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Oil Companies/Supermajors Are Entering Biofuel Space As a Part Of Energy Transition

Introduction

A 3rd generation biofuel under testing phase
Large oil & gas companies in biofuels industry

In the oil & gas industry, oil supermajors term commonly refers to the group of integrated oil companies (IOC) that has a presence in the complete cycle of hydrocarbons, starting from exploration & production to downstream refining and fuel retail operations. The group mainly includes BP, Chevron, ExxonMobil, Shell, and TotalEnergies. Therefore, this thought piece will mainly focus on these companies’ strategies and investments in the biofuel space.

Over the years, these supermajors have maintained a dominating position in the refining industry and captured about 12% of the global refining capacity. However, in the last decade, the industry has witnessed a common trend among all the supermajors i.e., the rationalization of refining capacity due to weakening refined product demand, sustainability trend which is strongly supported by stringent environmental regulations mainly in developed economies, and increasing support in energy transition space.


These factors have created lots of buzz for biofuels as these fuels are the closest sustainable alternatives to fossil fuels and have already been at the commercialized stage in many markets. Biofuels are mainly characterized into four generations, 1st generation, 2nd generation, 3rd generation, and 4th generation. Among these, currently, 1st and 2nd generation fuel production technologies are available at the commercial level whereas 3rd and 4th generation are either demonstration phase or have no development yet happened. Since generation 1st biofuel is not very sustainable as these fuels are derived from food crops that are available for human consumption. Therefore nowadays, the industry is mainly focusing on the advancement of 2nd generation biofuel.


Why biofuels are gaining traction among oil companies?

Biofuel can be used as a drop-in fuel in the transportation industry

Drop-in fuels mean that the fuel can be used in the existing fuel system without the need to change the complete fuel infrastructure. As the transportation industry is one of the largest consumers of refined products, therefore, reducing fossil fuel consumption from the transportation sector is critical to achieving net-zero targets. Biofuels can be used as a drop-in fuel in the transportation sector and thereby helps in mitigating carbon emission. Therefore, biofuels are considered one of the alternatives to energy transition from conventional fossil fuels in the transportation sector.


Support given to oil companies to increase biofuel production

Countries across the globe have taken net-zero commitments at the international level and to achieve their targets, they are progressively focusing on conventional fossil alternatives. Among many alternatives, they are focusing on biofuels as well. This is because the electrification of the transportation sector will happen over a long period of time. Therefore, countries are supporting the biofuel industry through several lucrative policies.


Further, many countries are highly dependent on crude oil & gas imports and since the oil & gas market is highly uncertain therefore in many times it marks a dent in the crude importing country’s economy. As biofuel is produced using waste feedstock (2nd generation), thus, this can be produced in any country without much dependency on import. This is one of the key reasons why governments across the world are promoting biofuel production.


Oil supermajors biofuel target

Company

Current biofuel production/supply

Biofuel production target

BP

27,000 b/d (2022)

50,000 b/d (2025)

 

100,000 b/d (2030)

Chevron

40,000 b/d (2022)

100,000 b/d (2030)

ExxonMobil

NA

200,000 b/d (2030)

Shell

Supplied 9.5 billion liters (2022)

NA

TotalEnergies

Supplied 3.3 million tons (2022)

15 million tons per year by 2030

 

1.5 million tons per year of SAF production by 2030

Oil supermajors' investment decisions and developments in biofuel/energy transition


BP

Chevron

ExxonMobil

Shell

TotalEnergies

How Insightutive can help you to grow into the biofuel space?

Insightutive offers a complete suite of products related to the biofuel market including (1.) biofuel project dashboards; (2.) global, regional, and country market research reports that help in understanding biofuel market size, competition, supply-demand analysis, and players’ performance among others; and (3) biofuels production economics based on several manufacturers’ technologies like Axens, Neste, Topsoe, and Honeywell UOP, among others.


Apart from this, if you have any specific research requirements, we can be your go-to partner through our customized research service. A dedicated team with years of experience in the biofuel space will work on your requirements only.




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