Transition is the key word here. At bp, we’re clear on the end goal – delivering secure, affordable and lower carbon energy to help the world reach its net zero ambition. This won’t happen overnight and there’s no single solution to the challenge. We are in action to help to solve problems for our customers both now and in the future.
Biofuels are a great example of this. They’re unusual in the sustainability agenda in that they’re already available and don’t require consumers to make a change. To give you an example, the same engine in your car that runs on mostly fossil fuel works with biofuels, too. The same is true for the trillions of dollars of existing infrastructure around the world – terminals, pipelines, storage tanks – which does not require to be replaced.
It means we can make significant cuts to emissions levels in the near term, while other solutions, such as electric vehicles or hydrogen, ramp up in demand.
Today, the biggest demand is from ground transport, such as cars, vans and heavy goods vehicles. Drop-in biofuels are an easy way for our customers to decarbonize and, over the next decade, we expect demand to rise quickly. Currently, biofuels are used in low-level blends of fossil and non-fossil fuel. Take E10* as an example, that’s 10% ethanol and 90% gasoline. Drop-in, advanced biofuels can reach much higher blend levels, delivering up to 80% reductions in carbon emissions on a lifecycle basis. As countries around the world adopt these fuel blends, demand will be strong and sustained.
Absolutely. To start, biofuels will still be a key source of energy for ground transportation in many parts of the world where other lower carbon solutions are cost prohibitive. But hard-to-abate sectors, such as aviation and marine, will likely be reliant on biofuels to reduce their carbon footprint for decades to come.
Take the aviation industry. Sustainable aviation fuel (SAF) has enormous potential for biofuels. Today, the industry produces approximately two thousand barrels per day (kbd) of SAF, but the market demand for aviation fuel is close to 700kbd. The principles are the same for a plane as for a car – no change is needed to the existing jet engines or associated infrastructure. The only difference is that jet fuels go through even greater technical scrutiny and validation to ensure they’re safe for use, taking longer to develop – and rightly so!
Our biofuels strategy reflects our approach to the transition – we’re looking to make quick, cost-effective wins where we can, without losing sight of what’s needed to meet future demand. The best way to explain this is to think about the different ways you can make biofuels.
Right now, the simplest, cheapest option is to process bio feedstocks through our existing refineries producing a bio/fossil fuel, co-mingled product. That’s where we’ve started – we’ve been up and running for quite some time producing biofuels and have established a profitable business model. We are increasing our co-processing capability where practical, like the recent expansion we have announced at our Cherry Point refinery, but there are limits to how far we can go with a conventional refinery.
We are, therefore, in action to develop standalone HEFA biofuels (Hydroprocessed Esters and Fatty Acids) – a term that covers biofuels made from used cooking oil, beef tallow, rapeseed oil, amongst others.
That said, in the longer term, and particularly with the demand for SAF anticipated to be so strong, there simply won’t be enough waste and residue streams to keep producing these fuels. So, we are also exploring alternative pathways.
One of these is using alcohol – specifically, ethanol – to make SAF. This is more complex and potentially more costly to produce. There are lots of separate steps involved and the full process has never been done at scale. We’re pretty far down the road in designing the first commercial end-to-end, ethanol-to-jet fuel facility.
Another option is to use municipal solid waste – or rubbish. Again, this is potentially costly to produce, but the world will need these alternative pathways to keep up with demand. Here, we’re a part owner in Fulcrum, a biofuels company that has recently become the first to to turn municipal solid waste into a synthetic crude for making fuel at scale.
Beyond that, we’re always investing in innovation to explore new options. We’re interested in the viability of electro fuels, or e-fuels – a circular process combining CO2 with hydrogen to produce jet fuel. It’s in the very early stages of development, but it has huge potential.
This combination of near-term and longer timeline opportunities is the basis of our biofuels strategy, giving us huge momentum in this net-zero pathway.
When you think about all the different working parts involved in the production and marketing of biofuels, you begin to see why we’re in such a strong position.
It starts with the feedstock. Producing a global supply of biofuels means you need to be world class at sourcing the raw materials – and managing the associated risks. You can’t just go to one place in one market, meaning it takes an established global network to make this happen. This is exactly what our trading and shipping organization does – and we’ve proven we’re very good at it.
Turning to the manufacturing of biofuels, these are capital-intensive, complex projects to design, build and operate. At bp, we’ve been building complex projects for 100 years and have a track record of doing this in a safe, efficient and timely way.
The final point is about the end customer – this is really important. We already have an established customer base that we know very well – we’re scaling up, not starting from scratch. For example, we’re selling jet fuel to airlines today. The difference is that we’re becoming their decarbonization partner, capable of meeting their requirements now and in the future.
Because we’re an integrated energy company, we can help customers to transition on their terms – moving to biofuels, EVs, hydrogen, wind and solar. There are not many companies on the planet capable of all that.
This is a great opportunity for bp, and an important part of how we’re helping the world to transition to net zero.
Today, we can already provide our customers with a cost-effective way to help them decarbonize while delivering on our own transformation plans. The market demand for biofuels is only going to grow, and we have the capabilities, capital and scale to succeed in this space like no other.
Biofuels are a vital part of the energy mix for the world to get to net zero. They can help to decarbonize hard-to-electrify sectors like aviation and heavy road transport. The demand from customers for bioenergy is already here, today, and it is growing too.
There isn’t a single solution to decarbonize the world’s energy systems, so bioenergy is going to play an important role alongside other forms of lower carbon energy, like wind, solar and hydrogen. That’s why bp is investing in all of these areas to help accelerate the energy transition.
By 2030, we’re planning for around half of our global investment to be in lower carbon businesses, convenience and power – up from around 3% in 2019 and 30% in 2022 – and for our oil and gas production to be around 25% lower than 2019.
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