Biofuels' Time of Transition: Achieving High Performance in a World of Increasing Fuel Diversity. Biofuels Study, Part Two

In spite of practical and political challenges, biofuels are gaining global momentum as a renewable and sustainable transportation fuel. As a result, a global industry is emerging around the production, processing and distribution of biofuels. As the momentum for biofuels grows, Accenture believes that only those companies that can navigate the patchwork of different incentives and changing market dynamics will achieve high performance.

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Accenture's first biofuels study, Irrational Exuberance?: An Assessment of How the Burgeoning Biofuels Market can Enable High Performance—A Supply Perspective, examined the biofuels supply market. This second report, Biofuels Time of Transition: Achieving High Performance in a World of Increasing Fuel Diversity, examines a number of crucial demand elements—and aims to pinpoint the future timescales, dynamics and demand drivers behind the global biofuels market.

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The demand side of the industry that supports biofuels growth is examined, including:

• Consumer influence
• Original equipment manufacturers' (OEMs) role
• Distribution and oil company activity
• Infrastructure development
• Financial market immaturity
• Technology evolution

In addition to a focused analysis of the evolving biofuels marketplace, the study includes detailed case studies on topics influencing the global biofuels market, such as land-use change and the arrival of the plug-in hybrid.

The report has a number of key messages, including:

• The impact of biofuels on food supplies has been exaggerated during the “food vs. fuel” debate.
  
  
• While governments are expected to guide sustainability through the legislative and regulatory environment, their supporting role as consumers is often underrepresented.
  
  
• A number of private-sector industries are also moving—or considering moving—toward greater adoption of biofuels, but they remain highly sensitive to public perceptions.
  
  
• International oil companies (IOCs) and national oil companies (NOCs) are investing in infrastructure to blend biofuels to scale as compliance with mandates becomes a more urgent issue.
  
  
• Infrastructure investment is critical to achieving global scale and trade.
  
  
• Financial markets are still immature and risk management is a significant challenge.
  
  
• Technology currently supports the development of biofuels, but there are game changers on the horizon.
  
  
• A far more diverse transport fuels market will develop.

Market participants seeking to achieve high performance in biofuels will need to master seven key capabilities to navigate through the transition. These are:

• An effective nonmarket strategy
• Superior investment
• Partnering
• Supply chain management
• Customer/contract management
• Trading and risk management
• Portfolio of investments in various technologies

As the biofuels sector continues to develop, participants' strategies and plans will continue to evolve. Accenture's research can help clients navigate the diverse array of incentives available, and understand the dynamics of the constantly evolving market.