Hayward predicted biofuels will represent 10 percent to 20 percent of global liquid fuel supply by 2030.
But, he said, “it’s clear to us that biofuels from corn is not a sustainable way of proceeding.” Most of the ethanol blended into U.S. gasoline is made from corn.
BP still sees promise in sugar-based ethanol used in Brazil, but is chiefly focused on so-called second-generation biofuels derived from non-food crops and organic waste.
James Burkhard, a managing director with CERA, suggested that while global fuel demand will continue rising, crude oil’s share of it will diminish over time and be replaced by “light” liquid hydrocarbons. Those include not only biofuels, but condensates, natural gas liquids and coal-to-liquid fuels.
“Most of the growth we see over the next 20 years is going to be in this area,” Burkhard said.
Alberto Weisser, CEO of Canadian agribusiness giant Bunge, noted there are limitations on the potential contribution of biofuels to global energy supplies. He used the example of sugar ethanol, which he views as one of the better biofuel options from a cost, sustainability and emissions standpoint.
It would require more than 1 billion hectacres of land — an area larger than the size of the United States — to grow sugar cane for ethanol in the quantities needed to replace all the gasoline used in the world.
Even so, biofuels will likely have a bigger role to play as the technology evolves.
Andreas M. Lippert, director of Global Energy Systems at General Motors Corp., agrees. “We’re certainly going to get better at doing this,” he said, citing potential for breakthroughs in plant breeding and biotechnology.
On Wednesday, GM and Sandia National Laboratories released a study saying 90 billion gallons of ethanol, the energy equivalent of 60 billion gallons of gasoline, realistically could be produced and distributed in the U.S. by 2030. That would be enough to replace more than a third of the 140 billion gallons of gasoline consumed by American drivers each year. That assumes 15 billion gallons of corn ethanol and the rest from non-food-based ethanol.
“There are no barriers,” Lippert said, explaining that the study explored everything from land and water use to feedstock costs.
But there is one immediate challenge: the estimated $250 billion in capital needed to build the plants to make the fuel.