Biofuels: Cutting Through the Hype

Some talk of a tipping point while others refer to a bubble about to burst. The biofuels business has, without doubt, acquired a life of its own. That is hardly surprising. Politicians have encouraged the use of renewable resources to produce transport fuels, and the market is reacting big time. Yet, there are growing fears of a biofuels bubble, inflated to potential bursting point by less well-informed investors simply following the crowd. Some believe the business is about to take off while others believe it will take a long time to fully develop. Biofuels encompass a range of blendstocks, and some will perform better than others. In this young business, biodiesel offers the greatest short-term promise. Wider use of bioethanol is expected, but difficult questions are being raised about its production and use. To this heady mix can be added growing concerns about potential hurdles to biofuels trade and technology transfer. It is noteworthy, however, that energy giant BP says it won't build any large-scale bio-refineries or plants in the near future. The technology, it adds, still has a long way to go.e