Shell is making a push into more sustainable sources of biofuels with a deal to buy ethanol made from sugarcane waste from its Brazilian joint venture Raízen.
Ethanol, which emits far less greenhouse gas than fossil fuels, is blended
with diesel or petrol and used to power
vehicles in several countries including
Brazil,wheremost cars can use the fuel.
Second-generation biofuels made
from waste and non-edible crops have
long been touted as a replacement for
that from corn and sugar, but have been
slow to take off because of high production costs.
Shell said it would buy 3.25bn litres of
ethanol made from sugarcane waste
under a long-term agreement with Raizen, its venture launched in 2011 with
Brazilian sugar and energy conglomerate Cosan. Raízen will invest $1.5bn in
five new plants, the first of which will
start productionin2025.
In 2021, biofuels represented 3.6 per
cent of transport energy demand,
mainly for road transport, according to
the International Energy Agency.
Although the amounts remain small,
analysts project a greater role for biofuels as governments seek to reduce emissions from cars, or as a transitional fuel
in some countriesaheadofEVadoption.
The IEAis forecastingannual demand
of 86bn litres of biofuels by 2026, up 28
per cent from currentlevels.
Andrew Smith at Shell Trading and
Supply said combining Raízen’s sugarcane waste tech with the group’s distribution network and customer relationshipswould helpmeet growing demand.
The announcement comes as Shell
enjoys record profits this year on surgingoiland gas prices.
The group, which aims to cut output
of traditional fuels 55 per cent by 2030
and providemorelow-carbon fuels such
as biofuels and hydrogen, bought 9.1bn
llitres of biofuels last year to blend with
other fuels.
It has a smaller second-generation
biofuels purchasing dealwith Swiss speciality chemicals business Clariant’s
Romanian plant and is building an
820,000-tonnes-a-year biofuels facility
in Rotterdam to produce sustainable
aviation fuel and renewable dieselmade
fromwaste.
The biofuels push has alarmed campaigners,who say demand for crops that
can be used for energy has accelerated
deforestation, and note that conversion
of food crops for energy has come at a
timeof surging food prices.