The international market for biofuels is growing, driven largely by the introduction of new energy policies in Europe and the USA that call for more renewable, lower-carbon fuels for transport. Today, biofuels make up around 3% of the global road transport fuel mix. This could rise to 9% by 2030. Sustainable biofuels are expected to play an increasingly important role in helping to meet customers’ fuel needs and reduce CO2 emissions.
Shell has a 30-year history of biofuel development and investment. Producing, buying, trading, storing, blending and distributing biofuels are now part of our usual business. We believe we are one of the world’s largest distributors of biofuels, and we continue to build capacity in conventional biofuels that meet our corporate and social responsibility criteria.
In 2011, Shell and Cosan launched the Raízen biofuels joint venture (Shell interest 50%) in Brazil for the production of ethanol, sugar and power, as well as the supply, distribution and retailing of transport fuels. With an annual production capacity of more than 2 billion litres per year of ethanol from sugar cane, Raízen is one of the world’s largest ethanol producers. This deal marks Shell’s first move into the mass production of biofuels. Ethanol produced from sugar cane in Brazil is the most sustainable and cost-competitive of today’s biofuels. It can reduce net CO2 emissions by up to 70% compared with gasoline.
We recognise the sustainability challenges associated with some biofuels. For that reason, we are working to ensure that the feedstocks and conversion processes for the biofuels we purchase today are as sustainable as possible. In 2007, we introduced environmental and social clauses into the contracts for the bio-components that we purchase for blending. And we monitor how well our suppliers adhere to those clauses. We are also working with non-governmental organisations, policymakers and industry coalitions to develop and promote robust global standards for ensuring the sustainability of biofuels production.
Advanced biofuels, which are based on new conversion processes for feedstock such as crop waste or inedible plants, offer the potential for improved CO2 reductions and improved fuel characteristics. Shell was one of the first energy companies to invest in advanced biofuels and we continue to invest in them. They will take time to reach commercial scale and government support will be required to accelerate their speed of development.
Our Projects & Technology organisation has a dedicated team working on biofuel-related research at four centres in the UK, the USA, the Netherlands and India. Its efforts are complemented by agreements with experts in academic institutions across the world.
Shell also has technical partnerships with the leading biotechnology companies exploring new production techniques for advanced biofuels. With the 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. 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. Those of Virent, in contrast, are based on the direct conversion of organic sugars into gasoline or gasoline-blend components.