As the climate crisis debate heats up and global catastrophes increase, so does the pressure to reduce our reliance on fossil fuels. However, in order to switch to cleaner fuels, we first need to invest in robust solutions that can support such a huge transition.
It is in this space where low-carbon biofuel energy systems sit and where energy companies who are experiencing significant volatility in pricing, can bolster their future security.
At HutanBio, we are developing low-carbon biofuel production systems. Our aim is to make scalable, controlled, high-output Bioenergy Carbon and Utilization (BECCU) systems. By capturing waste CO2 we can then convert it to valuable low-carbon biofuels to support a decarbonising world.
So, what are the drivers for our technology, why do we need low-carbon biofuel production and what part can the energy industry play?
Biofuel Technology Drivers
First up is location. Tropical latitudes where a combination of very high solar radiation, year-round high temperatures and very little variation in day length provide not only the optimum location for continuous industrial microalgal biofuel production but also co-locate within the largest and most vibrant global economies.
Secondly, in today’s world, the energy industry faces unprecedented challenges. While managing the difficult transition to low-carbon technologies in response to climate change, the COVID-19 pandemic has produced the sharpest economic depression on record. Oil prices have dropped over 2020 from ~$60/barrel to ~$40/barrel as demand plummeted.
Successfully addressing these twin challenges presents an existential moment for energy companies.
Energy Market Challenges
Post-COVID-19, energy market analysis, which combines both the transition to zero carbon and the pandemic, predicts a 6% – 12% drop in global energy demand over the next decade (2019 – 2030). These estimates depend on a number of scenarios:
A lowering of oil and gas prices below pre-COVID-19 values with peak oil plateauing below 100 mbd before 2030 [1]. Significantly, investor confidence is low yet existing oil field production is declining at between 2% – 6% a year. To address this decline, investment in new capacity would be required even if the global market remains below the 100 mbd 2019 record. An alternate option could be to increase reliance on shale to make up reserve capacity. However, this approach is doubtful as it requires very high capital investment and requires >$70 barrel to succeed [2].
New oil and gas investment in 2020 has dropped by a third over 2019 with companies reporting asset values falling by over $50 billion [3]. In response, European energy companies BP and Shell are re-basing their dividends and reporting a move to broaden their portfolios and reduce dependence on oil.
Energy Industry Actions
BP has announced it will reduce fossil oil production by 40% by 2030 and increase renewable energy spending 10-fold by 2030 as it plans to become a net-zero emissions company by 2050 [4,5]. US energy companies such as Exxon [6] and Chevron [7] face a difficult near term as large deficits from Permian Basin investments appear increasingly out of step [2] with the Biden Administration green energy policies and a rapprochement with the UN Paris Accord [8].
In the meantime, Asia, the world’s largest energy market and economic region, is actively diversifying its energy mix to include more biofuels driven by policies that mandate higher biofuel blends and renewables [3]. Energy investors are looking globally to support new technologies that can deliver reliable sustainable energy compatible with reducing CO2 emissions [3]. Thus clearly demonstrating that the energy sector urgently needs to invest in new low-emission, scalable, and continuous supplies of drop-in components for their fuel portfolios.
HutanBio are leading the way in algal-derived biofuel to provide a carbon-negative fuel solution that works directly with existing supply chains. You can find out how we can support the decarbonisation of your fleets here
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