DuPont's Tom Connelly, chief innovation officer, outlined the biofuel conundrum facing the U.S., adding that "there is a widespread recognition that we cannot continue to use more of our grain supply for production and fuel."
Speaking at the Credit Suisse Future of Energy conference, Connelly made the following points about biofuels:
- Biofuels are expected to be a $50 billion market in 2010 and double that tally by 2020;
- Government mandates are driving biofuel development;
- The U.S. and Brazil are fueling demand today;
- But fuels---notably ethanol---can't compete with the food supply in the long run;
- The ultimate goal is to engineer plants that will produce alcohols that will create better fuels.
DuPont has been investing heavily into alternative energy markets including solar, biomaterials, fuel cell components and energy efficient materials. The company has more than $2 billion in sales from alternative energy markets. For instance, DuPont expects its photovoltaic sales to top $2 billion by 2014.
But the meat of Connelly's talk focused on biofuels. He noted:
Most of the production is in two countries today -- in Brazil, which really kicked off the industry, sugarcane-based ethanol in Brazil and grain-based, corn-based ethanol in the United States. And yet as we look forward we recognize that the growth is going to come in new
This is driven by government mandates at this point. We have mandates coming out of the European Union, policies in the US, China is going to become a major factor, and also in Brazil. Those countries but other markets as well, and we the emergence that cellulose-based biofuel is a major factor.
First and foremost, because there is a widespread recognition that we cannot continue to use more of our grain supply for production and fuel. The competition between food and fuel use for grain is something that must be avoided so you can see that the grain consumption in biofuels production is something we expected to level off or certainly the growth rate will decline.
Most of the needs to meet our U.S. renewable fuel standards is going to come from cellulose-based biofuels, particularly in that post 2015 period. So this is how we see the market developing over the next little while. It's being driven by a need for energy and security. It's being driven by the economics of the increase of the fossil fuel costs.
Add it up and DuPont says that 600 new plants are needed for the biofuel market. Connelly said DuPont has two big projects---cellulose-based ethanol, an alternative to grain or sugarcane, and biobutanol which is a different and higher value biofuel. Connelly added that ethanol is a great "first generation product" that needs to be replaced.
In addition, biobutanol may be a big win to replacing ethanol because it is simply more efficient. The big question is how it stacks up from a cost perspective. Connelly said "in the short term we need good government policy to hasten the move towards cellulosic fuels, to hasten the move toward next-generation biofuels. So good policy can help us along the path but we recognize that longer-term we need to be fully competitive from an economic standpoint.
This post was originally published on Smartplanet.com