OUTLOOK '08: R&D focuses on alternative energy

02 January 2008 22:18  [Source: ICIS news]

R&D eyes alternative energyBy Ben Lefebvre

HOUSTON (ICIS news)--The US chemicals industry will continue to invest in alternative feedstock and energy sources in 2008 as skyrocketing costs in crude oil play havoc with their profit margins.

Anne Ainsworth, a spokeswoman for Dow Chemical’s research and development (R&D) segment, said the industry has plenty of reasons to invest heavily in projects that could help wean it off volatile crude oil markets.

“In 2002, when Dow’s sales were $28bn (€19bn), the company’s hydrocarbon costs were $8bn,” she said.

“Last year, our sales were $49bn, but hydrocarbon costs more than tripled to $26bn," Ainsworth said. "So you absolutely have to be looking at alternative energy and feedstock.”

The American Chemistry Council (ACC) expects the US chemical industry’s expenditures in R&D to increase 10% to $29.7bn by the end of 2009. Talks with industry participants reveal that a lot of that money is going to almost anything with the words “bio,” “solar” or, increasingly, “coal” attached to it.

Coal gasification plants are becoming much more attractive as a source of cheaper energy and chemical feedstock. While the process is still up to 20% more expensive than more traditional methods, researchers believe that cost will drop as the technology becomes more widespread.

Shell has 16 coal-gasification plants in China, and Dow is also entering the field there.

Companies such as Rentech, Eastman Chemical and Dow are either operating or looking into opening coal-gasification plants in the US.

Analysts expect the trend to continue with oil at close to $100/bbl. Such a scenario could easily be the case given that oil supplies will likely remain tight in 2008, according to the US' Energy Information Administration (EIA).

In the biofuels field, researchers continue to search for commercially viable ways to produce cellulosic ethanol and take the pressure off food-crop feedstock.

SRI Consulting analyst Russell Heinen said the biofuels sector is showing signs of staying power.

One of the start-up companies he follows, LS9 of California, has recently garnered $15m in funding. The company has attracted former Shell executive Robert Walsh as president and received a large amount of media attention for its work in using industrial synthetic bacteria to produce biodiesel.

On a larger scale, DuPont expects to be able to produce commercial-level performance biobutanol and cellulosic ethanol by 2010. The company said it plans to invest $300m by 2010 in biofuel production and pilot facilities. 

In December, Shell announced it entered a project to create biofuel from algae. Working under the name Cellona with partner HR Biopetroleum, the company plans to build a pilot facility to cultivate sea algae, which grows at a much faster rate than oil palm, soya or other land plants.

“The whole area of biofuels is getting exciting,” Heinen said. "The field is starting to show signs of maturity.”

In a development that could affect the glass industry, the still nascent solar field also shows signs of growth in 2008.

Dow’s Ainsworth said the company is “aggressively” pursuing research in building-integrated photovoltaic (BIPV) technology, a still nascent field that seeks to replace ordinary building materials - such as shingles, fence posts, siding and skylights - with those containing photovoltaic material.

The goal is for buildings to become their own power supplies, but minus bulky external solar panels, she said.

Even those confident about the technology admit that it has a way to go to reach widespread commercial viability. However, success stories like the Conde Nast building in New York - and Europe’s penchant for solar power - suggest that this might be a field to keep an eye on in the coming years.

($1 = €0.69)

By: Ben Lefebvre
+1 713 525 2653

AddThis Social Bookmark Button

For the latest chemical news, data and analysis that directly impacts your business sign up for a free trial to ICIS news - the breaking online news service for the global chemical industry.

Get the facts and analysis behind the headlines from our market leading weekly magazine: sign up to a free trial to ICIS Chemical Business.

Printer Friendly

Get access to breaking chemical news as it happens.
ICIS Global Petrochemical Index (IPEX)
ICIS Global Petrochemical Index (IPEX). Download the free tabular data and a chart of the historical index