According to a recent study by Accenture, the biofuel sector is repeating the pattern that the dot.com companies had during the early 2000s. In words of Matías Alonso, an Accenture partner, "At this point there is going to be a huge boom until it becomes evident how difficult growth is for this market. At the end, only the strongest and more stable contestants will remain. [...] Nevertheless, biodiesel and ethanol producers are going to be the leaders of the energy market because biofuels will become a strong asset in the sector."

Companies have to adapt themselves also to different legislation and the rest of realities of the sector, such as second generation biofuels, hybrids, the increase in fuel demand in China and India. Only the companies able to face those challenges will survive. The key factors to determine failure or success for these companies are their ability to guarantee their raw materials, their storage and distribution management and cost reduction, their concurrence and balance with food crops, and the approval of legislation in favor of biofuels to reduce CO2 emissions. Last but not least, companies will have to deal with governmental pressure which wants to guarantee energy security throughout diversification and local production. Whew.

The report also asks the biggest question about this issue: technology. Although it's clear that technology will evolve and will improve biofuel production, it's yet unclear what and how many improvements new techniques will deliver.

Finally, the report forecasts a good future for sugarcane ethanol. Biodiesel made from vegetable oils does not have such a good future, because of the impact of human consumption increase, although it mentions jathropa and soya as the key crops to keep an eye on.

[Source: Accenture via Econoticias]


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