Making sense of biofuels – a global and local perspective

James E. McDonald, Martin Gavelius, Dirk Kronemeijer and Ulf Svahn

PricewaterhouseCoopers offered their facilities on September 6 for a panel co-hosted by AmCham and the International Chamber of Commerce on new developments in biofuels, an important ingredient in the whole cleantech equation. Essentially, what should we be investing in? While energy and fuel issues are global by nature the panel confirmed that the landscape for biofuels is rapidly changing and moreover, there are local as well as global issues involved.


Ulf Svahn

First of all, it is a big industry. According to Ulf Svahn, Managing Director of the Swedish Petroleum Institute, renewable fuels these days are being produced at the rate of 1.8 million barrels a day (mbd), and are expected to grow to 2.5 mbd by 2015. The US has about 55% of the market, Brazil has 35% and rest is scattered. China has about 2%, for example.

Ulf Svahn's presentation in pdf here.

Ethanol, a first generation biofuel, costs about twice as much as petrol/gasoline for the same amount of energy, when subsidies are counted. The coming second-generation biofuels will have a lower “well-to-wheel” production cost.


James E. McDonald

Energy shifts take both time and guile in a politicized context, and eventually require new policies. According to James E. McDonald – with the Biofuels Development Group, LLC and vice-chair of the Swedish-American Chamber of Southern Florida – fuel based on corn from the US Midwest is a boondoggle, funded by major subsidies. In Florida, they are investing in sugar-based fuels and are consequently building up their ties to the Brazilians, who are the leaders in sugar-based fuels. The US currently imposes a tariff of 54 cents per gallon (about SEK 1 per liter) on Brazilian fuel imports.

Given that a partisan Congress won’t be active in changing policies in an election year, McDonald has pointed out the potential far-reaching significance of President Obama’s Executive Order 13423 of October 2009. It sets sustainability goals for Federal agencies and requires them to reduce fleet petroleum consumption and leverage Federal purchasing power to promote environmentally-responsible products and technologies – among many other things. As the Federal government operates more than 600,000 vehicles, this is bound to have an impact on fuel issues. Additionally, there is an increased military interest in biofuels.


Dirk Kronemeijer

There’s a good bet most of us have never considered sustainable aviation fuels, since putting “sustainable” and “aviation” in the same sentence is like swearing in church for some people. But Dirk Kronemeijer, Managing Director of SkyNRG in the Netherlands, maintains that biofuels are a good fit to the existing infrastructure that has been built up over a hundred years by the four participating industries: aviation, airlines, airports and petroleum fuel.

Moreover, there are new sources of biofuels, and we may be moving from plant-based fuel sources to algae-based fuel sources within 6-10 years. There are hundreds of algae species suited to biofuel production, and they can out-produce soybean crops, for example, given the same area. According to Kirkemeyer Swedish biofuels could easily be adapted for use in aviation. Sweden will easily meet its target of providing 50% of heating fuel through biomass by 2020, for example. 

Dirk Kronemeijer's presentation in pdf here.



Martin Gavelius

Martin Gavelius, Director of Corporate Finance for Energy & Utilities at PricewaterhouseCoopers, gave us insights into another big picture – how the money is flowing. Investments in cleantech hardware and facilities have been climbing despite the recession. But it is hard to obtain funding for commercialization and production. According to Gavelius, there are lots of government funds crowding the arena, but somewhat uncoordinated. If they didn’t exist, venture capitalists would likely be more willing to invest at early stages. In any event, he believes that biofuels will be a hot investment area for several more decades.



At the mingle following the panel the 45 guests were treated to their own version of biofuels.

Written by Robbin Battison, Battison & Partners
Photos by Rob Nelson