Bentley and the Future of Biofuels

8/8/2019 Bentley and the Future of Biofuels

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BEN TLEY AN D THEFUTURE OF B IOFUELS

Version 1.2 December 2008


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CONTENTS

1. Eecutive Summary 1

2. Bentley Environmental Strategy 2

3. Macro-Economic Contet 3

4. Can Biouels Be Produced Without Harming The Environment? 4

5. Can Biouels Be Produced Without Aecting Food And Fodder Crops? 8

6. Can Biouels Become A Commercially Viable Concept? 12

7. How Can The Benets O Biouels Be Realised On A Global Scale? 13

8. How Is Bentley Adopting Sustainable Fuels? 14

9. Should We Adopt Biouel Technology Now Or Wait Until 15

Sustainability Criteria Are Established?

10. Conclusion 16


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1 . ExECUT IVE SUMMA RY

In February 2008, Bentley Motors announced ambitious plans to embrace

biouels as part o a ar-reaching environmental strategy.

The initiative comes as the automotive industry as a whole is accelerating the

adoption o alternative uels and new technologies, aimed at reducing CO2

emissions and global dependency on ossil uels.

International demand or uel ecient, lower emission vehicles has mounted

amid fuctuating oil prices and increased concerns about the impact o climatechange. Several bodies and organisations have voiced their concerns over the

sustainability o biouels and the potential impact o land use, crop prices and

ood availability.

This paper aims to provide a balanced review o the key questions

surrounding biouels and how the strategy set out by Bentley relates to these.

Bentley is reassured by the conclusions o the Gallagher report, issued by

the UK government, stating that there is a uture or a sustainable biouel

industry. This report supports the need or sustainability criteria or all

biouels to ensure that they are produced in an ethical and environmentally

sound manner.

The report recognises that there are some instances o natural habitats being

destroyed to make way or palm plantations, impacting valuable carbon

sinks and local biodiversity. However, mounting scientic evidence suggests

that, when produced correctly, biouels have a minimal detrimental eect on

natural habitats.

Contained in this report is evidence that biouels do not play a signicant role

in infuencing the global price o ood compared to the impact o fuctuating

oil prices and increasing demand or ood.

Bentley believe that bioethanol can become a truly sustainable, ethical energy

alternative to ossil uels. Eamples o successul industries can be seen todayin Brazil and Sweden.

There is still investment fowing into bioethanol projects, despite the recent

slowdown in the global economy. These projects are helping to rejuvenate

rural economies in the developed and developing world.

The report concludes by outlining the need or ethical sustainability criteria

and calls or cooperation between governments, biouel producers, NGOs

and automotive manuacturers so that the benets o biouels can be realised

on a global scale.

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2 . BENTLE Y EN VIRONMENTAL STR ATEGY

In February 2008, Bentley outlined a ar-reaching environmental strategy

or the luury automotive group to be progressively implemented through

to 2012.

The commitments orm part o a roadmap or Bentley to adapt our

product portolio in an era dened by climate change and the security o

aordable uel supplies.

Bentley are making the ollowing commitments to address CO2 emissions anduel security concerns:

1. Bentley will take measures to reduce CO2

emissions by at least 15%

across our entire range by 2012. We will achieve this by applying

improved technologies to current powertrains, introducing new

transmission systems and drivelines, and reducing the weight o

Bentley cars.

2. In a urther measure, Bentley will introduce a new powertrain oering a

40% improvement in uel economy by 2012.

3. Also by 2012, 100% o the range will be compatible with renewable

uels, delivering signicant savings in CO2

emissions.

Given the customer epectations o Bentley, an important actor o the

strategy is that we deliver an improved environmental output without

compromising the outstanding levels o perormance and luury, or which

Bentley is renowned.

The renewable uel solution will be based on the incorporation o FleFuel

powertrains engines that can use either biouel or petrol into Bentley

cars, dramatically cutting CO2

emissions on a well-to-wheel1 basis.

1. Well-to-wheel is the measurement o the CO2

release o a uel rom its production (well) to its combustion or

deployment (wheel). Bentley believes that this approach recognised by the UK government King review o Low Carbon

Cars is the most appropriate way to determine a uels net environmental eect.

2

Cellulose ethanol is blended withpetrol to power vehicles

The CO2

released bybiorefneries andvehicles is then

absorbed and recycledby next years crop

Plants use solar energy to growand absorb CO

2rom the air

The non-ood fbre portion othe plant is collected

Biorefneries convert the plant fbre into

cellulose ethanol, electricity and CO2


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3 . MACRO-ECONOMIC CONTExT

The uture o biouels is currently the subject o intense debate. Biouel, as

a class o uels, is not well understood. A lack o public awareness creates

a scenario in which positive eamples o sustainable biouel are oten

overshadowed by controversial issues. This negative press coverage then

throws the viability o the whole industry into question.

Todays debate on biouels is stimulated by a variety o commentators

including global media, governments and independent organisations. In July

2008, the UK government contributed to this debate with the publicationo a biouel review by Proessor Ed Gallagher, Chairman o the Renewable

Fuels Agency.

Echoing several other reports, the Gallagher Review ound that current

policies on biouel promotion could lead to net gains in greenhouse gas

emissions, rather than savings, and potential negative consequences or

biodiversity. Importantly, the review called or biouels production to target

idle or marginal land and or a greater emphasis to be put on developing

second generation biouelsthose that utilise plant waste rather than

requiring the ood component o original crops.

There is evidence to suggest that the environmental impacts and the

ineciencies in biouel production can be avoided through the appropriate

biomass2 source and production method.

The interest in biouels has increased signicantly amid unstable oil prices.

At the same time, the cost o hydrogen technology and the impracticality

o delivering hydrogen remain high. Recent research has cast into doubt the

cleanliness o electric vehicles: the net CO2saving o these vehicles depends

heavily on how the electricity is produced. A large percentage o power

stations are driven by ossil uels. These actors have encouraged several auto

manuacturers to ocus on a uel source that can deliver perormance with

sustainability: Biouels.

The uture o the biouel alternative clearly rests on being able to eploitthe potential o this uel source without compromising agricultural land

use or eacerbating climate change. Bentley have thereore eplored in this

document elements o the debate shaping current attitudes to this

uel source.

2. Biomass organic matter that can be converted to biouel

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4 . CAN B IOFUELS BE PRODUCEDWITHOUT HARMING THEENVIRONMENT?

In order to grow so-called rst generation biouels uel derived rom the

sugar or starch-lled part o plants such as corn or sugar cane large areas

o arable land are required. There are three main environmental issues that

currently ace the biouel industry:

Biodiversity: eect o habitat destruction on native plant and

animal species Carbon sink destruction: release o terrestrial CO

2stores into

the atmosphere

Displacement and exploitation o indigenous people

i. BIODIVERSITY

There are reports that the earths natural habitats are being aected by an

epanding agricultural rontier: environmental groups argue that vast areas o

rainorest and peat land have been destroyed to meet growing demand or

arable land. Reports rom South America claim that rainorest is being clearedto make way or soya crops and elds or cattle grazing5. With the destruction

o habitats comes a reduction in biodiversity. Environmental groups claim that

ever more species o plants and animals are threatened with etinction as

natural habitats dwindle.

Bentley believe that it is important to maintain biodiversity

throughout the world. However, as highlighted in the Indonesian

case study, biouel production is oten not the main instigator o

natural habitat destruction. Such criticism oten distracts the public

rom the vast environmental benets that can be made by using

the uel.

3. Clover, C., Malays ia Deends Palm Oil Production, June 2007,

http://www.telegraph.co.uk/earth/main.jhtml?xml=/earth/2007/06/10/eaoil110.xml

4. International Fund or Agricultural Development Biouel Expansion: Challenges, Risks and Opportunities or Rural People,

February 2008

5. Webster, R., Taylor, M.: Friends o the Ear th, European Commission Climate and Energy Package , 2008

4

Burning o Carbon Sinksin Malaysia

CASE STUDY:

Biodiversity vs. Palm Oil in Indonesia

Palm oil is one o the crops used when making

biodiesel and is largely grown in Malaysia and

Indonesia. Each year Europe imports around 2.7

million tons o palm oil to produce a range o

products rom soaps to cooking oils3. Friends o the

Earth claim that the Indonesian great ape

population is now endangered as rainorests are

cleared or palm oil plantations4. The FoE reportstates that the Orang-utan population in Indonesia

could be wiped out within 12 years i current

trends continue.

In spite o c laims o environmental groups that

the Sarawak region o Borneo has been hit hard

by logging, Peter Chin, Malaysian Minister or

Plantation Industries and Commodities, highlighted

that only 4% o the rainorest-rich province has

actually been converted to palm oil plantations.

He maintains that the agricultural industry is

essential to support the local indigenous people.

The destruction o wildlie and natural habitats

in South East Asia is a cause o concern. However,

the vast majority o the Malaysian and Indonesian

palm oil exported in 2007 was not destined or a

biouel renery. 89% o the global palm oil output

in 2007 was exported to the ood and cosmetic

industries. Only 5 million tons were rened

into biodiesel.


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CASE STUDY:

Brazilian Bioethanol Success

Brazil, where sugar cane provides a vast proportion

o automotive uel, has shown that reduction in CO2

and securing uture uel supplies does not have to

be to the detr iment o the environment. Over the

last 3 decades, the Brazilian ethanol programme

has been considered to be the benchmark or the

global biouel industry. Brazil has a mandatory

minimum percentage ethanol and petrolblend. Petrol blended with 25% bioethanol (E25),

more commonly known as gasohol, is available

alongside E100 (100% bioethanol). These uels

now provide more than 50% o Brazils light

vehicle uel, however the sugar cane (rom

which it is made) occupies just 1% o its

arable land11.

In 2007, 71% o the cars manuactured in Brazil

wereFlexFuel cars cars that can use E100 or

E25 a clear example o market demand12.

The programme has boosted the economy

through exports and helped create more than

700,000 jobs13.

There are many scientic reports conrming

Brazils environmentally riendly credentials: a

Utrecht University report concluded that no

reasons were identied why [Brazilian] ethanol

could not meet sustainability standards14. Brazilian

President Luis Inacio Lula da Silva is adamant that

Brazil is doing all it can to prevent destruction o

the Amazon rainorest. Due to the wet climate,

it is dicult to grow sugar cane in the Amazon

rainorest region; instead, the sugar cane plantationsare situated on the plains North West o So Paulo

and around Recie15.

ii. CARBON SINK DESTRUCTION

The natural habitats that have been most eected by crop rontier epansion

are the rainorests, peat bogs and swamps. Due to their dense plant and

wildlie population, these areas are considered as Carbon Sinks7. Carbon

sinks are areas that contain large amounts o carbon that are terrestrially

(not atmospherically) based and can range rom oceans to orests and even

areas o soil8. Such habitats absorb more CO2

than they emit, thus helping to

maintain the global atmospheric CO2

levels.

When carbon sink areas are cleared to make way or crops usually

by burning the carbon contained is released into the atmosphere.

The Worldwide Wildlie Fund (WWF) estimates that turning one orest

in Indonesia into a palm oil plantation is generating a net eect equivalent

to 122% o the annual CO2

output o the Netherlands9. There are already

instances o carbon sink destruction: in Indonesia and Malaysia it is claimed

that 14 15 million hectares o carbon-rich peat lands have been cleared to

make way or palm oil crops10.

While this is true, it is important to remember that there are also positive

eamples o biouel development elsewhere in the world namely in Brazil.

Sweden also has a very successul, environmentally riendly biouel

programme. The positive eamples o biouel successes are oten

overshadowed by misconceptions about their true ecological credentials.

Bentley believe that the success o the biouel industry in Brazil,

both in terms o the vast savings in well-to-wheel CO2

emissions

(reported at 90% net well-to-wheel saving vs. petrol) and industry

sustainability has the potential to act as a model or other

countries. By harnessing the potential o biouels, Brazil has also

reduced its dependency on imported oreign oil, whilst having a

minimal impact in its large areas o carbon sinks.

For the bioethanol industry to become credible and globally

accepted by consumers, ecologically sound solutions such as

those on display in Brazil need to be adopted by other producing

nations. Consumers require a guarantee that their uel is notirreversibly damaging natural habitats.

7. Natural Environment Researc h Council, What are Carbon Sources and Carbon Sinks?,

http://www.nerc.ac.uk/research/issues/climatechange/carbon.asp

8. Sedjo, R.A., Harvesting the Benets o Carbon Sinks, 1998

9. World Wildlie Fund, Destruction O Sumatra Forests Driving Global Climate Change And Species Extinction , Science Daily,

February 2008

10. International Fund or Agricultural Development, Biouel Expansion: Challenges, Risks and Opportunities or Rural People,

February 2008

11. Car Magazine, Biouels, we suck it and see, Issue 552, August 2008

12. Association o Brazilian Automanuacturers (ANFAVEA), http://www.anavea.com.br/tabelas2007/

13. Lovins, A., Datta, E., Winning the Oil Endgame: Innovation or Prots, Jobs and Security, 2005

14. Smeets, Junginger, Faaij, Walter, Dolzan, Sustainability o Brazilian Bioethanol, 2006

15. Clendenning, A., Oakland Tribune, Brazil: Ethanol Farming will not Impact Amazon Rainorest, July 2007

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16. www.greenpeace.org/international/news/mcamazon-060406

17. www.sustainableethanolinitiative.com

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iii. HUMANITARIAN IMPACT

Environmental groups argue that land used or agriculture epansion is oten

remote and home to indigenous people. Such habitats are oten ar rom

civilisation and hence are dicult or governments to regulate, making it easier

or companies to clear habitats.

The purpose o clearing the land is oten unclear; it can be due to epanding

agricultural land (crops or cattle), or logging. Indigenous people are requently

aected by the destruction o natural habitats: Some environmental groups such

as Greenpeace claim that people cutting down orests in South America

are slaves16.

The chairperson or the UN Permanent Forum on Indigenous issues, Victoria

Tauli-Corpuz, highlighted that approimately 5 million indigenous people in the

Indonesian province o West Kalimanistan were likely to be displaced by the

epansion o the palm oil crop rontier.

However, there are studies that demonstrate the biouel industry will have a

positive impact on the worlds poorest nations. Biouel companies are investing in

ventures in Arica, where optimum conditions or growing biouels can be ound.

This investment has provided much needed unding or local inrastructure and

amenities in the area.

Bentley strongly believe that sustainability criteria, such as those set

out by the Sustainable Ethanol Initiative should be key inclusions in

uture renewable uel strategies o national governments. Such criteria

do not adversely aect the competitiveness o biouels against ossil

uels, and when executed and regulated correctly they are benecial to

emerging economies and their population.

CASE STUDY:

Sustainable Ethanol Initiative

Sustainability criteria are vital in preserving natural

habitats and to protecting the local population.

There are several examples o such criteria, one

o which is the Sustainable Ethanol Initiative.

The initiative aims to provide veried, traceable,

sustainable Brazilian bioethanol to the

Swedish market.

The objective o the Sustainable Ethanol Initiative

(SEI) is to promote sustainable and socially

responsible Brazilian bioethanol in Sweden and

ultimately help the European Union develop

sustainability criteria or biouels17. Such criteria

have both an environmental and a social ocus:

Acommitmenttoincreaselabourrightsfor

biouel plantation employees

Improvedworkingconditionsatplantations

Zerotolerancetowardschildlabour

Zerotolerancetowardsforcedlabour

Zerotolerancetowardsrainforestdeforestation.

The SEI aims to minimise humanitarian exploitation

and displacement in the emerging biouel industry

through economic measures: they propose penalties

be paid by producers or non-compliance with these

criteria.

The rst veried sustainable ethanol arrived in

Sweden on 26th May 2008.


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iv. BENEFITS OF BIOFUELS

There are major benets o using biouels as an alternative to ossil uels:

Biofuelsofferasignicant reduction in CO2

emissions

Investmentinbiofuelsoftenmeansinvestment in agriculture

Biofuelplantationssupportpoorer rural communities

in developing economies

As with bioethanol made rom sugar cane, biouels made rom non-edible

plant mass (second generation uels) are ast becoming a real alternative to

ossil uels.

There are some species o plant such as switchgrass and sorghum that can be

used to make second generation biouels. Such crops can be grown on

marginal land on which traditional ood crops cannot eist18.

The main advantage o using this marginal land or biouel growth, aside rom

the act that it has no impact on arable land and hence ood production, is

that vast areas o this scrub land are located in developing countries19.

A study by Indias Ministry or Rural Development has highlighted the

abundance o available marginal land. The study estimates that 43% o Indias

land mass could be used or growing switchgrass.

Growing biouel crops not only brings environmental benets, but also

economic benets or the local population. Biouel crop plantations createjobs and boost local economies, allowing money to be invested in agriculture

and amenities, helping the area to become sel-sustainable.

Bentley believe that when produced in an ethical and

environmentally sound manner, biouels can oer many more

benets than just providing low-carbon, sustainable uel.

Pilot projects in developing nations have provided investment

in amenities and inrastructure, low cost energy sources, and

trade opportunities or local economies.

Bentley would encourage the governments o the developed world

to help develop such projects as they provide a win-win partnership

or producers, end users and the environment.

18. The Economist, Grow Your Own, 21st June 2008

19. International Fund or Agricultural Development, Biouel Expansion: Challenges, Risks and Opportunities or Rural People,

February 2008

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CASE STUDY:

Second Generation Biouels in Arica

There are several examples o companies already

beginning to tap into the potential o second

generation biouels in developing countries.

With some o the largest areas o marginal land,

the best conditions or photosynthesis (hence crop

growth and yield) and an available work orce,

Arica is one o the areas that has the highest

potential or a biouel industry.

The Swedish biouel company SEKAB has set

up two initiatives, one in Tanzania, the other in

Mozambique, with the aim o building a successul,

sustainable biouel industry that will provide

economic benets to the local population. With

the strategy Aid to Traid (a play on trade), SEKAB

hopes to lit 2-3 million Aricans out o poverty,

creating 400,000 to 600,000 new jobs with the

help o 2 million hectares worth o sustainable,

second generation bioethanol crops by 2025.

Pilot projects already in operation in Chipembe,

Mozambique and in Bagamoyo, Tanzania, are

utilising the good access to water and marginal land

to produce ethanol and electricity. Bentley believes

such projects are vital to the development o theglobal second generation biouel industry that can

deliver a sustainable , environmentally riendly and

socially responsible source o energy. The trade

opportunities can help improve developing local

economies and lit people above the poverty line.


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20. BBC News, Leaders Warn on Biouels and Food, April 2008, http://news.bbc.co.uk/1/hi/world/americas/7359880.stm

21. http://news.bbc.co.uk/1/hi/world/south_asia/7445570.stm

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5 . CAN B IOFUELS BE PRODUCEDWITHOUT AFFECTING FOOD ANDFODDER CROPS ?

Much o the controversy surrounding biouel is related to ears that

production o biouel will divert land use rom ood production.

Recent increases in ood prices have raised concerns about the impact

o biouel on land usage.

With a limited supply o arable land and an ever-growing demand or raw

materials or ood and uel, there will inevitably be competition or land

between biouel and ood crops.

Contrary to common perceptions, the actual area o armland used

or biouel crop growth is very small: biouel crops take up only 0.1%

o global land mass.

In the rst hal o 2008 ood prices rose signicantly causing politicians and

media to scrutinize the uel vs. ood debate once more. Presidents Alan

Garcia and Evo Morales o Peru and Bolivia accused biouel development o

putting ood out o the reach o the poor and pillaging natural resources20.

Many environmental and humanitarian groups also place the blame squarely

on biouels. Greenpeace state that biouels are responsible or driving up the

price o basic oods.

Indeed there is evidence that rising ood prices have already begun to impact

people in the worlds poorer nations. Food riots have occurred in Egypt, thePhilippines, West Arica and in Haiti. Ocials in Pakistan have already begun to

make raids on ood hoarders. Ater seeing a 40% rise in the price o corn

the main ingredient or tortillas thousands o people marched in protest in

Meico. In India, the 50% rise in ood prices and consistently ailing crops has

led to widespread malnutrition in many rural areas21.

The driver o the shortages is unclear. It is likely that the price rises

are a combination o the ollowing actors:

Increaseindemandfromdeveloping nations

Uncertaintyintheglobalenergy markets and rising oil prices

Futuresmarketspeculation

Inabilityoftheagricultural industry to meet demand

Increased demand or biouel through incentives

Grain Harvesting


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i. INCREASED DEMAND FROM DEVELOPING NATIONS

Other sources highlight that the rise in ood prices is due to an increase in

demand. The President o the Brazilian Sugar Cane Association, Marcos Jank,

suggests that increases in demand or ood rom developing nations have

not been considered by those criticising biouels or increasing ood prices22.

Increases rom developing nations have been driven by two actors:

Increase in population

Increase in wealth

The worlds population is projected to rise by 1% per annum in the net 25

years, adding an etra 1.75 billion people by 2030. Populations in developing

countries have changed signicantly in the past decade, and this has increased

the global demand or ood. India is predicting a population boom. Reports

suggest that the number o people living in India will increase by 50% by

2050, adding an etra 3 billion people to the sub-continent23. This is largely

due to the rise in living standards since the start o the countrys economic

development. As living standards, acilities and healthcare has improved, lie

epectancy has increased. Added wealth has also allowed the size o the

average amily to grow, urther increasing the population.

A change in inhabitant wealth also alters eating habits: As the wealth o an

individual increases, so does their weekly ood bill, stated Engels Law24

over a century ago. This refects an ability o inhabitants to spend a greateramount o income on ood. In todays terms it translates to an increase in

meat intake25. Approimately 11lbs (5 kilograms) o grain are required to

produce 2.2lbs (1 kilogram) o meat26. Thereore as preerences become more

carnivorous, demand or odder increases dramatically. So as wealth grows,

ood prices will rise.

Bentley believe that the increase in oil prices, global wealth and

population levels are having the most signicant eect on ood

prices, not biouel production. The trend o rice and soya prices is

an upward one. These two ood sources are not used or biouel

production on a commercial scale.

In order or the eect on ood prices o a growing biouel market

to be minimised, a solution must be ound that allows biouel and

ood to be grown in unison. Hence, Bentley support investment in

second generation biouel research and pilot projects.

22. Jank, M., Brazilian Ethanol Industr y Developmen ts: Sugarcane Ethanol Today and Tomorrow, Presentation to Conerence

on Sustainable Ethanol, Gothenburg, Sweden, May 2008

23. Bl ythe, N., BBC News, Indias Big Population Challenge, February 2008, http://news.bbc .co.uk/1/hi/business/7261458.stm

24. Engel, E., Die Produktions und Konsumptions-Verhl tnisse des Knigsrei chen Sachsen, 1877

25. USA Today, Global Demand Lit s Grain Prices, Gobbles Supplies , February 2008,

http://www.usatoday.com/money/industries/ood/2008-02-11-ood-prices_N.htm

26. Lane, J., Meat vs . Fuel: Grain Use in the USA and China, 1995-2008 , April 2008

http://www.biouelsdigest.com/MeatvsFuel.pd

27. China grain requirement or meat production in 1995 was 150bn tons, population grew 9.8% during this period. Increase

o meat intake rom 25kg to 53kg meant grain requirement or meat production grew to approx 350bn tons per year.

CASE STUDY:

Chinas increasing ood bill

Asia has seen rapid population growth in the past

ew decades, which is projected to reach 4.2 billion

people by 2030. Economic growth has increased

wealth in China, which has meant its inhabitants

have had more disposable income, and Chinese

dietary habits have changed accordingly.

In 1995, the average Chinese person consumed55lbs (25kg) o meat, a gure that has now grown

to 117lbs (53kg) in 2007, according to the UN

Food and Agr iculture Organisation. Taking into

account the growth in population, it is estimated

that China now requires an extra 199bn tonnes o

grain to match the demand or meat an increase

o 232% since 199527.

I similar population and wealth booms take place

in other developing nations, the pressure to utilise

land or ood crops will increase.


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28. Speech by Marian Fischer-Boel , EU Agricultural Commissioner, May 2007

29. Speech by President George W. Bush to the Washington International Renewable Energy Conerence, 5th March 2008,

www.whitehouse.gov/news/releases/2008/03/20080305.html

30. http://www.barackobama.com/pd/actsheet_energy_speech_080308.pd

31. The Economist, Grow Your Own, 21st June 2008

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ii. INCREASE IN BIOFUEL DEMAND

One method o promoting and increasing biouel usage is or governments to

oer subsidies or incentives to producers or distributors.

The U.S. arming industry has seen many o its armers switch rom

traditional ood to biouel crops in 2007 and 2008. It is suggested that the

switch to biouel crops is due to an incentive issued by the U.S. government.

This has resulted in an increase in demand or biouel, making biouel crops

more protable.

However, recent evidence suggests that this competition may be having

a minimal eect on global ood prices. Biouel production in the USA has

increased eponentially since 2000, with orecasts predicting total 2008

bioethanol production to reach 9.3 billion gallons up 33% on 2007.

But whilst biouel production has continued to increase, ood prices have

allen since their peak in summer 2008.

Food prices appear to have risen and allen in line with the price o crude oil.

Indeed, rice, a crop which is not used or biouel production, has a price curve

remarkably similar to wheat.

iii. UNCERTAINTY IN GLOBAL ENERGY MARKETS

Evidence eists that a rise in basic ood prices could be attributable to arise in production costs. Petrol and ertilizer are used in crop production,

both o which are heavily dependent on the price o crude oil. This argument

is backed up by EU Agricultural Commissioner, Marian Fischer-Boel, who

indicated that only 1-5% o the cost o bread relates to the cost o the

cereals used in its manuacturing28.

Bentley agree that the rise in demand or bioethanol will lead to

competition between ood and uel crops. Claims that rises in ood

prices are directly linked to increases in biouel production are

alse. Higher ood prices are more likely to be related to fuctuating

oil prices.

CASE STUDY:Biouel growth in the USA

During 2008 the USA has seen a dramatic risein demand or bioethanol. Rising energy prices the threat o a $5 gallon and an increasingawareness o the environment, have meant saleso environmentally riendly vehicles have grown.Political weight has been thrown behind the pushto make America green: In March 2008 PresidentBush urged Americans to get o oil to helpprovide a secure energy supply in the uture and

or the sake o the environment29

. Political strategyhas been reinorced by a biouel mandate andCAFE guidelines to try and direct consumers andautomotive manuacturers to greener uels. Thisseems to be having an eect: on 7th October 2008the rst biouel corridor along I-65 was openedwith over 200 lling stations, making it possible todrive a vehicle on E85 rom Lake Michigan to theGul o Mexico.

The election o Barack Obama is expected by manyto signal increased support or biouels. Illinois isAmericas second largest corn growing area and asits Senator, Obama has been a long-term supportero using corn subsidies to encourage armers togrow biouels30.

The U.S. agricultural industry does have thecapacity to replace a signicant proportion oAmericas petrol requirement: a study by AmericasDepartment o Energy and Agriculture reportedthat with changes to production practices, 1.3

billion tonnes o plant matter could be collected orbiouels, without impacting ood crops. This in turnwould provide 92 billion gallons (350 billion litres)o bioethanol, or 65% o the countr ys current petrolconsumption31.

Bentley support eorts made by the U.S.government in encouraging investment in andusage o biouels. Despite the issues over eciencyand ood competition, Bentley believe that rstgeneration bioethanol projects are the rst stepin adopting sustainable , renewable uels. Suchprogrammes are an essential rst step in adoptingalternative uels. Without such investment thebenets o second generation biouels may never

be realised. By introducing alternatively uelledcars over the next our years, Bentley is ensuringthat our customers in the USA can reduce theirdependence on oil and reduce their net CO

2output.


13/20

32. Mackinlay, R., Oxam Calls For Invest igation Into Futures Markets, May 2008,

http://www.investegate.co.uk/invarticle.aspx?id=18649

33. Minder, R., Financial Times , India Cons iders Ban on Trading in Food Futures , May 2008

34. DEFRA, Bioue ls: Risks and Opportunitie s, October 2007,

http://www.dera.gov.uk/arm/crops/industrial/energy/pd/biouels-risks-opportunities.pd

35. UN Food and Agriculture Organisation, Food Summit Calls or More Investment in Agriculture, June 2008,

http://www.ao.org/newsroom/en/news/2008/1000856/index.html

36. European Parliament, Soaring Food Prices : Investment in Agriculture Needed in Developing Countries , May 2008,

http://www.europarl.europa.eu/news

37. Kirchho , S., USA Today, Surplus US Food Supplies Dry Up, May 2008,

http://www.usatoday.com/money/industries/ood/2008-05-01-usda-ood-supply_N.htm

11

iv. BIOFUEL FUTURES SPECULATION

Some sources suggest that the low stock situation is causing unrest in the

utures markets, which in turn cause a rise in ood prices. Food utures are

used by some arming cooperatives to insure themselves against a poor

harvest. Helena Vines Fiestas, a policy advisor or charity Oam has called

or an investigation into the markets and their role in the recent ood price

increases32. She stated that Governments and international bodiesshould

commission a study to clariy the uture markets contribution to the [ood]

price spike. Similar concerns have been echoed in India as Finance Minister,

Mr. P Chidambaram, proposed a halt to trading in ood utures in May 200833.

v. ExPOSURE OF AN INDUSTRY LACKING IN INVESTMENT

It is suggested that the inability o ood suppliers to match demand could

be a refection o the decades o poor levels o investment in the global

agricultural industry. A report by the UK Department or Environmental and

Rural Aairs (DEFRA) concluded that recent price rises had possibly more

to do with the low harvest yields than biouel production34. The UN Food &

Agriculture Organisation declared that there is an urgent need or developing

nations to invest in agriculture to help alleviate the issues o unstable ood

prices35. The European Parliament reiterated this calling or a substantial

increase in agricultural investment. A report highlighted the imbalance in

investment and population spread: only 4% o global ocial development

is dedicated to agriculture despite the act that over 75% o the globalpopulation lives in rural areas36.

These comments imply that sel-suciency o developing nations in terms o

ood provision could help stabilise and even reduce ood prices in the uture.

It is oreseeable that once second generation biouel processing techniques

are industrialised, the ability to increase crop yields will substantially grow.

In turn, this will enable developing nations to invest in agricultural industries

allowing areas to become sel-sucient in terms o energy and sustenance.

Other analysts believe that low grain stock levels are due to a combination

o improvements in just in time production techniques37. Just in time

production minimises time that materials are stored beore producinggoods, saving companies considerable costs. However, as stock levels are

based on historical trends, it is dicult or the system to adjust i demand

suddenly rises.

Bentley believe that the development o second generation

biouels could help regenerate an underperorming global

agricultural industry and allow developing nations to become

sel sucient, providing aordable, secure sources o ood and

energy or local populations.

CASE STUDY:

Bioethanol incentives & mandates

Governments have begun to oer incentives

or petrol producers to begin to use biouel.

The White House has oered a tax credit o $0.51

to uel producers in return or blending one gallon

o bioethanol into ten gallons o petrol (approx

0.10 per litre).

The EU has proposed that the minimum biouelsmarket share in Europe should be 5.75% in

2010; however doubts have been cast over the

validity o the proposals environmental targets

and assumptions. In January 2001 a group o UK

politicians criticised the EU o subsidising rst

generation biouels, stating that they were not the

most ecient method o producing bio energy.

Indeed, studies have shown corn-based bioethanol

only produces 1.3 units o energy or every unit o

ossil-uel energy used in its production, whereas

sugar cane produces 9 units.

This switch to second generation biouels can

produce between 2 and 32 units, depending on

production techniques and would increase the

potential yield o corn to 15,600 gallons (65,000

litres) per hectare.

Bentley agree with the Environmental

Audit Committee and the Gallagher

review government policies should ocus

on encouraging growth in the second

generation biouel industry to urther

reduce competition between ood and uel

crops. This should not halt the adoptiono frst generation biouels as these help

reduce net CO2

emissions and dependency

on oil.


14/202

38. Carstedt, P., Vulnerability o the Transpor t Sector and the Development o Sustainable Ethanol or Sustai nable Transport

Systems, Presentation to Conerence on Sustainable Ethanol, Gothenburg, Sweden, May 2008.

39. www.ebio.org

40. www.nile-bioethanol.org

41. www.ba.ino

42. The Economist, Grow Your Own, June 2008

6 . CAN B IOFUELS BECOME ACOMMERCIALLY V IABLE CONCEPT?

It has been highlighted by the cases in Brazil, USA and Sweden, that biouels

can be a commercially viable alternative uel that can go some way to

replacing petrol.

Across Europe bioethanol reneries unded by a variety o industries

rom petrochemical concerns to sugar producers have started operation.

Crop Energies, based in Sachsen-Anhalt, Germany, operates the largest rst

generation bioethanol plant in Europe whilst Abengoa already has several

bioethanol plants across Europe and the United States.

In spite o current unavorable market conditions, investment in second

generation bioethanol projects is continuing. Trial projects led in Europe

by organisations such as ebio (European Biouel Organisation)39, the NILE

project40 and BAFF41 are the rst step in bringing a commercial scale second

generation biouel solution to market. Volkswagen group is currently

active within the biouel sphere and is in partnership with industry-leading

bioethanol producer Iogen. Iogen have a acility in Canada which is already

capable o producing second generation bioethanol on an industrial scale.

The company has already demonstrated this by delivering a signicant

volume o second generation biouel in 2008.

Indeed, investment in innovative ideas is no longer on a small scale: large

pharmaceutical and energy companies are researching new sustainable

biotechnologies in-house as well as unding projects at universities42.

As the technology that supports biouels develops, the price o E85 is

epected to all. Projections orecast the cost o producing second generation

bioethanol to all up to 75% between 2005 and 2030. This will bring E85 into

line with the current cost o producing petrol.

The ull environmental benets o biouels can only be achieved by maimising

their usage. As seen in the USA and Sweden, government subsidies play a

major role in nurturing the biouel industry. There are various methods used

to achieve this: the Swedish government oers over 500 per cubic meter o

bioethanol as an incentive or producers, whereas in Germany, distributors

are heavily penalised i bioethanol is not blended into petrol.

As indicated above, the transition rom rst to second generation biouels

will be gradual. Biouel producers are already working to acilitate this steady

change by building reneries capable o producing rst and second generation

bioethanol using the same equipment. Biouel producer Abengoa is currently

investing in two such plants capable o producing both generations, one in

Kansas, the other in Spain.

There is evidence that proves biouels can become a commercially

viable concept. Considering the current economic climate, Bentley

believe that in order to support and develop a global sustainable

biouel market, governments should continue to incentivise biouel

projects now.

CASE STUDY:

Biouel industry in Sweden

Sweden only embraced the biouel concept in 2005.

Then Prime Minister, Goran Persson, declared that

Sweden would be ree rom oil dependency by

2020. Since then the biouel industry has fourished

in the Scandinavian countr y. Companies such as

SEKAB, Lantmnnen and BioGasol have already

set up rst generation bioethanol plants in Sweden,

which use biomass rom woodchip and wheat.These have uelled a boom in FlexFuel vehicles and

availability o bioethanol. It took 10 years to open

the rst 100 bioethanol lling stations in Sweden,

the last 100 opened in just three months. The Bio

Alcohol Fuel Foundation (BAFF) predicts that the

Swedish FlexFuel vehicle market share could exceed

40% as early as 2010, and that the volume o E85

uel sold in the country will more than double to

over 300 million litres p/m by July 200938.


15/2013

7 . HOW CAN THE BENEF ITS OF B IOFUEL SBE REAL I SED ON A GLOBAL SCALE ?

As this document has made clear, questions remain about the ethical and

environmental credibility o biouels in the public domain. However, there

is a pool o persuasive evidence which demonstrates that biouels

can have a positive impact on the environment and developing

economies.

Volatile oil prices refect the drastic need or alternative, sustainable uels.

With supplies rapidly drying up, and demand steadily growing, the upward

trend o uel prices will continue. Climate change is a very real threat and

ailure to act by governments, international agencies, industry and consumers

would pose a very serious global threat.

Biouels, initially seen as a very important solution, have recently been

characterised as part o the threat. But this document shows that

biouels can be produced without harming the environment.

There is sucient marginal land on which to grow second generation

biouels so that natural habitats and carbon sinks remain intact.

There are already eamples o biouels working on a national scale: Brazil

and Sweden both have fourishing biouel industries, bringing environmental

benets along with a reliable, secure source o energy. Economic benets

are also starting to be realised rom these industries: oreign investment in

Brazilian biouel companies is growing by the day and second generation

cellulosic bioethanol pilot projects are already driving a fedgling industry

in Europe.

It is untrue that a rise in demand or biouels has been the main

reason or increasing ood prices. It is clear, however, that other actors

played a signicantly larger role. Developments in second generation biouels

will enable ood and uel crops to be grown without competing with each

other. For biouels to become a truly alternative uel, sustainability criteria

which minimise the social and environmental impact must be implemented

on a global scale.

In order or the biouel industry to prove its ethical credentials,

traceability and sustainability criteria must be put in place.

It has been proved by a variety o projects around the world that

bioethanol can be produced sustainability on a commercial scale.

In ensuring the sustainability o such uels, the development o

second generation uels can only bring urther benets that

eclipse any current disadvantages.

Bentley believe that through cooperation o automotive

manuacturers, biouel producers, the global agricultural industry

and governments, bioethanol can become a truly sustainable

alternative to ossil uel usage in the near uture.


16/204

8 . HOW I S BENTLEY ADOPTINGSUSTAINABLE FUELS ?

In addition to improving the eciency o our vehicles, Bentley reviewed

a number o alternative technologies to support our product-based

environmental strategy. Ater considering a variety o alternative technologies,

Bentley decided that FleFuel provided the most suitable platorm around

which to base our uture core model line up.

Bioethanol combines impressive CO2

savings, is compatible with eisting

inrastructure and is capable o delivering the perormance levels or which

Bentley is renowned. It has the potential to deliver signicantly better CO2

savings on a well-to-wheel basis than cars powered by hydrogen or electricity

or many years to come.

By delivering bioethanol FleFuel technology rom 2009, Bentley is creating

the ability or greater CO2savings to be made once sustainable second

generation bioethanol becomes more widely available.

Bentley is making a signicant investment to enable our entire feet to

operate on biouel whilst maintaining the character and level o perormance

epected by our customers. The transition rom a petrol to a FleFuel

powertrain is not simply a case o ficking a switch. Bioethanol has a dierent

chemical make-up, and hence characteristics, rom traditional petrol.

With its high level o octane, bioethanol can deliver high perormance,

however due to its lower energy content, fow rates o uel into the engine

have had to be increased by 30%. As bioethanol does not have the same

lubrication characteristics as petrol, Bentley have upgraded materials used or

parts directly in contact with the uel. New uel tanks, seals, gaskets and uel

pipes have been re-engineered to deliver high perormance levels using both

petrol and bioethanol.

FleFuel technology allows the customer to use any mi o bioethanol rom

0%- 85%, enabling them to choose the most environmentally riendly uel

at their convenience. This requires a complete recalibration o the engine

management system and the addition o uel sensors that adjust how the

engine runs according to the amount o bioethanol in the cars tank.

The drivetrain must undergo recalibration and a validation programme using

both petrol and E85. This includes trials in etreme hot and cold climates, and

in ecess o 1 million miles o vehicle testing.

The investment in engineering is proo o Bentleys commitment

to oering a ull range bioethanol compatible vehicles beore 2012.

Engineering work is already underway and is on target to deliver

FlexFuel vehicles across our feet, with the rst variant available

in 2009.


17/2015

9 . SHOULD WE ADOPT B IOFUELTECHNO LOGY NOW OR WAITUNTIL SUSTAINAB IL ITY CR ITE R IAARE ESTABL I SHED?

Various lobby groups have argued that the widespread adoption o biouels

should be delayed until they are satised that eective sustainability criteria

have been established and are capable o audit. In the UK this has had the

eect o preventing Government rom avouring biouel compatible vehicles

the way they have done or other low tailpipe CO2

technologies.

In the long term this is damaging the impact that biouels will have on CO2

reductions when sustainability criteria have been established. By encouraging

consumers to buy biouel compatible vehicles today they will be building

a feet o vehicles capable o delivering a steep change in CO2

reduction

when the supply o biouels increases. This will have the additional benet o

improving the viability o the emerging biouel industry and increasing the

levels o investment.

Scenario A highlights the need to build a FleFuel capable feet beore biouel

becomes widely available. By doing so, the CO2

savings are maimised, limited

only by the supply o bioethanol into the market. Scenario B highlights the

potential risk to CO2

savings i FleFuel vehicles are built ater sustainable

biouel becomes available. The grey area underneath the sustainable

bioethanol supply curve highlights the lost opportunity or CO2saving

due to the lack o FleFuel vehicles in the market to take ull advantage o

the supply.

Bentley believe that producing cars capable o running on biouels

now will maximise the potential net CO2

saving o our car parc in

the uture. Even in areas where biouel is not yet on sale, these cars

will enable our customers to immediately change rom petrol when

E85 becomes available in their locale.

FleFuel Vehicle Car Parc

Sustainable Biouel Supply

Lost opportunity

or CO2

Saving

Scenario B

Scenario A


18/206

10 . CONCLUSION

Bentley intend to press ahead with an environmental strategy based on

biouel and new engine technologies.

The company has been reassured by the recommendations o the Gallagher

Review, which has highlighted that there is denitely a uture or a genuinely

sustainable biouels industry, provided mandatory sustainability criteria are

implemented43. Bentley believe that these measures should be integrated

sooner rather than later to ensure the momentum o biouel investment is

not lost.

This solution will allow Bentley to balance the high levels o perormance

that dene the marque and balance our responsibility to mankind and the

environment with our responsibility to the local population and economy.

On a wider scale, Bentley has a positive eect on the UK and EU economy

as an employer and eporter. Securing the relevance o its products is

undamental to its uture success.

Inaction is not an alternative. Substantial investment in biouel inrastructure

and FleFuel cars is required now to give consumers access to sustainable,

environmentally riendly travel. First generation biouels are an essential

rst step in maimising CO2

savings and also help und the technological

developments to enable a commercial-scale introduction o second

generation biouels. Building a FleFuel capable feet now will maimise

the environmental step change when sustainable biouel becomes more

widely available.

Bentley believe that through cooperation o automotive

manuacturers, biouel producers, the global agricultural industry

and governments, bioethanol can become a truly sustainable

alternative to ossil uel usage in the near uture.

43. Gallagher, E., The Gallagher Rev iew o the Indirect Eects o Biouels Product ion, July 2008


19/2017

50%

Cert no. CU-COC-807950


20/20

BENTLEY MOTORS LIMITED, PYMS LANE, CREWE, CHESHIRE CW1 3PL, ENGLAND.

www.bentleymotors.com/bentleyandco2

The names Bentley, Mulliner and the B in wings device are registered trademarks. 2009 Bentley Motors Limited. Printed in England.

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Bentley and the Future of Biofuels

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