Big Oil on biofuels prowl?

Greenchipstocks neatly summarized a presentation by Don Paul, Executive Director of the University of Southern California Energy Institute, giving five reasons why Big Oil is “coming to cleantech,” and five more as to why Big Oil is headed for a major role in the renewable energy business. Notably, Paul was CTO of Chevron before joining the Institute.

His reasons for Bio Oil entering cleantech:

1.    Global reach and scale
2.    Strong balance sheets and cash flow
3.    Technical, business, and market capabilities
4.    Infrastructure, land, and supply chain management
5.    Patience and longevity

His reasons for Bio Oil entering the renewable fuels marketplace:

1.    Producing alternatives to oil, and thereby diverting existing petroleum refining to deliver more natural gas.
2.    Converting existing production sites to wind and solar.
3.    Integrating power infrastructure with natural gas as a back up to other power producing feedstocks.
4.    Geothermal opportunities are a natural fit for the oil & gas business.
5.    Integration opportunities in biofuels.

In addition, I gave the following presentation on oil companies and the rise of partnerships in biofuels production at the Biofuels: SCience and Innovation workshop in San Francisco this week. In remarks that accompanied the slides, I implored biofuels companies to cease making the mistake of considering Big Oil to be the Big Enemy, and consider it instead the only practical source of capital and know-how to drive scale, and also the only realistic opportunity for VC and other early investors to find exits. Big Oil needs early-stage investors to take the technology risks on biofuels, and de-risk the space so that Big Oil can enter a more stable environment of projectable margins, provide scale, and provide exits for the early investors who can then redeploy their capital in search of more innovation in feedstocks and yields.

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