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NNFCC publishes fifth annual ‘Anaerobic Digestion Deployment in the UK’ report

Biofuels Digest - Wed, 04/18/2018 - 5:32pm

In the UK, NNFCC published the fifth edition of its annual ‘Anaerobic Digestion Deployment in the UK’ report. The publication provides a detailed breakdown of the UK AD sector on both a national and regional basis, using primary data to offer an accurate reflection of industry output capacities and feedstock consumption.

Constant delays in the implementation of tariff reinstatements under the RHI has brought developments in the biomethane sector to a halt, with developers unwilling to commit to projects until the amended legislation is adopted. However, with the new regulations laid in Parliament in February and the hope they will be passed following the Easter recess, the light is very much at the end of the tunnel.

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Red Rock Biofuels sets groundbreaking for summer but Velocys still waiting for order

Biofuels Digest - Wed, 04/18/2018 - 5:31pm

In Oregon, Red Rock Biofuels announced it was ready to start construction on its biorefinery in Lakeview but Velocys said it has yet to receive a notice to proceed for the manufacture of its Fischer-Tropsch reactors and catalyst for the plant, and will make a further announcement in due course. Red Rock’s CFO told local press that a groundbreaking ceremony was expected over the summer and the facility could be commissioned in 2020 after 18 months of construction.

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Urban Air Initiative studies show ethanol blends improve air quality

Biofuels Digest - Wed, 04/18/2018 - 5:30pm

In Washington, ethanol blends reduce toxic tailpipe emissions by up to 50%, significantly improving air quality and protecting public health, according to two new studies. The separate studies were conducted by the North Carolina State University (NCSU) and the University of California Riverside (UCR). The Urban Air Initiative (UAI) commissioned both independent studies to evaluate tailpipe emissions using fuels similar to what consumers can buy at the gas station, instead of laboratory created test fuels.

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ICCT working paper looks at effects of biodiesel on vehicles in Indonesia

Biofuels Digest - Wed, 04/18/2018 - 5:29pm

In Washington, the ICCT has released a working paper that reviews the effects of biodiesel on vehicles specifically in the Indonesian context. It does not address other renewable diesel substitutes such as hydrotreated vegetable oil.

The paper first reviews the effects of biodiesel on emissions of nitrogen oxides, carbon monoxide, hydrocarbons, and particulate matter in conventional vehicles. It compares the effects of using palm biodiesel and other biodiesel feedstocks, such as soy and rapeseed oils. The paper then reviews the effects of biodiesel on vehicle materials, including components of the fuel supply, engine, and exhaust system. These effects include corrosion and wear of metallic components, degradation of elastomers, and deposit formation in filters and fuel injectors. The implications of the impacts of biodiesel on vehicle emissions and materials are discussed in the context of Indonesia specifically.

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ASTM revises D1613 test method for measuring acidity in fuel ethanol

Biofuels Digest - Wed, 04/18/2018 - 5:28pm

In Pennsylvania, members of ASTM International recently revised a key test method (D1613) that has been used to measure the acidity of fuel ethanol and denatured fuel ethanol, including ethanol used for car gasoline blends.

By including a new “nitrogen purge” as part of the test method, a laboratory can help ensure that carbon dioxide is removed. According to ASTM International member Shon Van Hulzen, the presence of carbon dioxide is known to produce incorrectly high acidity values which can affect the product’s ability to comply with the specification for denatured fuel ethanol used in automotive spark-ignition engines (D4806).

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Clean Electricity Generation and Stork team on biocoal plants around the world

Biofuels Digest - Wed, 04/18/2018 - 5:27pm

In the Netherlands, at several locations around the world, a partnership of international companies will start construction of facilities, where biocoal will be produced on a commercial scale. This biocoal can be used as sustainable fuel in power plants and heating installations all over the world. The partnership is initiated by Clean Electricity Generation (CEG) and Stork. Stork, a Fluor Company, will build and maintain the new production facilities. The building of the first new production plant for biocoal is scheduled in Estonia. CEG and Stork are currently working on a front end engineering and design of the installation. Construction starts at the third quarter of this year. Parallel to that, they will continue working on installations in Finland and outside of Europe with a main focus on North America. Energy innovation company CEG will supply the patented technology. The company has succeeded in developing a production facility for biocoal on a commercial scale making biocoal a viable and sustainable alternative to fossil coal. CEG already has a production facility in Derby, United Kingdom, where high-quality biocoal is produced. In comparison, the new factory in Estonia will be five times bigger.

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Renaissance BioScience Corp teams with Mitacs on C$1.44 million non-GMO yeast R&D project

Biofuels Digest - Wed, 04/18/2018 - 5:26pm

In Canada, Renaissance BioScience Corp. announced a new partnership with Mitacs for a multi-year, C$1.44-million research and development project. Mitacs, a national not-for-profit research and training organization, will provide matching funding to the RBSC project to support the development of next-generation, systematic tools and methods for expanding, screening and selecting biodiversity in non-GMO industrial yeast strains.

In addition to the work done directly by RBSC, the project will be facilitated by collaboration with three world-leading University of British Columbia (UBC) researchers in the fields of yeast genetics and biochemistry.

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Secretary of Agriculture slams China’s “politicized” 179% duty on US sorghum imports

Biofuels Digest - Wed, 04/18/2018 - 5:25pm

In Washington, U.S. Secretary of Agriculture Sonny Perdue expressed extreme disappointment regarding China’s announcement of duties of almost 179 percent on U.S. sorghum imports. “The international grain market is about the freest market there is, and it is ludicrous to even mention ‘dumping,’ because China can buy product from anywhere they choose. This is clearly a political decision by the Chinese and we reject their premise. Our sorghum producers are the most competitive in the world and we do not believe there is any basis in fact for these actions. As we explore options, we are in communication with the American sorghum industry and stand united with them. The fact remains that China has engaged in unfair trade practices over decades and President Trump is correct in holding them accountable. We remain committed to protecting American agricultural producers in the face of retaliatory measures by the Chinese.”

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Chemicals, a second life for carbon: The Digest’s 2018 Multi-Slide Guide to LanzaTech

Biofuels Digest - Wed, 04/18/2018 - 4:03pm

LanzaTech has developed a fully sustainable integrative gas to fuels and chemicals platform that has no impact on food, water security or high biodiversity land use.

LanzaTech’s gas fermentation platform disrupts the current highly centralized global energy system by enabling the regional production of low-cost energy from local wastes and residues, including gases as varied as industrial flue gas, gasified biomass wastes and residues, biogas, and high-CO2 stranded natural gas. The company was originally founded in 2005 in New Zealand. The proprietary gas-to-liquid platform produces fuels and high value chemicals such as 2,3-butanediol (2,3 BDO) and acetic acid from a variety of waste gas resources.

LanzaTech’s Laurel Harmon gave this illuminating overview on LanzaTech’s chemicals progress and promise at ABLC 2018 in Washington DC.

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The Digest’s Top 10 Innovations for the week of April 18th, 2018

Biofuels Digest - Wed, 04/18/2018 - 3:53pm

The pace of invention and change is just too strong, we’ve realized, to highlight annual or even quarterly or monthly rankings and summaries of significant product and service advances. For now, we’re going to be tracking these on a weekly basis to keep pace with the changes. Here are the top innovations for the week of April 18th.

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Whitefox Technologies to install its ICE™ system at Chippewa Valley Ethanol Company

Biofuels Digest - Tue, 04/17/2018 - 7:50pm

In Minnesota, Whitefox Technologies, a leading solutions provider for ethanol and other alcohol production processes is proud to announce Chippewa Valley Ethanol Company (CVEC) is to install a Whitefox ICE membrane dehydration system at its plant in Benson, Minnesota.  This is Whitefox’s second agreement this year and its first installation in the state of Minnesota.

Chad Friese, General Manager, Chippewa Valley Ethanol Company, said: “We are enthusiastic about the operational flexibility the Whitefox ICE membrane system will give us to adjust our product demand cycles and growth in certain markets.  With the installation of the Whitefox ICE membrane system, we expect to increase our ethanol production capacity by 7.5 million gallons per year, an increase of 15% or more.  This will increase our margins and overall efficiency both during regular uptime and product changeover cycles.”

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Japan approves US ethanol for up to 44% of ethanol for ETBE

Biofuels Digest - Tue, 04/17/2018 - 7:47pm

In Washington, the U.S. Grains Council (USGC), the Renewable Fuels Association (RFA), Growth Energy and their member organizations welcomed the news Tuesday that the Japanese government’s new biofuel policy will allow imports of ETBE made from U.S. corn-based ethanol.

The change comes as part of the country’s update of its existing sustainability policy, approved in 2010, in which only sugarcane-based ethanol was eligible for import and which only allowed sugarcane-based ethanol for the production of ETBE, an oxygenate. The new policy calls for an increase in the carbon intensity reduction requirements of ethanol used as a feedstock to make ETBE to meet a 55 percent reduction, up from 50 percent, and recognizes corn-based, U.S.-produced ethanol’s ability to meet that goal, even with the higher greenhouse gas (GHG) reduction standard.

Japan will now allow U.S. ethanol to meet up to 44 percent of a total estimated demand of 217 million gallons of ethanol used to make ETBE, or potentially 95.5 million gallons of U.S.-produced ethanol annually. Japan imports nearly all of the ETBE from ethanol that it uses.

This decision by the Japanese government is based on its evaluation and life cycle assessment update of U.S. corn-based ethanol. The U.S. industry’s efforts to maximize production efficiency through technological innovations that lead to higher GHG emission reductions for corn-based ethanol and the emergence of co-products like distiller’s dried grains with solubles (DDGS) have supported this new access to the Japanese market while positively contributing to the feed and energy value chains.

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UFOP sees dreary future European rapeseed following Argentine and Indonesian biodiesel imports

Biofuels Digest - Tue, 04/17/2018 - 7:12pm

In Germany, UFOP views the prospects of European rapeseed cultivation as being acutely jeopardized. “The dumping imports from Argentina and Indonesia are becoming a question of survival for European rapeseed producers”, said the Chairman of UFOP, Wolfgang Vogel. The shutdowns and production cutbacks carried out by European biodiesel producers will continue to increase the pressure on the volume and pricing on the market for rapeseed oil and rapeseed.

The UFOP Chairman stressed that the oil percentage of more than 40% in rapeseed is the most important factor for producer pricing, and recently costs EUR640 per tons, which is around EUR100 per ton below the previous year’s levels. With an average of 6 million tons from a total of around 12 million tons, rapeseed oil is the most important raw material in the European biodiesel industry. This roughly corresponds to an area of 4 million hectares of a total of around 6.5 million hectares for rapeseed cultivation within the EU’s 28 member countries. The decline in the demand for the biodiesel industry is due to the use of oil mills in agricultural trading and ultimately among producers, stressed UFOP’s Chairman.

Vogel considers current political actions as being entirely contradictory. The European Commission and European Parliament want to excessively reduce biofuel production from cultivated biomass as of 2021. A gap in the demand for European rapeseed could only then emerge if palm oil were prohibited in accordance with the EU Parliament’s decision. But the EU Commission opposes this decision. On the other hand, both institutions agree on the issue of the so-called indirect land use changes, except for the recognition of iLUC factors. At the same time, a European protein plant strategy is being developed without granting special status to rapeseed as by far the most important European GM-free protein source.

Vogel strongly criticized the fact that the EU Commission as well as the member states are clearly incapable of acting quickly enough to prevent the expected dumping imports of an estimated 3 to 5 million tons from Argentina and Indonesia as a result of unfair trading practices. On the other hand, policies are not providing alternative distribution options. Even cereal cultivation has long since reached its absolute economic limit. Surpluses have determined the pricing on a global level. European agriculture cannot live off flower strips alone, stated Vogel.

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Congressman tells IFRA he wants ethanol blends beyond E15

Biofuels Digest - Tue, 04/17/2018 - 7:10pm

In Washington, after meeting with members of the Iowa Renewable Fuels Association, Congressman Steve King, a member of the House Agriculture Committee, re-affirmed his strong support for biofuels, telling participants that he wants to see ethanol sold in blends that go ‘to, through, and beyond’ the E15 mix. Other items discussed today included Congressman King’s concerns about the EPA’s questionable use of waivers to undercut the RFS standard, and the importance of allowing market forces to more accurately determine the price of RINs.

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European Investment Bank launches EUR1 billion bioeconomy financing initiative

Biofuels Digest - Tue, 04/17/2018 - 7:08pm

In Luxembourg, the European Investment Bank (EIB) announced the launch of a new financing initiative that aims to unlock close to EUR1 billion of investment in the agriculture and bioeconomy sector. Bioeconomy encompasses the value chains of production and the processing of food, material and energy using renewable biological resources from land and sea. This large EIB lending program for agriculture and bioeconomy outlines the Bank’s broader support to this sector. The operation will be guaranteed by the EU budget under the European Fund for Strategic Investments (EFSI), which forms a central part of the “Investment Plan for Europe” of the European Commission under the Juncker administration. In a new Regulation applicable from early 2018, the scope of EFSI was extended to include a specific sectorial focus on sustainable agriculture and the wider bioeconomy.

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Corn farmers and ethanol plants eligible for $1.51 billion Syngenta settlement

Biofuels Digest - Tue, 04/17/2018 - 7:07pm

In Kansas, farmers who grew Viptera and Duracade varieties of corn between 2013 and 2017 are eligible for up to $22.6 million of the $1.51 billion settlement with Syngenta for selling GMO corn seed that was not yet approved by the Chinese government, while a whopping $1.438 billion will go to farmers who didn’t grow those varieties but whose corn was blocked due to the trade tiff. Ethanol plants will also get $19.5 million of the settlement but experts expect up to one third of the total settlement will go to attorney fees.

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UK and US scientists engineer enzymes to digest common plastics

Biofuels Digest - Tue, 04/17/2018 - 7:04pm

In the UK, scientists have engineered an enzyme which can digest some of our most commonly polluting plastics, providing a potential solution to one of the world’s biggest environmental problems. The discovery could result in a recycling solution for millions of tons of plastic bottles, made of polyethylene terephthalate, or PET, which currently persists for hundreds of years in the environment. The research was led by teams at the University of Portsmouth and the US Department of Energy’s National Renewable Energy Laboratory (NREL) and is published in Proceedings of the National Academy of Sciences (PNAS).

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Thirteen Senators demand EPA stop issuing “hardship” waivers

Biofuels Digest - Tue, 04/17/2018 - 7:03pm

In Washington, Sen. Chuck Grassley (R-Iowa) and Sen. Amy Klobuchar (D-Minn.) led a bipartisan group of 13 senators in writing to EPA Administrator Scott Pruitt requesting the agency cease issuing so-called “hardship” waivers exempting obligated parties from the Renewable Fuel Standard, provide topline information about the waivers already issued, disclose whether or not the agency redistributed the waived volume obligations among the non-exempted obligated parties and outline the agency’s plan to make the waiver process more transparent.

Grassley and Klobuchar were joined by Sens. Joni Ernst (R-Iowa), Debbie Stabenow (R-Mich.), Deb Fischer (R-Neb.), Dick Durbin (D-Ill.), John Thune (R-S.D.), Tina Smith (D-Minn.), Roy Blunt (R-Mo.), Claire McCaskill (D-Mo.), Tammy Duckworth (D-Ill.), Heidi Heitkamp (D-N.D.) and Joe Donnelly (D-Ind.).

In their letter, the senators cited the confirmation hearing testimony of Pruitt, in which he stated, “Any steps that the EPA Administrator takes need to be done in such a way as to further the objectives of Congress in that statute, not undermine the objectives of Congress in that statute.” The senators also noted Pruitt’s October 2017 letter, in which he stated, “I reiterate my commitment to you and your constituents to act consistent with the text and spirit of the RFS. I take seriously my responsibility to do so in an open and transparent manner that advances the full potential of this program…”

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Equipment Requirements to Study Agitation for Gas-Liquid Fermentation

Biofuels Digest - Tue, 04/17/2018 - 2:44pm

By Gregory T. Benz, Lee Enterprise Consulting

Special to The Digest

Small pilot fermenters are used with several different objectives: studying the organism, developing feeding strategies, evaluating potential yields, etc. A major purpose can be to study the mass transfer characteristics of the system, and how they relate to agitation. In the production scale, the required mass transfer rate can be achieved over a wide range of aeration and agitation conditions. However, the combined power draw of the agitator and compressor for a given mass transfer rate goes through a minimum, as illustrated in figure 1.

Figure 1 Fermenter Power Optmization

In order to develop such curves, it is necessary to develop broth-specific kla correlations. (Reference 1) The purpose of this article is to outline the equipment needs and data to be taken to do this, as most off-the-shelf pilot fermenter systems are not well suited to study mass transfer and agitation.

Vessel Requirements

For mass transfer studies, the gas dispersion mechanism must be the same in the pilot scale as it is in the production scale. Size matters in two ways: the bubbles must be smaller than the vortex trail created by the dispersing impeller, and mass transfer directly to the liquid surface should not be more than about 10% of the total mass transfer. These two factors mean that the minimum size for piloting mass transfer is about 50 liters working volume, with a dispersing impeller diameter of at least 125 mm diameter. 100 liters or more would be even better. Small benchtop fermenters are OK for studying microorganism response to various inputs but cannot be relied upon for scalable mass transfer data.

Although most production fermenters have aspect ratios of 2-3, it is OK for the pilot scale to be a bit shorter, as long as it has at least 2 impellers so it can match full scale impeller types.

Range of Variables

Normally, mass transfer correlations are presented in the form kla = A(P/V)B(US)C. Though this form works reasonably well, it is not perfect, and should not be used for extrapolation. What this means in practice is that the values of P/V and USshould cover the same range in the pilot scale as in the production scale.

Table 1 Range of Variables: Pilot vs Production

Table 1 shows typical values of P/V, USand VVM for a variety of vessel sizes at near-optimum conditions, based on a common air/ionic water correlation and an OTR of 200 mmol/l-h. The general trend is for higher P/V and lower USin the pilot scale than in the production scale. However, for proper piloting of mass transfer, we need to develop a test program that brackets the anticipated full scale values in the pilot scale (Reference 2).


Table 2 gives vessel dimensions and other parameters for an array of production volumes and oxygen transfer rates.  What does this mean for modeling in the pilot scale? It would take up too much article space to illustrate the scaled-down parameters for all the production vessel sizes shown, so we will illustrate the concept by scaling down the 200 cubic meter production fermenter.


Table 3 shows the required power and airflow in several pilot fermenter volumes as a function of full scale OTR. The requirement for equal USresults in a higher VVM in the small scale than in the production scale. Most off-the-shelf pilot fermenters are not set up to deliver that much air, so they should be modified to do so. The author has actually run as high as 30 VVM in a 100 l test vessel to study hydrodynamics.

Impeller System Recommendation

Though perhaps not absolutely essential, higher confidence in the derived correlations may be higher if the pilot scale uses the same general types of impellers as those that will be used in the production scale, and those should follow current best practice. Presently, generally accepted best practice in production equipment is to use a lower concave-blade radial turbine, preferably deeply concave, and one or more upper up-pumping high-solidity axial hydrofoils. These are illustrated in figures 2 and 3, respectively.


Most off-the-shelf pilot fermenters come equipped with standard Rushton impellers (Figure 4). Aside from not matching production equipment, there is a very practical reason why such impellers are not the best. When setting up an array or grid of P/V and USvalues to test, some combinations of low P/V and high USmay lead to a flooded impeller, and such test conditions must be avoided. Concave impellers have at least double the gas handling capacity as a Rushton. The best concave radial impellers have more than 5 times the gas handling capacity of a Rushton. This means that more possible variable combinations can be tested, improving the range of validity of the correlation.

Table 4 shows a typical set of impellers and shaft speeds to match the pilot conditions shown in table 3, as well as the nearest standard motor sizes and shaft speeds.

Buying Recommendations

To allow for flexibility, pilot equipment should be able to deliver more power and airflow than a scale down from the anticipated production scale would require. We recommend the capability to deliver at least double the P/V and USof the full scale estimated design. Table 5 is an example of recommended impeller systems, air flows, shaft speeds and motor sizes for several pilot scales using the 200 mmol/l-h example from the previous tables.

Of course, a specific recommendation can be made for a specific set of client needs. 

Measurement/Data Needs
  • Inlet airflow rate, vessel temperature and back pressure
  • Ungassed liquid volume and liquid level
  • Density of the liquid
  • Viscosity, especially if it will vary during the test. (May have to add it as a parameter in the correlation)
  • Barometric pressure at time of test
  • Csatvalue at a reference gas composition and pressure at operating temperature. This must be expressed in actual concentration units, such as mg/l or mmol/l, not simply %
  • Offgas analyzer measuring oxygen, nitrogen and CO2at a minimum for aerobic fermentations
  • Dissolved Oxygen (DO) at top and bottom of fermenter, or in middle if only one is available. The readings must be converted from % to concentration units, so the actual concentration at 100% must be known.
  • Agitator shaft speed
  • Agitator power draw, if possible. If vessel has standard baffles and the impellers are of a well-studied type, the manufacturer’s power draw calculations may be substituted in lieu of measured power. It is difficult to measure power draw of an agitator; a whole article could easily be devoted to that.

Using a pilot fermenter to study agitated mass transfer generally has requirements that are not met by off-the-shelf units. This article identifies some of the issues involved and provides guidance about how to purchase appropriate new pilot equipment or make necessary modifications to existing units to allow for such studies. The biggest modification is usually increasing the air supply.

About the Author

Gregory Benz is a member of Lee Enterprises Consulting, the world’s premier bioeconomy consulting group, with more than 100 consultants and experts worldwide who collaborate on interdisciplinary projects, including those requiring the technologies discussed in this article.  The opinions expressed herein are those of the author, and do not necessarily express the views of Lee Enterprises Consulting. Mr. Benz is also President of Benz Technology International, Inc.

References-1 optimizing fermenters 2 piloting fermenters

  • “Optimize Power Consumption in Aerobic Fermenters”, G. Benz, Chemical Engineering Progress, May 2003, pp 100-103
  • “Piloting Bioreactors for Agitation Scale-Up”, G. Benz, Chemical Engineering Progress, February 2008, pp32-34

Acknowledgment: Figures 2, 3 and 4 are courtesy of Chemineer, a brand of NOV. They are intended to illustrate type and are not to be taken as a product endorsement.

List of symbols

P/V                  Power/volume

US                   Superficial gas velocity

kla                    Overall mass transfer coefficient

DO                  Dissolved oxygen concentration

VVM               Volume of air per Volume of liquid per Minute

A, B and C      Correlation constants

Csat                  Saturation value of oxygen in liquid

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Shell releases Energy Transition Report: commits to 50% lower emissions by 2050, biofuels to top oil by 2100 in “Sky” scenario  

Biofuels Digest - Tue, 04/17/2018 - 2:29pm

In the Netherlands and England, Shell released its most definitive statement yet on its low-carbon future and committed to 50% lower emissions by 2050 and net zero by 2070 in its operations and emissions from its fuels.  The road, to Shell, is apparently paved with good intentions.

In its analysis of future energy demand, Shell noted that the global energy demand is set to increase from 570 exajoules to 1000 by 2070 and it will take extraordinary measures to meet the stringent carbon-reduction goals set in the Paris Agreement, while the world is increasing energy usage at the same time. But Shell reaffirmed its support for the Paris Agreement, while noting certain extraordinary consequences of the required re-shaping of energy supply, including biofuels supply exceeding petroleum by 2100 in the company’s “Sky” scenario.

In  the new Shell Energy Transition Report, available here for download, the company updated what it calls its Mountains and Oceans scenarios and introduces a third, Sky. The company was at pains to present scenarios rather than projections about the long-term future.

As Shell notes:

For example, in Mountains, strong governments and powerful economic actors work together to create stability and maintain their own interests. This enables big initiatives like the deployment of carbon capture and storage (CCS) at scale or the building of widespread gas and hydrogen infrastructure. In contrast, in Oceans, competitive markets and a strong private sector are the main engines of change. There is major technology innovation, but big coordinated initiatives are more difficult to achieve. Energy needs are increasingly delivered through a patchwork of initiatives. 

Both Mountains and Oceans deliver net-zero emissions (NZE) from the energy system by the end of the century. But they fall short of the temperature goal of the Paris Agreement. Sky builds on this earlier work and assumes that society takes actions so as to meet the Paris goal. It requires unprecedented and sustained collaboration across all sectors of society, supported by highly effective government policy. 

Carbon goals

Shell acknowledges a global economy in sharp transition on carbon:

We believe society will have to achieve net zero additional CO2 equivalent emissions from energy by 2070. That will likely require the world to reduce the amount of CO2e produced for each unit of energy consumed from today’s level of around 74 grams to around 43 grams of CO2e per megajoule by 2050

By 2050 we intend to match the Net Carbon Footprint of the global energy system. To achieve this we need to go even faster than society because our starting point is higher. It will likely mean we need to reduce the Net Carbon Footprint of our portfolio of energy products by around half from its current value of around 83 grams of CO2e per megajoule, to around 43 grams of CO2e per megajoule by the middle of the century. We plan to reduce our Net Carbon Footprint by around 20% by 2035 as an interim measure.  

25X increase in biofuels production by 2050

Given the gigantic and global nature of Shells’s business, they note how dramatic the energy transition would have to be at Shell “to match the energy system by 2050”. They illustrate with six examples and note that meeting the Sky scenario could mean achieving not some, but all of them:

■ Selling the fuel produced by 25 biofuel companies the size of our joint venture Raízen in Brazil. 

■ Selling the output from 200 large offshore wind farms the size of our planned Borssele wind farm in the North Sea. 

■ Changing the proportion of gas in the total amount of oil and gas we produce, so that natural gas increases from 50% to 75%. 

■ Selling enough electricity on our forecourts around the world to meet three times the total demand for power in the Netherlands. 

■ Developing the capacity of 20 CCS plants the size of our Quest CCS plant in Canada. 

■ Planting forests the size of Spain to act a carbon sink for emissions that still exist.  

Today’s energy system is the result of many decades of choices by consumers, energy suppliers and governments. Societies want energy that is reliable, widely available and affordable. As a result, hydrocarbons account for more than 80% of the energy mix.  

Capital investment in the trillions; solutions vary by sector

Shell noted that “capital investment measured in trillions of dollars over decades will be necessary to finance both new sources of energy, and to adjust existing infrastructure. It will also be necessary to change how energy is consumed, as a vast range of capital assets that consume energy – from homes, domestic appliances, vehicles, machinery and entire industries – will need to be adapted or replaced.”

The investment will vary by sector. “Some, like clothes and food manufacturing, require low temperature processes and mechanical activities, which electricity is well suited to deliver,” the report found. But electrification is not universally easy to achieve. “Other sectors, such as the iron, steel, cement, plastic and chemical industries, and certain types of transport, currently rely on the unique ability of hydrocarbons to provide extremely high temperatures, chemical reactions or dense energy storage. Today, many of these cannot be electrified at all, or only at a prohibitively high cost.”

Shell’s Sky scenario

Turning to more specific actions and consequences, the company went deep into the changes that would come from meeting the net-zero CO2 emission goals of the Paris Agreement, as contemplated in the Sky scenario. The five highlights were:

Mobility: The percentage of internal combustion engines (ICE)in passenger cars falls from 100% in 2010 to around 75% by 2030. By 2050, it is impossible to buy a new passenger vehicle powered by an ICE anywhere in the world.  

Electricity: The share of electricity in final energy consumption rises from 18% today to 26% by 2030 and grows to as much as 50% by 2060. Renewable energy overtakes fossil fuels such as oil, gas and coal as the primary source of energy in the 2050s. The world uses hardly any fossil fuels in the power sector after 2060. The share of nuclear in the global electricity mix remains steady at around 10% to 2070. A new addition to the sector is generation from biomass combustion, which is linked with CCS to offer an important carbon sink.  

Industry: Sky assumes that industrial applications are electrified where possible. To provide the negative emissions required to achieve net-zero emissions from the energy system, Sky requires the construction of around 10,000 large CCS plants by 2070, compared to fewer than 50 in operation in 2020. 

Land use: Sky achieves net-zero global deforestation by 2070. In addition, an area the size of Brazil being reforested offers the possibility of limiting warming to 1.5°C, the ultimate ambition of the Paris Agreement. 

Hydrogen: The share of hydrogen in total final energy consumption rises from less than 1% before 2040, to 6% by 2070. It is used as a high-density and storable energy source in transport and industry. Importantly in Sky, it is produced from water electrolysis using mainly renewable power.  

Reshaping the Shell portfolio: Shell New Energies

The Shell portfolio is, thereby, on the verge of a major shift. The “New Energies business is exploring new fuels for transport, where our activities range from developing advanced biofuels, made from waste and non-food plants, to launching hydrogen refueling stations and recharging for electric vehicles,” the company said. So, a sort of “All of the Above” ambition. 

Primarily, expect a ramping up in Shell’s gas and electricity businesses — and to a lesser extent investment in biofuels and hydrogen. And they foresee “a range of between $40 and $100 dollars per barrel of oil to 2030 to be likely.”

The surprising attraction is renewable power. As Shell notes, “The decline in costs of solar and wind generation, along with the electrification of the energy system, make the development of renewable energy resources increasingly attractive for society, and an attractive investment opportunity for Shell. “ But for the time present, the investment will be relatively limited for Shell compared to the ongoing investment in convention fossil fuels. “We expect our capital investment in New Energies to be between $1 billion to $2 billion a year, on average, until 2020,” they noted. “ We expect the largest part of our investments to be in power, where we will invest to gain access to customers, and in generation powered by solar, wind and gas.”

Establishing a higher ROI hurdle for new fuels than power

As we have seen elsewhere, the world is turning toward a double standard on investment in renewables, and Shell is no exception. In committing the bulk of its investment attention to power, it frankly confesses that it is seeking “equity returns of between 8% and 12%” from power projects. However, for new fuels, the company only noted in its forecast that it would “expect returns on capital similar to those in the Downstream business.”

It’s Shell’s disingenuous moment, because only three weeks ago they updated financial markets on those Downstream return ambitions. As reported here, “Shell plans to make a yearly investment of around $7-$9 billion in its downstream segment, forecasting a return on average capital employed (ROACE) of more than 15%.” 

One is left to imagine how the investment options and decisions would look if the company decided that it needed only the same returns in advanced liquid fuels that it expects from new power investments, instead of expecting advanced fuel projects to be 100% competitive with established fossil fuel technologies from the get-go.

Developing conventional and advanced biofuels 

As Shell notes:

“Biofuels today make up around 3% of global transport fuels and we expect their share to grow as the world shifts to lower-carbon energy. Shell is one of the world’s largest producers of biofuels made from sugar cane, through our joint venture in Brazil called Raízen. Raízen (Shell interest 50%) produces low-carbon biofuel from sugar cane. This Brazilian sugar cane ethanol can emit around 70% less CO2 compared with gasoline, from cultivation of the sugar cane to using the ethanol as fuel. In 2017, Raízen produced around 2 billion liters of low-carbon ethanol from Brazilian sugar cane. Shell is also one of the largest blenders and distributors of biofuels worldwide. We purchase biofuels to blend into our fuels to comply with country regulations and mandates.  

“We are active in the development of advanced biofuels made from alternative feedstocks such as waste and cellulosic biomass from non-food plants. In 2015, Raízen opened its first advanced biofuels plant at its Costa Pinto mill in Brazil. In 2017, the plant produced 10 million liters of cellulosic ethanol from sugar-cane residues. It is expected to produce 40 million liters per year once fully operational. 

“In Bangalore, India, we have built a demonstration plant that will turn waste – including food, cardboard, plastics and paper – into petrol or diesel that can power cars. This provides the final stage of the R&D process we will need to see if it is successful to scale up and support the commercialization of this waste-to-fuel process. The process has been developed by a USA-based research centre, the Gas Technology Institute, and is called IH2. The IH2 process uses heat, hydrogen and catalysts to convert large molecules of the sort found in waste into smaller fragments. Oxygen and other contaminants are removed to create two pure elements: hydrogen and carbon. The two are then combined to create hydrocarbon molecules: petrol, diesel and jet fuel.”


The Digest noted the absence of any specific mention of VIrent technology — although Virent’s approach certainly fits under “advanced biofuels made from alternative feedstocks such as waste and cellulosic biomass from non-food plants.” But we also wonder whether there will be emphasis on technologies like Virent to deliver renewable chemicals, because Shell’s ambitions in  chemicals are increasing substantially even as it looks to reduce its petrochemical dependencies.

Shell notes:

“We plan to increase earnings in our Chemicals business from $2.6 billion in 2017 to between $3.5 billion and $4.0 billion per year by 2025. We expect strong demand growth for chemicals in the medium term, mostly because of economic growth and demand for the everyday products that petrochemicals help produce. Chemicals can also help deliver some of the materials that will help the energy transition – such as high-performance insulation for homes and light plastic parts in cars and planes that can help save energy. Petrochemicals are also ingredients for components in energy-efficient lighting and low-temperature detergents.”

“By 2050, consumers in this scenario will not be able to buy an internal combustion engine (ICE) anywhere in the world”

The various Shell scenarios each show “a rise in demand for electric vehicles in the next few decades,” but it gets dramatic in the Sky scenario, which foresees that “more than half of global new passenger car sales are electric by 2030. 100% of new car sales will be electric by 2030 in places such as China and Western Europe, and by 2035 in North America and some other parts of the Asia Pacific region.”

By 2050, consumers in this scenario will not be able to buy an internal combustion engine (ICE) anywhere in the world. The result? In the Sky scenario, “global consumption of liquid hydrocarbon fuels in the passenger segment falls by 1.5-2 million barrels per day by 2030 compared with today.”

Hydrogen Council and the Energy Transitions Commission 

There are two global collaborations that Shell highlighted in the Energy Transition Report that merit special attention, and they are the Hydrogen Council and the Energy Transitions Commission. As Shell describes them:

Hydrogen Council  In January 2017, Shell and other companies launched the Hydrogen Council, a global coalition of chief executives working to raise the profile of hydrogen’s role in the transition to a low-carbon energy system. The council seeks to accelerate investment in the development and commercialization of the hydrogen and fuel-cell sectors. It provides recommendations to ensure appropriate conditions are in place to facilitate the deployment of hydrogen technologies. The council comprises 18 CEOs of energy, transport and industrial multinationals.  In January 2017, the council published a report: “How hydrogen empowers the energy transition“ which further details hydrogen’s potential. In November 2017, the group launched a second report, called “Hydrogen, scaling up,” outlining a path to greater hydrogen deployment and its role in the energy transition.  

Energy Transitions Commission. In 2015, Shell helped establish the Energy Transitions Commission which aims to accelerate change towards low-carbon energy systems that enable robust economic development and limit the rise in global temperature to well below 2°C. The ETC brings together leaders representing a wide range of sectors and interests: investors, energy companies, innovators, industrial energy users, nonprofit organizations and research institutes. As of October 2017, the ETC had 29 members. It is chaired by Lord Adair Turner and Dr Ajay Mathur. Chad Holliday serves as Shell’s Commissioner.  

The Bottom Line

There are scenarios, Scarenarios, and there is the real world to come that will likely be neither. Let’s put that into perspective, these are not projections, these are estimates of likely situations and Shell is making business decisions based on them. 

In the long-term, these are striking changes but they are evolutionary. In some ways, this is an attempt to put Shell’s investments into context for potential critics adopting a “hurry up” posture. The biggest changes in Shell’s business come between 2030 and 2050, in which it turns sharply towards renewables as hydrocarbon demand slows. For those welcoming a low-carbon future, it’s good news. For those looking for energy companies to maintain earnings, it’s good news. But not tomorrow.

We note the appetite for power projects with an 8-12% return while requiring 15% for advanced fuels. That clearly reflects the hurry-up in this document, which is less about Paris and more about a desire to get into the business of producing and delivering electricity as a world-scale replacement for producing and delivering fuels. Lower returns for strategically vital projects — that’s been accepted at big companies for a long time. 

Advanced fuels? To the extent that they compete head-to-head with conventional fuels, Shell will be delighted to do them, and is investing  in technologies that it believes will achieve that. 

But Shell hardly needed an Energy Transition report to justify fuel projects that meet current investment hurdles — that’s energy-as-usual, not energy transition. The Energy Transition that is leading to this report comes in the form of electrons. The company is advising regulators that electricity will lead Shell towards meeting its Paris Agreement goals. Meanwhile, the company is advising shareholders that it sees not only “freedom to operate” in a future dominated by electric power, it sees good business too. 

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