FAO-OECD: The Global Biofuels Market Is Still Growing

07.05.16 | Blog | By:

The UN Food & Agriculture Organization (FAO) and the Organisation for Economic Co-operation and Development(OECD) released its 12th annual joint outlook providing market projections to 2025 (including assumptions and data) for major agricultural commodities ― including biofuels. The upshot is that both ethanol and biodiesel production are expected to grow through 2025, albeit a more modestly for ethanol.

Global ethanol production is expected to expand modestly about 11% from 116 billion liters (30.6 billion gallons) in 2015 to 128.4 billion liters (33.9 billion gallons) by 2025 and 50% of it will come from Brazil. Biodiesel production is expected to increase 34% from 31 billion liters (8.2 billion gallons) in 2015 to 41.4 billion liters (10.9 billion gallons) by 2025, driven by policies in the U.S., Argentina, Brazil and Indonesia.

I took the data in study and developed the following charts showing the ethanol and biodiesel projection on an annual basis through 2025 and also by the major countries included in the study for 2025.

 

Other major findings for biofuels included the following:

  • Advanced Biofuels: Not expected to take off over the projection period. (This is not correct as we do have advanced biofuels in the marketplace now. Neste’s NEXBTL is just one example and those volumes are significant.)
  • Blendwall: The 10% ethanol blendwall will continue in the U.S.
  • Cellulosic Ethanol: Not available on a large scale and will be largely met with renewable compressed natural gas and renewable liquefied natural gas.
  • RED in the EU: The proportion of total transport energy accounted for by biofuels, including double counting for sustainable biofuels is expected to reach 6.3% by 2020.The remainder of the 10% Renewable Energy Directive (RED) target will be met from other renewable energy sources such as EVs.
  • Brazil: Prices will remain favorable to hydrous ethanol use rather than gasohol and thus a sustained demand for ethanol, mostly met by domestic production, will prevail.
  • India: New policies aiming at compensating sugar mills for high sugar prices will encourage ethanol production from molasses.

The growth projection is especially interesting considering how controversial biofuels remain in the U.S., EU and elsewhere, with some NGOs advocating hard to abandon them completely. This analysis shows that might be hard to do, at least until there is significant EV penetration.