Upbeat Research Firm Sees Success for Biofuels, Hydrogen Fuel Cell Vehicles

Upbeat Research Firm Sees Success for Biofuels, Hydrogen Fuel Cell Vehicles

By John O'Dell February 23, 2010

There's a new player in the clean-tech analyst community that seems to be looking at things through a long lens - one with, perhaps, a slightly rosy hue.

Don't get us wrong, we like what they're saying over at Colorado-based Pike Research. We just hope they're right.

In the past two days, for instance, the firm has predicted big growth in both the biodiesel
market and in production and sales of hydrogen fuel cell vehicles.

Global biodiesel firms' revenue will more than triple over the next decade as producers get better at converting feedstocks such as algae and waste grease to usable fuel, Colorado-based Pike said in a report issued Monday.

Then the company said this morning that it expects to see a small explosion in the market for fuel-cell electric cars.
 
Biodiesel will be a $71 billion market in 2020, up from $18.4 billion this year, its growth driven not only by better production methods but by increased support from major oil companies that once were market foes, the 11-month old clean-tech market research firm said in a report issued Monday.

Predicting Success

On the biofuels front, Pike managing director Clint Wheelock said that while producers have been hurt in recent years by increasing concern over the social and environmental impacts of producing ethanol and biodiesel from food cops such as corn and soybeans, "prospects remain bright" for next-generation biofuels refined from waste and non-food crops.

This morning the company said it expected to see fuel cell cars begin to take off in 2014 with  the worldwide fleet of vehicles powered by electricity derived from hydrogen swelling from a few hundred today to 2.8 million by 2020.

"They are on the verge of commercial reality," said Pike analyst Dave Hurst.

Not So Easy

The number sounds big but actually represents a market share of less than 0.5 percent of the approximately 600 million light vehicles in service around the world today.

It is likely to be an even smaller share of the overall passenger vehicle market by 2020 as demand for cars and trucks swells in developing countries in Asia, Latin America and Eastern Europe.

Still, it won't be an easy number to achieve. 

Although eight major automakers have vowed to begin retail sales of hydrogen fuel cell vehicles by 2015, widespread use will require a massive global effort to install a hydrogen fuel infrastructure. So far the amounts devoted to hydrogen pale in comparison to the government and private funding being poured into battery-electric vehicle development.

Biofuels Bloom

On the biofuels front, Pike helped launch itself last year with a report projecting that production of all types biofuels would surge despite the present collapse of corn and soy prices and seeming overcapacity in the once-eager biofuels segment.

The research firm's premise was based on a belief that the U.S. and European Union nations will follow Brazil's lead by investing heavily in biofuels technology as a way to reduce dependence on crude oil.

The company predicted then that the global value of the biofuels market would more than triple to about $250 billion in 2020 from about $75 billion this year.

Its new predictions about biodiesel growth are in keeping with that earlier report.

Overcoming Obstacles

Pike's biofuels predictions come in the face of growing concern by that increased ethanol and biodiesel production since Congress passed a tax credit in 2004 equaling $1 for every gallon of biodiesel blended in the U.S. and 51 cents for each gallon of ethanol contributed to a spike in corn and soybean prices that exacerbated worldwide food shortages through the end of 2008.

Since then, overproduction as farmers ripped out other crops to plant corn and soy for fuel helped lead to a glut that has seen the price of each fall about 50 percent in the past year after prices for corn - the major ethanol feedstock in the U.S. - quadrupled from mid-2005 and mid-2008 and soybean prices almost tripled between from 2006 to early 2008.

Pike, though, argues that a broader range of feedstocks that can be used for ethanol and biodiesel will ease such concerns.

Ethanol producers are looking at cellulose from woody, non-food plants as a major new feedstock and biodiesel producers will begin using low-grade animal and vegetable greases this year with jatropha oil (a vegetable oil from a non-food plant native to Central America and Mexico coming into play in 2013 and algae oil in 2015.

By then, demand for biofuel will surge as companies start using  it for jet fuel, Pike said.

We applaud Pike's enthusiasm and hope the company's analysts are more prescient than many of their contemporaries at other clean technology research groups - the idea of looking past immediate woes with a longterm view of what the future holds appeals to us.

John O'Dell, Senior Editor

Danny King, Contributor

John O'Dell:  is an AutoObserver Senior Editor. Follow @AutoObserver on Twitter.