Analysts see biofuel production doubling over next decade

Source: Amanda Peterka, E&E reporter • Posted: Tuesday, April 9, 2013

Global biofuels production will nearly double in the next decade, replacing 6 percent of transportation fuel worldwide by 2023, analysts said in a report released yesterday.

Biofuels will top 61 billion gallons a year by 2023, up from the current global annual production level of 33.6 billion, Navigant Consulting Inc. found. Production will be helped along by biofuels mandates in more than 40 countries, with the United States, Brazil and the European Union at the helm.

“North America is leading the transition to advanced biofuels, but healthy growth in Europe, Asia Pacific and Latin America is helping to diversify the fuel supply for a range of transportation applications,” said Mackinnon Lawrence, a principal research analyst with Navigant.

The report analyzed both conventional corn-based ethanol and advanced biofuels that are expected to come online within a few years. Drop-in biofuels, or those that can be used in existing fuel infrastructure, will grow at an annual rate of 14 percent each year over the next decade and lead the expansion.

Conventional ethanol, though, will continue to make up the bulk of biofuel production. North America and Latin America alone will make up 74 percent of biofuels production by 2023.

Despite the expected boom, biofuels will face “significant head winds” during the next decade, Lawrence said. The report found that there will likely be a shake-up of existing biofuels policy “to better calibrate policy objectives and actual production.”

There’s a lively debate, for example, in the United States over whether the conventional ethanol targets set by the renewable fuel standard are feasible given declining gasoline demand and whether the advanced biofuels targets are too aggressive given the slow start to the industry.

Global mandates requiring that a certain amount of biofuel be blended into fuel — both obligatory and voluntary — call for a 55-billion-gallon biofuel market by 2023. Supply targets, or those that set more general targets for biofuels, call for a 96-billion-gallon market in 10 years.