Biobased fuel generation must scale up to reach petroleum parity

Retrofitting existing petroleum, paper, bioethanol plants is key

March 1, 2010

Bio-based fuels and materials need to match oil in scale, as well as costs and properties, according to Lux Research, Inc.

Biobased fuels and materials need to match oil in scale, as well as costs and properties, according to Lux Research Inc.

Biofuels and biomaterials are hotly pursued for strategic and environmental reasons, but for them to replace conventional fuels and materials, they need to reach petroleum parity—to be competitive with petroleum-based products on cost, properties, and scale, according to Mark Bünger, a research director for the firm.

Although cost and properties parity may be within reach, a new report from Lux Research claims that biobased alternatives won’t become a viable competitor to the $250 billion petroleum industry until they can compete on scale as well—a much more challenging task. To replace the estimated 30 billion barrels of oil consumed annually, today’s biobased technologies would need to cultivate an area the size of Russia, according to Bünger’s report, entitled “Biofuels’ and Biomaterials’ Path to Petroleum Parity,” available at www.luxresearchinc.com.

The battle is not lost, however, Bünger said. The following are among the report’s key conclusions:

• Purposely grown crops will never yield enough biomass. A hectare of soybeans roughly translates into 200 kilograms of plastic or 197 liters of diesel – a comparatively low yield. Even non-food crops like jatropha, which can grow on traditionally nonarable land, put unsustainable demands on the planet’s limited water resources.

• Slowly falling cultivation costs mean that waste biomass is the best option. Of biotechnologies’ four main feedstock classes—crops, algae, waste, and CO2—waste is the near-term winner. Some 316 million dry tons of waste biomass from forestlands and 534 million dry tons of crop residues and other waste handily exceed oil equivalents; and at a cost of $40 per barrel of oil equivalent (BOE), the cost of these materials is lower than that of other feedstocks.

• Retrofitting existing petroleum, paper, and bioethanol plants could slash production costs. To reduce cost, biofuel manufacturers will need to integrate with existing facilities in pulp and paper or food processing—many of which employ the same processes used in petrochemical production. Not only would this approach lower capital costs for biobased products, it would also provide access to transportation and other infrastructure.

The report’s conclusions are based on a quantitative model of the value chains for petroleum products and their biobased alternatives. The model begins with feedstock costs and capacity, then follows with technologies and processes and examines end uses. It draws on government sources and scientific data, primary interviews with chemical and energy companies, and the company’s own database of 150 leading biofuel developers.