Many have recognized that the continued and growing dependence on fossil fuels exacerbates global warming problems and exposes nations to critical disruptions in fuel supply, which creates economic and social uncertainties for businesses and individuals. In response, several countries enacted initiatives and mandates that prompted a boom in alternative sources of fuel, including advanced biofuels projects. For example, in the United States, the Department of Energy has to date committed more than $500 million to support several commercial- and demonstration-scale facilities, while the Energy Independence and Security Act established a 36-billion gallon mandate for biofuels by 2022. In Europe, the Biofuels Directive put forth by the European Commission mandates transportation fuels contain 5.75 percent biofuels content by 2010. Many governments around the world have introduced similar policy aimed at increasing biofuel production.
The advanced biofuels industry faces several challenges, such as problems in obtaining funding, the management of many interfaces, high public and political attention, and pressure to grow fast. The most daunting obstacles, however, are the risks associated with the extensive use of new technology. Recognizing, correctly assessing, and mitigating new technology-related risks are essential to devising the most effective commercialization path. Once the technology is proven, the remaining challenges have to be tackled in an orderly fashion, and projects have to be conducted using Best Practices to ensure the timely deployment of large-scale advanced biofuels production.
During the last couple of years, IPA has analyzed around three dozen projects focused on the production of advanced biofuels. Our experience spans a large variety of technologies in both the thermochemical and biochemical routes and all phases of the commercialization cycle: R&D, piloting, and demonstration- and large-scale commercial application. In addition to the learnings from these projects, we have identified many advanced biofuels project characteristics that are similar to those observed in commodity chemicals, specialty chemicals, and refining and petrochemical projects. This allows us to use a large set of projects from our database and to utilize findings from IPA research to determine factors that are pertinent to the success of the advanced biofuels industry. These research areas include, but are not limited to, the Best Practices for megaprojects and joint venture (JV) projects, managing cash-flow constrains, managing late changes, accelerating cycle time, and, in particular, Best Practices for implementing new technologies.
Commercializing advanced biofuels technologies is not an easy task. In fact, many of the projects currently underway experience several problems in their commercialization effort. Using our experience, IPA can assess the risks associated with new technology, particularly the risks associated with and the status of the process development. Based on this assessment, IPA can develop the optimal path for projects to ensure successful deployment. IPA has been involved in identifing the ideal path forward for the successful comercialization of biofuels projects.
In addition to commercialization risks, IPA can also provide cost and schedule benchmarks for proposed projects. A clear understanding of risks and a set of cost and schedule benchmarks are crucial tools to minimize project surprises, to effectively manage your portfolio of activities, to align investors around the project’s prospects, and to ensure that estimates do not significantly deviate from historic norms.
IPA can also assess the level of Front-End Loading (FEL) for advanced biofuels projects and share commercialization and project Best Practices applicable to your project. These Best Practices have been statistically proven to make capital projects more predictable and perform better in terms of the cost and schedule, making them are pertinent to your project’s success. In essence, IPA’s goal is to help your company successfully commercialize advanced biofuels.