The future of biofuels X: the two sugar rushes

By José Vitor Bomtempo

In the rush to develop new processes and products that will compose the bio-industry of the future, searching for suitable feedstocks is a strategic point, especially in the case of biotechnology-based processes. As some innovative projects try to overcome the original stage and make scale up to demonstration and commercial one, ensuring access to feedstocks becomes critical. For many of these processes, and probably for the most innovative ones, sugar is feedstock of choice.

As a consequence, a real sugar rush similar to gold rush for bioprocesses occurs. In fact, evidenced in recent months not only one but two sugar rushes: a more immediate and commercial / strategic nature one, in order to ensure the best sugar that exists today – the Brazilian sugarcane – and other one with technological nature to seek the plentiful sugar existing in plants in general (2/3 of the lignocellulosic material is composed of sugars: cellulose and hemicellulose).

The future of biofuels IX: The diversity of strategies and future of bio-economy – by comparing Shell, Braskem and Amyris

By José Vitor Bomtempo

In previous articles, we have studied the oil companies’ biofuels strategies. In particular, we discussed the Shell, BP, Total and Petrobras’ activities. The main conclusion from these analyzes is a diversity of view and approach to “biofuels” business.

In this article we will extend the discussion about the diversity of strategies that can be observed in the development of bio-economy, by comparing Shell, Braskem and Amyris. This comparison illustrates the remarkable variety of strategies for innovation and entrepreneurial initiatives that indicates the construction of the bio-products industry.

There are many ongoing projects worldwide involving technology-based start-up alongside companies established in different industries such as oil & gas, chemical, biotechnology, and agribusiness. How have companies been building their history in the new industry? Are these strategies converging or diverging?

The future of biofuels VIII: The contrasting strategies of major oil companies and the future of the bio-economy

By José Vitor Bomtempo

The recent Ethanol Summit organized by UNICA in São Paulo, on June 6th and 7th, it seemed to be an interesting event for the line of reasoning that we have developed this series of articles. In some way, the Ethanol Summit addressed clearly – for the first time, I guess, in a relevant event in Brazil – the issue of industry of the future. Of course, many subjects of specific interest for Brazilian ethanol industry were highlighted and addressed in most, but some plenary sessions and meetings on Future and Technology addressed issues not so urgent.

Due to the Ethanol Summit, we propose a change in this blog that seems to be consistent with what we have developed: no more talk about biofuels of the future but we will talk about he new industry which includes in addition to biofuels, bio-products, biorefining and other bios that may arise. How should we name this industry?   As initial suggestion we have chosen bio-economy, which seems pretty comprehensive. Thus, we can say that the Ethanol Summit has provided a discussion of a number of questions related to the development of bio-economy worldwide and particularly in Brazil. In fact, all the videos of conference and plenary sessions can be watched here.

We will highlight in this article the plenary session O futuro do petróleo e o papel dos biocombustíveis (The future of oil and role of biofuels). The plenary session brought together executives from four major oil companies on biofuels: BP, Petrobras, Shell and Total.

Ethanol: from promise to problem

By Luciano Losekann

Until recently, the Brazilian government highlighted the country as a world’s top ethanol exporter. Accordingly, in 2007, the Brazilian government published a study indicating the possibility of Brazil using  ethanol to meet 5% of global gasoline consumption and, with more advanced techniques, such portion could reach 10% in 2025 [1], with a production of 205 billion liters of ethanol in the country.

Four years later, perspective is completely different. The recent scenario of ethanol in Brazil is characterized by difficulties in supplying the fuel, high prices and need to import the product.

In April, prices of hydrous ethanol and anhydrous ethanol in power plants in São Paulo showed the maximum value ever of the past 10 years. On average, the price of hydrous ethanol at gas station reached 40% over the same period in 2010. As the price of anhydrous ethanol mixed with gasoline tripled during the same period, the price of gasoline was also affected, increasing 15%.

The future of biofuels VII – what does Brazilian role?

By José Vitor Bomtempo

In last article, we discussed the Petrobras strategy, arguably the most important actor in the future of energy in Brazil. We can infer from the initiatives of the company an effective participation in the biofuels industry. But this participation seems to occur in a view more committed to the current industry – so-called first-generation – than with the industry of the future – so-called advanced biofuels and other bio-products.

This perspective is supported when comparing Petrobras with other major oil companies such as Shell and BP (see the previous articles, the future of biofuels IV and V), which combine position in the current industry and a strategy for building new industry. Total is other oil company that has increased interestingly its portion on biofuels of the future. Total will be back on the next article. The question today is to examine the Brazilian role in the industry of the future and for this we must examine beyond the role of Petrobras.

Flex-fuel vehicles: understanding the choice of fuel

By Luciano Losekann and Gustavo Rabello de Castro(*)

As previous article, models that allow you to choice fuel, gasoline or ethanol, rule cars for sale in Brazil. Flex-fuel vehicles already represent 46% of the Brazilian light vehicle fleet, whose portion should rise continuously.

Thus, most car owners can choose the fuel they use at the time of fueling. Thus, the demand for gasoline and ethanol becomes more volatile. Although other factors influencing consumer choice, such as autonomy and environmental impact, the relative price of fuels is the predominant criterion of choice.

The future of biofuels VI: Petrobras’ strategy

By José Vitor Bomtempo

In the previous article, we compared the BP and Shell’s strategies for biofuels. Today we present the case of Petrobras. We have to recall the reasons for the analysis. We start with a basic distinction between competition within the existing industrial structure – ethanol and biodiesel – and the competition in what we call biofuels and bioproducts industry of the future – new processes and new biofuels and bioproducts. In the first case we have a typical competition based on positioning within a known industrial structure. In the second case, the industrial structure is not yet established, and the basis of competition is the ability to innovate and shape the new industrial structure. These points are developed in more detail in previous articles of this the series.

It is also important to note that the first-generation biofuels industry conversion technologies are available to investors from accessible external sources such as engineering/technology companies and equipment manufacturers. In the biofuels industry of the future – based on innovation in new commodities, new processes, new products – a fundamental change is to move the source of technology into the companies; thus, the technology tends to be much more advanced in bioproducts of the future and, therefore, owned. Therefore, there are large differences in the technological strategies of the current industry and the future of the industry.

A future agenda for biofuels policy in Brazil

By Renato Queiroz

The Brazilian Association for the Study of Energy – AB3E – held on December 14, 2010, in Rio de Janeiro, a seminar to discuss the agenda for the Brazilian energy policy for the next administration. In the specific panel, where agenda for biofuels was discussed, there were two approaches: one from representative of Petrobras, Eduardo Correia, Competitive Strategy area, who identified a number of critical uncertainties that influence strongly the biofuels market, developing initially from these uncertainties four exploratory scenarios and selecting two scenarios for the next 20 years, and the other one from professor José Vitor Bomtempo, Energy Economics Group, who assessed the future of the biofuels industry in a strategic approach with assumptions that break current paradigms.

This article presents the considerations from these experts and question on the topic that will surely be discussed by energy policy agenda developers for future years.

The future of biofuels V: Shell and BP’s strategies

By José Vitor Bomtempo

In previous article, we discussed the nature of competition and innovation in biofuels. In the classification proposed, the essential issue was a basic distinction between competition within the existing industrial structure – ethanol and biodiesel – and the competition in what we call biofuels and bioproducts industry of the future – new biofuels and bioproducts. In the first case, we have typical competition based on positioning according to Porter. A competitor becomes competitive upon finding a favorable position within the existing industrial structure.  In the second case, the industrial structure is not established yet, and the basis of competition is Teece capabilities building that seek make feasible opportunities for innovation and shaping the new industrial structure.

It is also important to note that the first-generation biofuels industry conversion technologies are available to investors from accessible external sources such as engineering/technology companies and equipment manufacturers. In the biofuels industry of the future – based on innovation in new feedstocks, new processes, new products – a fundamental change is to move the source of technology into the companies; thus, the technology tends to be much more advanced in bioproducts of the future and, therefore, owned.

The future of biofuels IV: Brazilian position

By José Vitor Bomtempo

In the previous article, we discussed the nature of the ongoing innovation process. The importance of this process is that its evolution will define the structure of biofuels and bioproducts industry of the future. As a result, policies and strategies regarding the future of the biomass-based industry can not ignore this new structure under construction, due to losing current competitiveness later.

Our previous analyzes suggest that there are interesting opportunities ahead. The essential question is: Have strategies and policies in Brazil taken into account the opportunities and threats that this process brings us? Or do we believe undoubtedly that our competitive ethanol from sugar cane – which gives us an enviable competitive position in the current industry – is enough to ensure a prominent position in the industry of the future as well?

The two questions above summarize an issue that seems crucial to consider: competition in the industry of the future tends to be considerably different from what we have today in ethanol industry. The fact that we are leaders in this game – the first-generation biofuels – ensures us not necessarily a leadership position and even a prominent position in the industry of the future.

The future of biofuels III: The innovation process that is building the industry of the future

By José Vitor Bomtempo

In the previous article, we presented a debate about points that can justify our central premise:  in the future, the industrial use of biomass will be very different from the current industry. The World Economic Forum has just published “The future of industrial biorefineries”, a report that reinforces the idea of a new industry under construction.

Note that this is the first work of the Collaborative Innovation Initiative group, established in 2009 to identify important trends in the global economy and contribute to the cooperative development of innovations.

In this article we will discuss the ongoing process of innovation that is based on construction of the biofuels industry of the future.

The future of biofuels II: Why will the biofuels industry of the future be different from the current one?

By José Vitor Bomtempo

In our first article on the future of biofuels, we start from a clear premise: the biofuels industry of the future will be very different from the current one. It will be neither limited to current products – ethanol and biodiesel – nor the current processes and feedstocks. Its technological base and its industrial structure can be unrecognizable today.

This assumption is very important to ponder on the questions made previously. Let’s discuss it a little more and try to defend it.

Brazilian light vehicle fleet: expansion of flex-fuel and CNG

By Luciano Losekann and Thais Vilela (*)

The Brazilian energy matrix is characterized by a significant ethanol and natural gas participation as automotive fuel alternative to oil byproducts. Having knowledge of the evolution and characteristic of the automotive fleet is a key step to estimate the fuel consumption and guide policies related to the replacement of oil byproducts as well as the mitigation of CO2 emissions.

However, since 1986, after cancellation of Single Automotive Tax, the estimates of the national fleet circulating in Brazil, made by various institutions, have very different results. DENATRAN, National Traffic Department, publishes data on the fleet by vehicle type and states from the registration data conducted in Detran (State Department of Transit).

The future of biofuels

By José Vitor Bomtempo

The late Professor Keith Pavitt, one of the major starters of the studies in the economics of innovation, he used to say to his mentees that the goal of a research is not necessarily answer the questions, but make them better or “more answerable” as he used to say. I want to start this blog making some questions that we can do when we think about the future of biofuels and industry based on renewable raw materials. We will try to bring elements and discuss, as the master Pavitt wanted, in order to become these questions clearer, better formulated, if possible. After all, to begin we have to mention the masters, as Inácio Rangel said; no one solves problems that can not formulate clearly. So this is the initial effort for which the blog will try to help: improve our questions about the future of biofuels.