Harvesting sugar cane to make ethanol in Brazil. (photo)

Harvesting sugar cane to make ethanol
in Brazil.

Global demand for transport is growing, along with the carbon dioxide (CO2) emissions it produces. With the number of cars on the road expected to triple and the amount of freight carried by trucks likely to double by 2050, the world will need all the sustainable transport fuel options available.

Electric and hydrogen fuel cell vehicles will be important in the longer term. Natural gas is expected to become a bigger part of the mix. But in the coming decades most vehicles will continue to run on petrol and diesel. We believe that blending sustainable biofuels with petrol and diesel offers the most commercially viable way to reduce CO2 emissions from road transport fuels over the next 20 years.

Biofuels are expected to play an increasing role in helping to meet demand for transport fuel. Shell predicts that their share of the global transport fuel mix will increase from 3% today to 9% by 2030. We are already one of the world’s largest biofuels distributors, blending around 7.4 billion litres of biofuels in our petrol and diesel in 2011.

We moved into the production of low-carbon biofuels in 2011 for the first time. With Cosan, we set up Raízen (Shell interest 50%), a joint venture that produces the lowest-carbon biofuel commercially available, ethanol from sugar cane in Brazil. This biofuel reduces CO2 emissions by around 70% compared to petrol, from cultivation of the sugar cane to using the ethanol as fuel. Raízen’s efforts to improve the efficiency of its production process include burning plant waste for electricity.

Sustainability challenges

The environmental impacts of biofuels vary according to how and where they are produced. Some offer potential CO2 savings, depending on the raw materials used – whether palm oil, corn or sugar cane. Production and distribution methods can also make a difference. In some regions, high annual rainfall provides natural irrigation to the plants that are processed into biofuel, although water is still needed in the processing phase.

Another potential challenge is competition with food crops for land. Biofuel crops can compete directly with food crops or displace them into areas with rich biodiversity. Disputes can arise over land ownership, as well as concerns related to labour rights and child labour. All these challenges must be carefully managed.

Increasing global biofuel production raises further challenges in managing land, including the need to conserve biodiversity. In sourcing biofuels we work to protect ecosystems, and the livelihoods they support. Our long-term collaboration with the International Union for Conservation of Nature (IUCN) helps us better understand how to do this.

In 2011, we joined with industry partners and non-governmental organisations, including IUCN, to commission an independent study into how European Union (EU) policy could address the potential for biofuels crops to displace other crops into sensitive areas. The study found that the most effective way to reduce this impact would be to provide incentives, including carbon credits, that encourage sustainable practices in biofuels production. These include developing advanced biofuels from crop waste, raising crop yields on existing land, using by-products for animal feed, and producing crops on abandoned land. The consortium has shared the findings with the EU to help inform future policies.

Our approach to the responsible management of land can be seen in our work through Raízen and in our efforts with social and environmental organisations to improve supply-chain practices.

Standards and certification

The supply chain for biofuels can be complex. Many different parties are involved, from growing and harvesting crops to processing them into fuel. International voluntary standards and those we have developed independently require producers to trace biofuel components to make sure they have been produced in a responsible way.

Since 2007, Shell has followed a policy that governs the way we work with our suppliers on sustainability. Under this policy, we work closely with suppliers to develop more sustainable supply chains and review their progress on a regular basis. We require suppliers to meet existing regulations, such as the EU’s requirement that imported raw material for biofuels must meet minimum standards related to land-use change, emissions and supply chains.

One way we do this is through international certification schemes such as Bonsucro for biofuel from sugar cane, which is recognised by the EU. Where possible we source biofuels certified under such schemes, which are becoming more widespread. Where we are not able to buy certified products, we introduce our own long-established sustainability clauses into our supply contracts. These clauses are designed to prevent the sourcing of biofuels from suppliers who may not abide by human rights guidelines, or who may have cleared land rich in biodiversity.

Since internationally recognised certification schemes are becoming more common, we have increasingly applied their standards in place of, or as well as, our own. The proportion of biofuel components we bought that were either certified under these schemes or covered by our own sustainability clauses was 96% by the end of 2011.

We play a leading role in several roundtable organisations that drive the development of sustainable biofuels from specific crops. They include Bonsucro, the Roundtable on Sustainable Palm Oil and the Roundtable on Responsible Soy. In these organisations we work with other energy companies and environmental non-governmental organisations, including IUCN.


Launched in 2011, Raízen produces and sells over 2 billion litres a year of the lowest-carbon biofuel commercially available, ethanol from sugar cane in Brazil.

Sugar cane needs little artificial irrigation to grow in Brazil thanks to the high annual rainfall. Raízen recycles around 90% of the water supply it uses to convert sugar cane into ethanol in 23 of its 24 mills. It plans to be recycling water in the remaining mill by the end of 2012.

Our Raízen joint-venture agreement includes a set of principles to help improve sustainable production. These require Raízen to assess the potential direct and indirect impacts of cultivating new land for biofuel crops, and to avoid land rich in biodiversity. Raízen also works with its suppliers, contractors and landowners to make sure that they follow sound water management, labour and land practices.

Land used to grow sugar cane for Raízen lies hundreds of kilometres from the Amazon rainforest. Raízen supports the work of the Brazilian government to implement effective land use policies and address concerns over sugar-cane production displacing other crops to areas with rich biodiversity. Raízen also supports government efforts to protect the land rights of indigenous peoples.

As manual harvesting is being phased out in São Paulo state, Raízen is training some manual cane cutters for new roles, including operating and maintaining machines for sowing and harvesting. It has also launched a training programme for workers to gain other trade skills, for example as electricians or mechanics.

Raízen is a member of Bonsucro, which has developed industry standards for the certification of biofuels from sugar cane. Bonsucro separately certifies the mills where the sugar cane is converted, and the ethanol produced. Bonsucro certified four Raízen mills in 2011, including the first mill to be certified under the initiative. Raízen aims to have all its mills certified in the coming years. It also aims to achieve certification for all ethanol produced from its own sugar cane, and ethanol produced from its suppliers’ sugar cane.

With interests in biofuels technology firms Iogen Energy and Codexis (see box, below), Raízen has the potential to accelerate the commercial production of advanced biofuels.


For the future, Shell is developing advanced biofuels from inedible plants and crop waste. The conversion processes involved can potentially produce more efficient, low-carbon biofuels for blending at higher concentrations with petrol and diesel. Our biofuels research teams in India, the Netherlands, the UK and the USA work with leading biotechnology companies and academic institutions. Taking advanced biofuels from the laboratory to commercial scale takes time, however, and poses considerable technical challenges. Not every process we help develop will become commercially available.

With Canadian firm Iogen Energy, we are developing technology that uses enzymes to break down the cellulose in, for example, wheat and barley straw. The cellulose is converted to sugars which are then fermented and distilled into ethanol. Iogen Energy has a demonstration plant in Ottawa and continues to look into potential sites for a commercial plant in Canada.

Through Raízen, our research programme with Codexis in the USA is developing natural enzymes into super-enzymes that speed up the conversion of biomass to ethanol.

Shell has a joint-technology development programme with US company Virent to convert plant sugars and inedible biomass directly into a range of fuels. A Virent demonstration plant that opened in Wisconsin, USA, in 2010 is the world’s first facility to convert plant sugars directly into a petrol-like biofuel. Virent is also researching the production of diesel and jet fuel made this way.

Electric cars will be increasingly common in the decades to come, but their CO2 benefits depend on how the energy is produced and delivered – for example, whether the electricity comes from a CO2-intensive, coal-fired plant or a cleaner-burning gas-fired plant.

Hydrogen fuel cells have potential for the longer-term transport energy mix. Shell had six hydrogen refuelling stations open at the end of 2011 in China, Germany, Japan and the USA. One station in the USA uses on-site electrolysis that makes hydrogen from water.