## Accenture Reports Identifies 12 Disruptive Technologies Most Likely to Transform Supply and Demand of Transport Fuels and Cut Emissions Within Next 10 Years

##### 10 November 2009
 Accenture timeline for evolution of electrification technologies, the “game-changing” subset of the disruptive technologies. Source: Accenture. Click to enlarge.

Accenture has identified 12 technologies that it concludes have the potential to disrupt the current views of transport fuels supply, demand and GHG emissions over the next 10 years. In a report comparing advances in combustion engines, biofuels, electrification and other technologies, Accenture warns that the commercial viability of those disruptive technologies will be delayed unless regulators more proactively support the transformation of science into applied technologies.

“Betting on Science – Disruptive Technologies in Transport Fuels” selected 12 innovations in electrification and genetically modified biofuels, as well as existing fuel sources that will have the most immediate impact on emissions and on the gasoline and diesel markets. The study profiled 25 companies that aim to commercialize these technologies in the next five (i.e., by 2014) and also examines different global markets.

Accenture defined disruptive fuel technologies as those that:

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

Accenture divided the technologies into three groups:

Evolutionary. Technologies that stretch today’s assets and resources. These are “no-regret” technologies, as they represent actions that can be made today to make a significant impact on CO2, energy security and the optimization of local resources. These include:

• Next-generation internal combustion engine. Significant gains are achievable, which are often overlooked. Getting more miles per gallon out of conventional vehicles achieves the same end-goals of lowering carbon emissions and increasing energy security as the movement toward the electrification of transport. While there are significant requirements for infrastructure and incentives to bring about the widespread electrification of vehicles, improvements to the internal combustion engine could be quickly deployed and assuage many of the voices currently clamoring for change.

• Next-generation agriculture. There is significant potential for improvement in agriculture, particularly given the historic advances made with genetic modification (GM) of crops to obtain desired characteristics, increase yield and reduce harvesting and processing costs. This is coupled with the innovation seen in first-generation players to drive down costs, energy and water use, and GHG emissions. The biggest challenge is in the deconstruction stage, with high costs for pretreatment and enzymes. These costs have to go down, but improvements will come from optimizing the whole system, from feedstock to production.

• Waste-to-fuel. The production of transport fuel from waste is a nascent technology, largely in the lab and pilot stages of commercialization at present. Subsequently, while there are small local government pilot projects in place, there is little legislative support or financial incentive to develop the technology at the current time. If the technology can be brought to scale, then waste feedstock processing could solve two problems at once—a source of low-cost, low-carbon renewable fuel, and a solution to the ever more critical issue to landfill reduction.

• Marine scrubbers. This technology could avoid both the need for significant capital investment to upgrade refineries to produce more low sulfur fuel oil (LSFO) and greater dependence on costlier, low sulfur crudes. It also has the potential to significantly and economically reduce emissions from seagoing vessels beyond that which can be achieved by simple fuel switching. Marine scrubbing is technically feasible—several companies have successfully tested the technology on demonstration projects. However, the final technology winner has not yet been identified, with investment dollars currently spread across seawater and fresh water solutions.

Revolutionary. Technologies that support the creation of fungible fuels, enabling the use of the existing distribution infrastructure. These technologies would remove the distribution infrastructure constraints on the speed and scale of penetration of biomass-based fuel. These include:

• Synthetic biology: sugarcane-to-diesel. If the economics of synthetic biology applied to the sugar-to-diesel pathway could come close to the sugar cane-to-ethanol economics, then there would be significant potential in diesel markets given the cost and availability of sugar cane (compared to the traditional biodiesel feedstocks such as palm, soy and rapeseed). The use of synthetic biology to convert sugars to diesel has advanced significantly in the past one to two years, and it is close to commercial viability. Two companies, Amyris and LS9, are planning to break ground on commercial plants in 2011, with production starting by 2013.

• Butanol.Fuel from butanol is a highly desirable product with energy content similar to gasoline—higher octane and less affinity to water—meaning it can be transported through existing pipelines, use existing infrastructure and be blended with gasoline at ratios much higher than ethanol. However, there are issues hampering the production of butanol and the economics are unproven. Researchers are looking to adapt traditional butanol production (via the ABE or acetone-butanol-ethanol process) by consolidation of process steps and potential genetic modification of bacteria. Genetic engineering and advances in synthetic biology could also lead to breakthroughs from companies such as Gevo and Butamax, who have proven the technology at pilot scale and are both planning commercial plants in the next few years.

• Bio-crude. The benefits of a bio-crude that could take advantage of existing refining and distribution infrastructure with little extra investment are clear, and could lead to a breakthrough in the adoption of renewable fuels worldwide. Given this potential, what is most surprising, said Accenture, is how few companies and technologies there are, compared with many of the other technologies covered in this report. There are uncertainties over the technology, but with the right level of investor funding, bio-crude could be a disruptive technology for transport fuel.

• Algae. Technologically, the algae industry is very fragmented—possibly the most fragmented of all of the industries covered in this report, Accenture noted. There are many players, and the oil industry (including Shell, ExxonMobil, BP, Valero and Chevron) is looking at a range of methods to eliminate steps in the process to reduce complexity and cost. As companies try to find the lowest cost option, several different operating models are emerging. Accenture provided case studies of companies with plans for commercial production within five years. However, there are considerable technical constraints.

In ExxonMobil’s announcement of its investment in Synthetic Genomics (earlier post), the company stated that “significant work and years of research and development still must be completed,” with the key challenge being “the ability to produce it [algae] in large volumes which will require significant advances in both science and engineering”. It is therefore likely, Accenture concluded, that it may take more than current estimates of five years in order to reach commercial scale.

• Biojet (renewable hydrocarbon fuels for aviation). The aviation industry will face increased pressure to increase efficiency (because of the cost of fuel and competitive nature of the market) and reduce carbon emissions. The outlook for airline biofuels is positive as it is one of the few ways to reduce emissions and many of the technology challenges have been overcome. However, Accenture noted, the scale is questionable given the feedstock supply constraints and the competing demand for biofuels in road transport. This demand for feedstock will continue to support developments in high-yielding feedstocks such as algae and also provide support to other alternatives to diesel for cars and trucks, i.e., save the feedstock for jet fuel (where there are limited alternatives to biofuels) versus using it for road. Improvements in design and operational efficiency will continue to be important.

The game changer. Electrification and the technologies that are needed for the scale-up of plug-in hybrids (PHEVs) and to enable the opportunities that PHEVs could bring in optimizing generation and transportation resources. Technologies in this area include:

• Plug-in hybrids. Plug-in electric vehicles have received increasing amounts of attention from government and industry, indicating they will be part of the future vehicle landscape, with PHEVs (plug-in hybrids) likely to be the most disruptive model within the next five years. PHEVs benefit from lower-running costs than both internal combustion engines and HEVs, as well as extended driving range over EVs, but the capital cost of the battery and availability limitations still need to be overcome for the economics to work favorably without regulatory incentives.

Moreover, while PHEVs have the potential to be emission-free, the reduction in GHG emissions is highly dependent on the generation mix and will therefore vary by country. The ability of the grid to withstand PHEV penetration rates will further vary by country. However, using smart, off-peak charging, the grid will be able to manage initial PHEV penetration and enable load leveling for utilities.

• Controlled charging. Controlled charging enables utilities to manage energy demand more effectively and consumers to benefit from lower off-peak tariffs. This will be key in delivering the aspirations of widespread electrification of vehicles. Municipalities across the globe have announced ambitious roll-outs of charging point infrastructure. The growth of the controlled charging market will be heavily dependent on the uptake of plug-in electric vehicles and how incentives for the growth of PHEVs and EVs are driven/managed by policymakers and businesses.

• Vehicle-to-grid (V2G). V2G is technically feasible with demonstration projects currently underway. These projects vary in focus, with some assessing the communications between the vehicle and the grid, some looking at how to maximize vehicle storage to increase the quantity of renewables being used, and some looking at a more integrated smart grid offering.

All projects, albeit in the early stages, have proven that V2G has the potential to significantly disrupt the supply and demand relationships—with end-electricity consumers potentially becoming an essential grid storage resource—and change both the electric power and transport fuels landscapes, Accenture concludes. However, to reach this potential, V2G is dependent upon the commercialization of electric-drive vehicles, cooperation between the various industry players, and the education of consumers. Initial electrification initiatives will determine the latter’s potential success.

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 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.

Never before have we demanded so much from our regulators and governments. The science has made enormous progress, but it now requires government leadership to accelerate the commercial viability of these low emission technologies. That means our policy makers need to understand the technologies enough to make the necessary trade-off decisions quickly and to address issues such as genetic modification and intellectual property rights head on. They will also need to provide financial support and consumer incentives.

—Melissa Stark, Senior Executive at Accenture and lead author of the report

The report makes 10 key findings:

1. There is low-hanging fruit where the debate should no longer be about “if” or “how,” but about “when” and “how fast.” Proactive government regulation has the potential to support and accelerate the sustainable development of these technologies. Examples include increasing crop yield; rewarding improvements in water and energy use; supporting waste to energy or fuel; and continuing to roll out higher-efficiency standards.

2. Genetic engineering is transforming biofuel production (feedstock, deconstruction and conversion), often eliminating, combining or simplifying steps.

3. Algae could exponentially increase available feedstock.

4. Technologies and assets will be combined and evolve. Accenture’s view is that the final scale will be achieved by a combination of first- and second-generation technologies—rather than by any one technology in isolation. There is increasing creative application of multiple technologies to the process of using biomass to produce different products, while continuing to reduce costs.

5. Batteries are the “feedstock” of electrification and constrain its potential. The case for the electrification of vehicles is well understood. In the same way that feedstock characteristics and supply constrain the potential of biofuels, battery characteristics and supply constrain electrification, highlighting a number of challenges that need to be overcome.

6. Electrification heralds two key players in transport fuels:utilities and battery manufacturers.

7. At least in the next five years, possibly even 10, PHEV scale-up is not dependent on comprehensive “smart” grids.

8. There will be increased activity in the airline and marine industries on options to reduce GHG.

9. Markets will optimize around their own domestic agenda, local resources and local economic development opportunities.

10. The trajectory of supply, demand and GHG footprint of transport fuels is being reshaped now.

Key implications for business. Accenture suggests that competitors in the market for new transport fuels must consider key actions:

• Place scientists and engineers in leadership positions, not only to drive technology development, but to support sound regulations and policy by facilitating debate and understanding of the pros, cons and trade-offs between the technologies.

• 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 PHEVs.

Resources

• Betting on Science: Disruptive Technologies in Transport Fuels (Study Overview)

Interesting overview. But it leaves out truly disruptive technologies centered around new physics, e.g. LENR, and excess heat catalytic reactions.

With all the funds Obama has ostensibly made available - someone should take lead on algae. Obviously this is not happening because it threatens status quo. While there are clearly great hurdles to jump, it is still a reletively simple process: grow algae, squeeze the lipids or alcohol out, put it in distribution system. We'd like to see DARPA head the mil development and a coalition of big oils to seriously fund some commercial development. SBIR can administer grants and loans to small business and entrepreneurs.

This three pronged funding/development approach should be able to produce several algal oil demonstration plants in the 5 year near term. Fully scaled commercial production should be achievable in ten years. After all, we went to the moon in less than ten years from a standing start. Algae is little more than a farming challenge.

Let's keep moving forward!

This is a starving article from exxon-employees. Algea fuel is ready since the beginning of the earth and is entirelly known and don't need genetic modifications from criminals that want to ' invent ' a new body for them instead of the actual human body made by f&%(*&g like cows or any other animals or plants, LOL. This is a deeply depressed maniac website.

All can be taken at the second degree. Most humans 'think' that scientists will invent a new body-civilisation system, LOL, LOL. They event cannot power a simple car without big big problems and cost and pollution, they are anti-human incompetants working for the army mainly.

a.b. - you make me feel middle-of-the-road, but I don't know if that's a good thing.

a.b. "All can be taken at the second degree." Probably true. Do not let them give you the third...

Coal and natural gas to liquids with carbon dioxide capture. Cars must be made that can run on pure methanol, pure ethanol, or gasoline. Conversion to all diesel hybrids will save a lot of fuel and refining costs. Grow a lot more trees where ther is water enough like the treeless areas around mount St. Helens.

Plug in hybrids can make a lot of difference. ..HG..

I like their assumption that battery costs will eventually dip below $500 per kWh by 2015, finally making PHEVs viable. I can already buy LiFePO4 on the internet for less than that and BYD are currently making them for less than$300 per kWh.

Not sure why v2g is considered game changer. Sure it would be great (grid stability) but doesn't seem imperative.
Sulleny: yes! good analogy, going to the moon vs. growing algea. Makes algea look pretty simple by comparison. We definitely should be able to do it in 10 yrs (if not a lot sooner).
Funny, Hydrogen is nowhere to be found here.

"Grow a lot more trees where ther is water enough like the treeless areas around mount St. Helens."

This is happening naturally but could be accelerated by man. St. Helens is treeless only because she blew her top.

achieves the same end-goals of lowering carbon emissions and increasing energy security as the movement toward the electrification of transport

The end goal is 0 carbon emissions and 0 dependence on finite resources. Lowered emissions and decreased dependence and only be an intermediate step.

While we are at it,

"Algea fuel is ready since the beginning of the earth and is entirelly known and don't need genetic modifications from criminals that want to ' invent ' a new body for them instead of the actual human body made by f&%(*&g like cows or any other animals or plants, LOL. This is a deeply depressed maniac website."

All can be taken at the second degree. LOL, LOL. They event cannot power a simple car without big big problems and cost and pollution, they are anti-human incompetants working for the army mainly.

Can't say the same about "f&%(*&g like cows" but hey if thats what turns tou on.

"Most humans 'think' that scientists will invent a new body-civilisation system,"
Which part doesn't apply to you again?

"This is a deeply depressed maniac website."
Why bother coming here then.

"They event cannot power a simple car without big big problems and cost and pollution"

Can you show us how it's done then?

"they are anti-human incompetants working for the army mainly."

Wow, thats the fist time I've been accused as working for the army.

a.b.- You're suggesting that Accenture wrote this article in the best interest of Exxon? Do some research, Accenture is a multi-national company with only a tiny fraction of a percentage of its revenues coming from oil companies. As they also are the 2nd largest systems implemter in the world, they'd be far more interested in V2G (they already have that as an offering) implementations than oil rigs. Additionally, why risk their position of respect in the consulting community by releasing a false report? Your post is far more biased than their report.

Anne- 0 Carbon emissions? Do you mean 0 carbon emissions from vehicles? It is technically impossible to ever reach a state of 0 carbon emissions as an economy. Perhaps we should just go back to our hunter-gatherer ways.. life was so much better back then.

Overall, I think this is a great report as it isn't released by oil interests or the green industry. It offers an unbiased; objective view on the best path towards the ultimate end game of removing reliance on a finite resource (with the added benefit of polluting less).

Accenture is a business consulting company with many corporate clients. Several companies pay them a lot of money to identify forces that will shape business over the next decade. Call it a self fulfilling prophecy or just good research and analysis, the fact remains that major corporate interests read these reports and make their plans accordingly.

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