|Total Biofuels production by fuel type, world markets: 2013-2023. Source: Navigant. Click to enlarge.|
Navigant Research forecasts global biofuels production will grow at a compound annual growth rate (CAGR) of 6% between 2013 and 2023, despite slower than expected development of advanced biofuels pathways (such as cellulosic biofuels); an expected expansion in unconventional oil production in key markets such as the United States; and a decline in global investment for biofuels in recent years.
In contrast, Navigant expects the CAGR for fossil-based gasoline, diesel, and jet fuel to be 3.1% over the forecast period. The research firm projects that total biofuels production will reach 62 billion gallons by 2023 or 5.9% of global transportation fuel production from fossil sources.
Navigant’s research report, which is an update to its forecasts for biofuels consumption and production across the gasoline, diesel, and jet fuel pools, includes the following fuel types: conventional ethanol; advanced ethanol (including cellulosic); biobutanol; biodiesel (fatty acid methyl ester [FAME]); renewable diesel; synthetic gasoline; and renewable biojet (including bio-derived synthetic paraffinic kerosenes [Bio-SPK]).
Navigant expects conventional ethanol derived from corn starch, coarse grains, and sugarcane to remain the largest segment of biofuels throughout the forecast period. The firm also expects biodiesel derived from conventional and advanced feedstocks to double its installed production base.
Navigant expects the production of advanced ethanol and biobutanol are expected to generate an additional $14.5 billion in revenue with their production base growing at a CAGR of 38.7% and 72.2% respectively.
Renewable diesel and renewable biojet represent the fastest growing segments among drop-in bio-based fuels, reaching more than 5 billion gallons of installed production capacity by 2023 and generating $17.4 billion in revenue. Production of synthetic gasoline is expected to grow at an 18.7% CAGR over the forecast period.
Navigant Research anticipates that global biofuels production will exceed the aggregated volume of blending mandates by 2020. Meanwhile, the anticipated rollout of supply targets will exceed actual production that same year. This leaves the global biofuels industry hurtling toward a rock and a hard place. Accordingly, the next decade will likely see a shakeup of existing policies around biofuels to better calibrate policy objectives and actual production.—Market Data: Biofuels
Navigant projects that North America and Latin America will continue to be the market leaders, accounting for 74% of global biofuels production in 2023 due to the US’ Renewable Fuel Standard (RFS) and Brazil’s ProAlcool policy.
Europe’s share of global biofuels production will decline moderately due to a growing emphasis on sustainability compliance and restricted growth options for biodiesel production from commodity-based feedstocks, according to Navigant.
Both Asia Pacific and the Middle East & Africa are forecast to show the fastest growth with CAGRs of 9.2% and 7.1% over the forecast period respectively. The two regions will see their collective market share of biofuels production increase from 9.4% in 2013 to 12.3% in 2023.