Biofuels: Looking Forward

CERA week

February 14, 2007

 It’s The Cellulose, Stupid

Biofuels produced incidentally to food-crop agriculture are

suboptimal in several dimensions, but the cellulose from
engineered energy crops, processed in new ways, offers the
prospect of significant improvement and material benefit for
transportation fuels.
Steven E. Koonin
Chief Scientist, BP
 Basic Carbohydrate Biochemistry

Sucrose (sugarcane) Starch (corn grain) Cellulose (energy crops)

Hemicellulose (energy crops)

amylase /
sucrase glucoamylase
Cellulases Hemicellulases

C6 fermentation/ C6 fermentation/ C5/C6 fermentation/

distillation distillation distillation

Biofuels Biofuels Biofuels

 Before Looking Forward…Look Back

Plants did not evolve to serve man

Genetic manipulation or “breeding” has been instrumental
 Technology Is Game Changing…

Adoption of hybrid genetics has tripled US corn yield since 1940!!

 How Technology Can Impact Feedstock…

Parts of the Equation Relevant Traits

Acres ƒ Stress tolerance (e.g. drought,

heat, cold, salt)

Tons per acre ƒ Increased yield (e.g.

photosynthetic efficiency)

Dollars per acre ƒ Nutrient requirements (e.g.

nitrogen utilization)

Capital cost of ƒ Composition & structure (e.g.

refinery & gallons C5/C6, cell wall structure)
per ton
 The Tyranny of Distance…

Yield density both reduces transport distance (thereby

reducing transport cost) and improves economy of scale
for use of harvesting equipment

Yield vs. Transport Distance* Yield vs. Harvest & Transport Costs*
45 $200

40 $180

$160
35

Harvest & Transport Costs

Transport Distance (miles)

$140
30
$120

(per ton)
25
$100
20
$80
15
$60
10 $40

5 $20

0 $-
0 5 10 15 20 0 5 10 15 20

Yield (tons per acre) Yield (tons per acre)

* Assumes a 10,000 ton/day processing facility with 50% of surrounding land used for biomass
Switchgrass in Oklahoma…
Miscanthus in Illinois…
 Where Will The Breakthroughs Be?

Biomass value chain

Storage & Brand &

Germplasm Farmers Enzymes Biorefinery
Transport Distribution

• Tons per acre • Location • Yield density • Reduced cost • Composition • Ethical
Consumerism
• Marginal acres • Location • Improved • Pre-processing
efficiency
• Input per acre • Location • Fermentation
• Composition • End molecule
• Consolidated
bioprocessing

Biotechnology is creating technological discontinuities

Early adopters will build formidable intellectual property barriers

Where will the rent accrue?

THANK YOU
 Dedicated Energy Crops

Credible studies show that with plausible technology

developments, biofuels could supply some 30% of global
demand in an environmentally responsible manner without
affecting food production. To realize that goal, so-called
advanced biofuels must be developed from dedicated energy
crops, separately and distinctly from food….
Steven E. Koonin
Chief Scientist, BP
 Biomass as Reserves??

1 acre = 209 barrels of oil*

100M acres = 20.9 billion barrels

Proven Reserves (billion barrels)

Exxon Mobil 22.20
BP 18.50
Royal Dutch Shell 12.98
Chevron 9.95
Conoco Phillips 7.60

* Assumes 10 yr contract
Source: Energy Intelligence (data as of end of 2004)
 Energy Crops v. Crude Oil

Cost of Carbon in Cellulosic Energy Crops v. Crude Oil

$200
Above the line, crude oil is
$180 a cheaper source of carbon

$160
Energy Crop Price ($/ton)

$140

$120 w/VEETC*

$100
wo/VEETC*
$80

$60

$40

$20 * VEETC - Volumetric Ethanol Excise

Below the line, energy crops are
a cheaper source of carbon Tax Credit ($0.51/gal ethanol)
$-
$20 $30 $40 $50 $60 $70 $80 $90 $100 $110
Crude Oil Price ($/barrel)
 Some see the need for change…

“The greatest service a citizen

can do for his country is to add
a new crop for his countrymen.”
- Thomas Jefferson