AMSTERDAM – On the 4th and 5th of October, Amsterdam was host to the next generation biofuels market conference, which discussed the challenges that the biofuels industry faces today. Philip New, President of BP Biofuels, addressed a distinguished audience of managers and CEO’s to share what he believes to be the future of biofuels. Together with DuPont, BP has been co-developing a type of fuel alcohol called butanol. It overcomes some of the drawbacks of ethanol such as limited mileage, water attraction and limited blending in standard vehicles. Ethanol Statistics sat down with Philip New to discuss the status of BP’s plans to enter the biofuels industry.
BP’s strategy
Last month, BP, DuPont and Associated British Foods got the approval of the European Commission to start a joint venture for the construction of a 420 million litres per year ethanol plant in Hull, UK. Considering that BP is one of the largest oil companies in the world, this may seem like a strange move to some, but not according to Philip New. “BP believes that biofuels could represent as much as 30% of the fuels mix in 25 years time. As one of the main players in the
industry, we have a choice: Either we do nothing and potentially lose access to a third of the market, or we try to participate in the biofuels value chain.”
Regulations and future growth
“Currently, our first priority as a blender and marketer is to make sure that we comply with regulations. If there is a target that has to be met, than we will do everything we can to make sure that we have a rational, logical and cost effective way of procuring the bio components we need. On the biofuel side, we are able to look through the opposite end of the telescope. In our opinion, this industry can only be developed through partnerships along the value chain. By combining the key strengths of chemical experts such as DuPont and feedstock suppliers such as ABF we are trying to put in place a very selective set of assets that we think can give us access to new technologies and opportunities. This will be our basic platform for future growth.”
The Hull facility
“The facility in Hull makes sense for us because it is surrounded by UK wheat, the cheapest feedstock in NW Europe. In addition, CHP is already in place, it has a skilled work force and excellent opportunities for import and export. It can supply the UK market, but also for instance the Rhine market. We say, if you’re going to build an ethanol plant anywhere in the UK, it should be in or near Hull. But we are not doing it for the ethanol alone, we are also doing it to have a platform for butanol.
Why Butanol?
It is clear why second generation biofuels are more attractive to oil companies than first generation, but why is BP focussing so much on butanol? “There is an interesting dilemma facing the biofuels industry called the E10 wall. Some countries will want or need to go beyond a 10% ethanol blend, but we have a car fleet that is overwhelmingly E5 or E10 capable. Flex-fuel vehicle sales are increasing in the United States, but not enough to increase consumption significantly beyond 10%. The properties of butanol allow you to blend it with gasoline up to 18%, which buys you time to increase the market share of flex-fuel vehicles. In addition, you can transport butanol through pipelines and it has 88% of the mileage of gasoline, compared to under 70% for ethanol.”
“We have a number of strategic relationships with auto manufacturers for innovations in car fleets and fuel science. As biofuels gain market share, we will have molecules that are much more engine friendly – like butanol, and engines that are more biofuel friendly. Those are convergent developments, but it takes time for the car fleet to change.”
Commercial availability
Butanol does need considerable development in the efficiency of its production process before it is commercially available. The most important question therefore is, when can we expect that to happen? “That is a difficult question. I want to avoid setting expectations that are inappropriate on the basis of cutting edge biotech. There could be events that speed up things and set backs. We have our targets, but I hope that we will have butanol available on a commercial scale, before we have cellulosic ethanol on an economically sound basis.”
© Ethanol Statistics 2008