Biofuels and biomaterials are hotly pursued for strategic and environmental reasons, but in order to replace conventional fuels and materials, they need to reach petroleum parity — to be competitive with petroleum-based products on cost, properties, and scale. While parity on cost and properties may be within reach, a new report from Lux Research finds bio-based alternatives won’t pose a serious challenge to the $250 billion petroleum industry until they can compete in terms of scale — a much more challenging task. In order to replace the 30 billion barrels of oil consumed annually, today’s bio-based technologies would need to cultivate an area the size of Russia, according to the report.
The battle is not lost, however. The report, titled “Biofuels’ and Biomaterials’ Path to Petroleum Parity,” provides substantive advice to policymakers, investors, corporations and citizens who wish to see biotechnology become a more viable competitor to petroleum.
“People are interested in bio-based products for two reasons: They want a reliable source of affordable fuels or materials, or they wish to reduce the amount of carbon dioxide entering the atmosphere,” said Mark Buenger, a research director for Lux Research, and the report’s lead author. “If biofuels and biomaterials can’t deliver either of these things, they’ll remain little more than a novelty.”
To assess the competiveness of biofuels and biomaterials with petroleum products, Lux Research constructed a quantitative model of the value chains for petroleum products and their bio-based alternatives. The model begins with feedstock costs and capacity, then follows with technologies and processes and examines end uses. It draws on intelligence gathered from government and scientific data, primary interviews with chemical and energy companies and Lux Research’s own database of 150 leading biofuel developers. 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 non-arable land, put unsustainable demands
on the planet’s limited water resources.
— Slowly falling cultivation costs position waste biomass as 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 are lower than
— 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 applied in petrochemical production.
Not only would this approach lower capital costs for bio-based products, it
would also provide access to transportation and other infrastructure.
“Biofuels’ and Biomaterials’ Path to Petroleum Parity” is part of the Lux Biofuels and Biomaterials Intelligence service. Clients subscribing to this service receive ongoing research on bioscience market and technology trends, continuous technology scouting reports and proprietary data points in the weekly Lux Research Biosciences Journal, and on-demand inquiry with Lux Research analysts.
About Lux Research
Lux Research provides strategic advice and on-going intelligence for emerging technologies. Leaders in business, finance and government rely on us to help them make informed strategic decisions. Through our unique research approach focused on primary research and our extensive global network, we deliver insight, connections and competitive advantage to our clients. Visit www.luxresearchinc.com for more information.