Betting on Science: Disruptive Technologies in Transport Fuels

It profiles 25 companies bringing these technologies to market and assesses the level of private activity in 10 countries and summarizes their local regulatory landscape.

The study comprised significant primary and secondary research, including analysis of more than 100 companies and interviews with leading scientists and more than 30 companies. Accenture defined disruptive fuel technologies as those that:

• Reduce hydrocarbon fuel demand by more than 20 percent by 2030.
   
• Save greenhouse gas emissions (GHG) by more than 30 percent relative to the hydrocarbons they replace.
   
• Will be commercial in less than five years.
   
• Will be competitive at an oil price of $45 to $90 at their commercial date.
   

In this 300-page report, Accenture’s global team of more than 15 people, have demystified these technologies—by providing data on when and what the trajectory might be for commercial viability—and to highlight the key challenges in economically bringing these technologies to market.

Accenture concludes that, while all 12 technologies are in development today, they may not all be successfully brought to market. To improve the chances of commercialization, policy makers will need to take action.

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Never before has there been so much uncertainty about the future supply and demand for hydrocarbons. There are a number of reasons for this, but technology assumptions are a key driver.

New technologies that have higher yields per unit of energy input or allow new sources of energy to be cost competitive have the potential to completely change future supply and demand levels. In addition, options to reduce greenhouse gases will vary from those being considered today.

However, in most future energy scenario forecasts, the “disruptive” impact of specific technologies is a factor that is rarely explored in any detail.

The report makes three key findings:

• Regulators must not overlook the ‘low hanging fruit’ of existing technologies: The conventional vehicle engine offers the greatest scope for immediate emissions reductions, thanks to lighter vehicles, fuel injection and powertrain innovations. But higher efficiency standards are required. Waste-to-fuel will be an important fuel source, but legislation and financial incentives are needed to kick start this industry. Genetic engineering is increasing corn and sugar cane yields, while process innovation and technology continue to reduce water and energy consumption.
   
• Support for genetic modification will be critical to next generation biofuels: Genetic engineering is enabling next generation feedstocks that offer greater energy density, require less water and energy and can be broken down more easily. In addition, genetic modification is a key lever to the production of algae strains with higher yields and are lower in cost to cultivate and harvest.
   
• Electrification is held back by battery costs and constraints: Plug-in hybrid electric vehicle (PHEV) engines could be the most disruptive of all technologies, with most manufacturers having produced models within three years. But without regulatory incentives, the up-front cost and performance of batteries may hinder broad uptake.
   

The diversity of new fuel technologies in each local market has the potential to allow governments to better meet energy security and economic development needs than globally traded hydrocarbons do today. Although most technologies will be widely available, local conditions will determine different weightings, with Brazil focusing on sugar cane-based fuels, South Korea and Japan on electrification, and China and the United States on all fuel options.

The study concludes that, while all 12 technologies are in development today, they may not all be available or successfully brought to market. To improve the chances of commercialisation, policy makers will be required to:

• Underwrite the risk of first plants through mandates, tax incentives or even direct investment.
   
• Provide clear policy and guidance for key issues such as intellectual property protection, synthetic biology, battery technology and the efficient use of water and energy in producing biofuels.
   
• Support short-term pragmatic solutions, such as improved vehicle engine efficiency and the use of waste as a bridge to longer-term innovations.
   

Accenture suggests that businesses in the market of new transport fuels must consider key actions:

• Place scientists and engineers in leadership positions, not only to drive technology development, but to better influence regulations and government policy.
   
• Improve cooperation between multiple sectors, for instance between the battery, utilities and car industries.
   
• Accelerate commercial viability by improving project management excellence and supply chain optimization to reduce costs and increase margins.
   
• Improve risk management to mitigate the volatility of immature markets, for instance the price of new feedstocks or the level of electricity demand for plug-in hybrid electric vehicles (PHEVs).