Thursday, April 15, 2010

Bio Fuel : Linking Trend Analysis and Scenario Planning

Someone asked the question how to link trends affecting bio fuel sector with future scenarios?

Reproducing my 2 sens ( Malaysian cents) answer

For developing bio fuel scenarios- Good question to ask is what is the element of uncertainty in future of bio fuel?

Uncertainty is in demand and supply.

2*2 matrix can be made for demand on one axis and supply on the other axis

Four scenarios popup

Scenario 1: Good Demand of Bio Fuel and Good Supply of Bio Fuel : Optimist
Scenario 2: Good Demand of Bio Fuel but Poor supply of Bio Fuel : Lottery
Scenario 3: Poor Demand of Bio Fuel but Good Supply of Bio Fuel: Pessimist
Scenario 4:
Poor Demand of Bio Fuel and Poor Demand of Bio Fuel: No Change

Now Linking Current Trends to Future Scenarios

Overall energy demand will grow but relative demand of bio fuel will depend upon
a)Oil Price Movement
b)Development of Other Renewable sources ( Solar, Wind ) ...Price Reduction and Grid Parity
c)Price Reduction of Bio fuel - Technology advancement
d)Government incentives for use of Bio Fuel
e) Development of end user applications - Bio Fuel Car, Bio Fuel Engines

The supply of Bio Fuel will depend upon
a)Food Price rise and public opinion against use of Bio Fuel
b)Excess Bio Fuel supply because of Competition
c)Government Incentives may boost supply or Govt. neglect may decrease supply
d)Rise of national protectionism and disruption in global trade

So on...