Johannesburg - Despite the emerging biofuels market, the creation of a global biofuels industry will be much more
difficult to achieve than originally thought, according to the findings of an Accenture report.
Titled "Biofuels' time of transition: Achieving high performance in a world of increasing fuel diversity", the study reports that biofuels could make up 10-15% of the future fuels mix in the next 10-20 years. However, getting to that level will be more difficult than previously thought, reflecting the challenges involved in creating full-scale markets in biofuels feedstock, production, transport and distribution.
The study also identifies challenges in three areas that need to be overcome in order for the biofuels market to become a truly global industry.
They include making a compelling case for environmental benefits and that food security would not be compromised.
The sector also need to address challenges around distribution related to integrating biofuels into the established fuels value chain, with tough decisions to be made around storing, blending and accommodating different grades of biofuels.
The study further found that it would be difficult to justify the up-front investment when the ultimate returns and size of the market were uncertain.
"Although the ultimate scale of the biofuels industry is yet unknown, we believe that biofuels will be part of the future fuel mix and also herald the evolution of a fuels marketplace," said Anoop Patel, senior manager in Accenture South Africa's resources operating group.
"Our research shows that government policy and technology developments are the biggest uncertainties. Technology will continue to improve the economics of biofuels development, but the industry will also have to deal with competing technologies such as plug-in hybrids.
"And regulatory policies - including those that encourage cleaner fuel versus selecting a type of a fuel - will continue to grow," he added.
- I-Net Bridge