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Shell sees Biofuels at the best Alternative Fuel for the next 20 years

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Shell saw the combination of traditional biofuels production and next generation.

LONDON

Shell re-affirmed its belief that biofuels are the best alternative to oil-based transport fuels for the next 20 years at F.O. Licht’s World Ethanol & Biofuels in Barcelona on 8 November.

In a keynote interview to open the conference, Arthur Reijnhart, General Manager, Alternative Energies and Fuel Development Strategy for Shell, painted a picture of an increasingly diverse energy supply landscape against a backdrop of soaring demand between now and 2050, driven by population growth, increasing incomes and increasing urbanisation of the world’s population.

Given that new oil and gas reserves are likely to be found under ice caps, deeper under the sea or under difficult political conditions, Reijnhart believes that fossil fuels will be harder and more expensive to get. Shell’s view is that the 3% of energy for mobility from alternative sources will increase to up to 30% after 2030, with the increase coming from a portfolio of products. Within this, Shell sees a place for gas, hydrogen and electricity, but Reijnhart was clear that: “We see biofuels as the single most important alternative to hydrocarbons in mobility in the next 20 years.”

Reijnhart several times stressed Shell’s strategic intention to operate “at scale” in the biofuels market, with particular reference to its recent launch of Raizen, its $12 billion joint-venture with Brazilian sugar and ethanol producer Cosan.

When asked by his interviewer, Christoph Berg of F.O. Licht, about how Shell saw the combination of traditional biofuels production and next generation, Reijnhart explained that first generation and second generation were different pillars of the same long-term strategy. However, he struck a realistic note about the timescales for full industrial scale production of 2nd generation ethanol.

“The challenges of upscaling cellulosic ethanol in a commercially viable way and with reliable processes are enormous,” he said, adding that “deep pockets, patience and the right kind of government support” were the essential prerequisites for development of this sector. He expects that the real breakthroughs in this arena will come in the early 2020s, whilst recognising that this was part of the long term future for biofuels, and emphasising Shell’s massive commitments to R&D in next generation technology.

In the short term, Reijnhart sees that a diverse range of products in the mix will be crucial if the 2020 mandates are to be met. Recognising the importance of diesel in the European transport fuel market, he said that FAME and HVO will play a part, though the blend levels of the former would likely differ between light duty vehicles and freight, whilst the penetration of the latter was potentially limited by feedstock constraints. Overall, he called for support from the EU and national governments to ensure that the industry is able to meet the RED targets.

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