Study Questions If Transportation Biofuels Economically Sustainable?

LONDON--Many see transportation biofuels as a way of reducing carbon emissions in the face of climate change and of mitigating the volatility of the world energy markets. But the question arises “given dependency on high oil prices and political support, are transportation biofuels economically sustainable?” Arthur D. Little’s global study on the Sustainability of Transportation Biofuels explores the key issues of this dynamic marketplace to help investors, policy makers and many other stakeholders make informed decisions.

“The biofuel market is thriving in countries which have the most favourable political incentives and availability of cheap feedstocks. But long term survival of the various biofuel options is far from clear, as virtually all are dependent on government support and/or high oil prices,” comments Roger Hill, Head of Arthur D. Little’s Global Energy Practice.

Despite the current support, there are uncertainties regarding the long-term sustainability of biofuel technologies and applications. This is due to the fact that most biofuels are cost competitive only in times of high oil prices. Also, the competition between fuel crop and food crop needs and the impact on biodiversity may lead to withdrawal or reduction of government support in the long-term. Finally, there is uncertainty regarding those who will be the active players in the value chain. For instance, will there continue to be on-off joint ventures supported by private equity, or will the market be dominated by energy majors and others?

These ambiguities make investors more sceptical about the potential for making long-term profits by investing in biofuels. To make the right investment choices potential investors, suppliers and policy makers must have in-depth, independent data, covering all aspects of the bio-fuels debate. Critical factors must be examined such as the competition between food and fuel; carbon and energy balances; and theoretical demand outstripping supply or government support resources.

These challenges illustrate the importance of choosing the technology platform and the right segments in the biofuel value chain when making an investment decision. The study will examine how investors in biofuels can distinguish where and how to earn an attractive return on investment. It will also examine when economic conditions might change during the life of the investment and alter the factors that initially resulted in acceptable returns.

Please visit: http://www.arthurdlittle.com/biofuels/

About Arthur D. Little

Arthur D. Little (ADL), founded in 1886, is a leading global management consulting firm that links strategy, innovation and technology to master complex business challenges while delivering sustainable results to our clients. Arthur D. Little has a collaborative client engagement style, exceptional people, and a firm wide commitment to quality and integrity. ADL is proud to serve many of the Fortune 100 companies globally in addition to many other leading firms and public sector organizations.

Arthur D Little has over 30 offices worldwide, employing over 1,000 people. If you would like additional information on the firm, please visit www.adl.com.