Biofuels and Fuels in European transport: perspectives to 2020 and beyond

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1 Biofuels and Fuels in European transport: perspectives to 2020 and beyond John Cooper, Director European Biofuels, Refining & Marketing, BP

2 BP has activities across the biofuels value chain Agronomy Agriculture Conversion technology R&D Conversion technology demonstration Production at scale Fuel transport and trading Fuel marketing BP Biofuels works across the value chain, from agronomy to production, to make affordable, scalable and sustainable biofuels. R&M Fuel Value Chains supply biofuels to the market. BP is one of the biggest biofuels distributor in Europe and in the US. R&M s Conversion Technology Centre develops new technologies for converting biomass to fuels and chemicals Integrated Supply and Trading One of the major global trading organisation for biofuels. AE Emerging Businesses and Ventures invests venture capital in early stage technologies in agriculture and conversion to biofuels Group Technology supports academic research into biofuels potential and sustainability

3 Global outlook: Biofuels are expected to supply 6% of global road transport fuels by energy in 2030 Projected biofuels consumption to 2030 With 2030 shares in road transport fuel by volume Over the next twenty years, biofuels will play an increasingly important role in fuelling transport contributing over 40% of the growth in global road transport fuel volume in the 2020s Much of the growth to 2030 will be low carbon biofuels such as sugarcane and cellulosic ethanol Africa Canada and Mexico Rest of S. and C. America Asia Pacific 24% of road transport fuels Europe & Eurasia Brazil US Share of road transport liquids by energy 3.2% 4.4% 6.0% Source: 2013 BP Energy Outlook

4 Current global demand / supply overview Biofuels demand and supply historically concentrated in the Western Hemisphere where regulation is the primary driver. Other regions are emerging Current Global Biofuels Supply 2011 Total Supply 1958 kb/d Source: BP studies 4

5 US and Brazil markets US Renewable Fuels Standard (RFS) mandates blending of biofuels into domestic gasoline & diesel, up to 36 b gal/yr of biofuels which will be 20-25% of the motor gasoline pool by 2022 Most blended is conventional corn starch based ethanol (85% in 2012). Goal to move to other types that have a lower environmental footprint, however advanced biofuels have not developed to commercial scale at the pace envisaged by the original legislation Significant uncertainty and discussion at the moment, waiting for the EPA s confirmation of future targets. Brazil Brazil s 40-year-old ethanol program: most efficient agricultural technology for sugarcane cultivation in the world. Current mandatory blend is 25% of anhydrous ethanol and 75% gasoline (E25) The Brazilian car manufacturing industry developed flexible-fuel vehicles (FFV) that can run on any proportion of gasoline (typically E20-E25 blend) and hydrous ethanol (E100). Very high customers awareness. Harvesting sugarcane at one of our 3 mills, Tropical Bioenergia, Brazil

6 Europe: biofuels have and will continue to play a significant role in the transport energy mix Source: BP studies 4.5 Mtoe 25 Mtoe Implementation timeline is still unclear and varies between countries. A continuous increase in biofuels consumption is required to meet the 2020 target while keeping the economic cost low. Concern over feedstock competition with food is driving the regulation review. Conventional biofuels done well still have a major role to play Pathway depends on current regulation review EU Production capacity (2012): 21.5Mtoe biodiesel + 4.3Mtoe ethanol Additional capacity will have to come from conventional conversion or non-conventional construction. Estimated UCOME/TME resources ~ 2Mtoe 2020 targets require a major increase in non-conventional, in particular advanced biofuels. Investment in new capacities is key and demands longer term regulatory certainty (beyond 2020).

7 Conclusion Biofuels can and should play big role in future transport fuels supply. In addition to environmental benefits, biofuels provide economic growth to rural areas and opportunities for Europe to differentiate through innovation. Biofuels are still the best way to decarbonize transport.