Are Transportation Biofuels Economically Sustainable? - A Study by Arthur D. Little on the Economic and Environmental Impact

Many see transportation biofuels as a way of reducing carbon
emissions in the face of climate change and of mitigating the
volatility of the world energy markets. But the question arises "given
dependency on high oil prices and political support, are
transportation biofuels economically sustainable?" Arthur D. Little's
global study on the Sustainability of Transportation Biofuels explores
the key issues of this dynamic marketplace to help investors, policy
makers and many other stakeholders make informed decisions.

"The biofuel market is thriving in countries which have the most
favourable political incentives and availability of cheap feedstocks.
But long term survival of the various biofuel options is far from
clear, as virtually all are dependent on government support and/or
high oil prices," comments Roger Hill, Head of Arthur D. Little's
Global Energy Practice.

Despite the current support, there are uncertainties regarding the
long-term sustainability of biofuel technologies and applications.
This is due to the fact that most biofuels are cost competitive only
in times of high oil prices. Also, the competition between fuel crop
and food crop needs and the impact on biodiversity may lead to
withdrawal or reduction of government support in the long-term.
Finally, there is uncertainty regarding those who will be the active
players in the value chain. For instance, will there continue to be
on-off joint ventures supported by private equity, or will the market
be dominated by energy majors and others?

These ambiguities make investors more sceptical about the
potential for making long-term profits by investing in biofuels. To
make the right investment choices potential investors, suppliers and
policy makers must have in-depth, independent data, covering all
aspects of the bio-fuels debate. Critical factors must be examined
such as the competition between food and fuel; carbon and energy
balances; and theoretical demand outstripping supply or government
support resources.

These challenges illustrate the importance of choosing the
technology platform and the right segments in the biofuel value chain
when making an investment decision. The study will examine how
investors in biofuels can distinguish where and how to earn an
attractive return on investment. It will also examine when economic
conditions might change during the life of the investment and alter
the factors that initially resulted in acceptable returns.

Please visit: http://www.arthurdlittle.com/biofuels/

About Arthur D. Little

Arthur D. Little (ADL), founded in 1886, is a leading global
management consulting firm that links strategy, innovation and
technology to master complex business challenges while delivering
sustainable results to our clients. Arthur D. Little has a
collaborative client engagement style, exceptional people, and a firm
wide commitment to quality and integrity. ADL is proud to serve many
of the Fortune 100 companies globally in addition to many other
leading firms and public sector organizations.

Arthur D Little has over 30 offices worldwide, employing over
1,000 people. If you would like additional information on the firm,
please visit www.adl.com.