DuPont: Biofuel Not Financially Viable Until $70-$80 Oil

by Ship & Bunker News Team
Thursday November 5, 2015

U.S.-based E. I. du Pont de Nemours and Company (DuPont) says that biofuels derived from agricultural waste will not be competitive against conventional fuels until oil rises to $70 to $80 per barrel, the Financial Times reports.

It's reported that with the Brent crude futures market sitting at about $65 per barrel for December 2021 delivery, cellulosic ethanol will need to be financially or legislatively supported "for several years."

DuPont, which opened a new $255 million cellulosic ethanol plant in Iowa last week - reported to be the largest of its kind in the world - says that "second-generation" biofuel companies are realising that their business models are becoming vulnerable to the industry's economic forces.

While cellulosic ethanol is said to provide "a phenomenal environmental benefit," emitting 90 percent fewer greenhouse gases compared to conventional fuels, production levels in the U.S. are said to be low, with only 1.65 million gallons of the fuel produced last year - an estimated 4 percent of total production capacity.

Energy analyst Robert Rapier, says that managing the large amounts of plant waste created during the production of cellulosic ethanol is another considerable difficulty.

"Technically it works. Economically it's a very difficult proposition," asserts Rapier.

In October, it was reported that analysts asserted that a planned Venezuela led meeting of the Organization of the Petroleum Exporting Countries (OPEC) with eight non-member countries would be very unlikely to achieve the goal of establishing a $70 price floor for crude.