Rob Routs, Executive Director of Oil Sands, Oil Products & Chemicals at Royal Dutch Shell, gave a speech in Germany on July 4 predicting that biofuels could come to represent 10% of the global fuel mix. Excerpts from the speech posted on Biofuel Review:

I think biofuels could grow from a mere one percent of the world fuels mix today to as much as 7 or 10 percent over the next couple of decades…. I want us [Shell] to lead in that space; and to that end we decided in 2007 to increase our rate of investment in them — quadruple it, in fact.

To hear some tell it, all of today’s, or “first-generation,” biofuels are a disaster and should be written off. But let’s be clear: when it comes to truly sustainable, low carbon biofuels, we can’t open the taps overnight.

We still need more innovations to lower the costs and raise the yields. We still need to learn more about sustainable production. We still need to develop markets and use them to scale up capacity. We still need first-generation biofuels, both to meet mandates and to build capacity for the next generation.

Shell is in the biofuels game to win:

In addition to using conventional fossil fuels more wisely, we also are working hard to develop alternative, low-CO2 sources of energy. In the first half of this decade, we invested more than $1 billion in alternative energies including GTL, hydrogen, and biofuels.

We’ve been working for thirty years on turning natural gas to liquid — what we call GTL…In fact, we already blend it with conventional diesel fuel and sell it in more than 4,000 Shell service stations in Europe and Thailand.

We have teamed up with a number of major cities around the world to see if GTL could have a positive impact on air quality and CO2 emissions in busy urban environments. The results are promising. The most recent test data, announced in Shanghai last September, showed that Shell GTL Fuel used in buses can reduce CO2 by 4%, particles matters by 35%, and black smoke emissions by 70% compared to conventional diesel.

Hydrogen is a possibility for the future, but biofuels — though not a “silver bullet” — is the near-term answer, according to Routs:

There are obstacles to be overcome, but hydrogen could become a commercially viable transport fuel in the years to come…. Unfortunately, the widespread use of hydrogen as a power source could take a decade or more. We need to find nearer-term alternatives, which is where biofuels come in….

In 2007 we sold more than 5 billion liters — mainly to meet government mandates — and we continue to build our capability.

If not managed carefully, they can sometimes compete for land with food, consume a lot of water, or disrupt biodiversity or local cultures. It varies tremendously but some of today’s biofuels also deliver only modest CO2 benefits — compared to conventional gasoline or diesel. Looking to the future, these disadvantages could be overcome by next-generation biofuels, which are already starting to show their promise. These are biofuels that use non-food raw materials and that deliver CO2 savings of as much as 90 % compared to conventional gasoline and diesel. They are going to be vital part of the fuels mix in the future.

The full text of his speech can be read here.

Power Politics

July 9, 2008