BP Biofuels CEO presents sugar-based vision

By Kris Bevill | November 15, 2010
Posted Dec. 3, 2010

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 source 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."

New said any biofuels project chosen for an investment from BP must meet a set of four criteria. Projects must be low-cost, low-carbon, scalable and sustainable. "Our benchmark for success is $1 a gallon, so that biofuels can compete with oil when it is about $40-50 a barrel," New said. "They must be low-carbon - genuinely low-carbon from well-to-wheels, or from plough-to-piston basis once all measurable emissions, absorption and mitigation factors are accounted for. Advanced biofuels also need to be scalable. There is no point making boutique biofuels. Only mass production and mass distribution can turn the dial." Having these criteria has led BP to focus on three types of investment: sugarcane-based biofuels in Brazil, energy grass-based projects in the U.S., and molecules derived from sugars that can be deployed for biobutanol and diesel production and existing and new ethanol facilities.

In the U.S., BP's work began with a partnership with Verenium Corp. to produce cellulosic ethanol from sugarcane bagasse and energy cane bagasse. BP bought the cellulosic operations from Verenium earlier this year, including the 1.4 MMgy demonstration-scale facility in Jennings, La. New said in his speech that BP has achieved operating and technology breakthroughs at the Jennings plant which indicate the process is able to scaled up. Development work is underway at its first commercial-scale facility, according to New. The 30 MMgy facility, known as Vercipia Biofuels, is to be built in Highlands County, Fla., located in the south-central part of the state, and will produce ethanol from sugarcane and sweet sorghum. A target groundbreaking has been set for July.

BP activities in the Brazilian sugarcane-to-ethanol market are carried out by a joint venture called Tropical BioEnergia. In his speech to the sugar organization, New spoke about the joint venture's safety record at the Brazilian facility and said it has been producing since 2008, but offered no details on plans to expand operations there.

Biobutanol is also a prominent player in BP's alternative fuels portfolio. Through a partnership with DuPont known as Butamax Advanced Biofuels, BP has developed a molecule to produce butanol and is working to commercialize the process at a plant in Hull, England. BP has also partnered with Associated British Foods to form Vivergo Fuels, which is constructing a 420 million liter (approximately 100 million gallons) capacity ethanol plant nearby. The company's goal is to eventually convert the Vivergo plant to produce biobutanol rather than ethanol.

A combination of small- and large-scale biofuels production will be needed to meet the world's increasing appetite for alternative fuels, New said. Small-scale industries will be important for developing countries, supported by large-scale, international biofuel industries. "Both approaches are complementary in increasing the resilience of the world to feed itself and to most productively use its resources as population and aspirations grow," he said, adding that non-food crops will be vital to the industry's sustainability. "If the industry is to compete with $50 oil, it can only grow sustainably at scale by utilizing the lowest cost useable land - not the premium cost, prime arable land such as the cornfields of the U.S. Midwest."

New further indicated that the early years of biofuels development, which were dominated by corn ethanol production, may have lacked a vision for sustainability. "I think we are now much better placed to combine vision and action and grow this absolutely vital new industry in a vibrant and sustainable way," he said.