Navigant Research forecasts 58% growth in global biofuels consumption by 2022; biodiesel and drop-in fuels gain market share

05 February 2014

In a new report, “Biofuels for Transportation Markets”, Navigant Research forecasts that global demand for biofuels in the road transportation sector will grow from representing almost 6% of the liquid fuels market in 2013 to roughly 8% by 2022. Of that 8%, 8% will consist of advanced drop-in fuels, according to the research firm. Navigant forecasts that global biofuels consumption in the road transportation sector will grow from more than 32.4 billion gallons per year (BGPY) in 2013 to more than 51.1 BGPY in 2022—an increase of 58%.

Overall, Navigant forecasts that global retail sales of all liquid fuels for the road transportation sector will grow from more than $2.6 trillion in 2013 to more than$4.5 trillion in 2022 (73% growth).

Through 2013, ethanol accounted for 78% of biofuels consumption. This will drop to 69% of the market in 2022 as biodiesel and drop-in fuels gain share, according to Navigant. While Europe will be the leader in biodiesel development, other markets with growing diesel vehicle fleets will help set the foundation for a strong global biodiesel market.

Navigant projects the global biodiesel market will grow from 6.9 BGPY in 2013 to almost 12.2 BGPY in 2022 (77% growth), accounting for nearly 24% of the biofuels market at the end of the forecast period.

On the drop-in side, major stakeholders such as the airline industry and US DOD will continue to spur development of the technology, driving the price per gallon down to competitive levels.

The prior 10 years have seen steady increases in production capacity of ethanol in the United States and Brazil, and biodiesel in Europe, resulting in biofuels gaining a foothold in the global liquid fuels market. Outside of North America and Brazil—which have reached mandated blend levels for ethanol—other countries are mandating low-level blends (5%-10%). National energy security is a primary driver for many nations, as increasing percentages of biofuels within the petroleum supply chain dampens the effects of spikes in oil prices on retail fuel prices.

Although cellulosic biofuels have been slower to emerge commercially than anticipated, there are a few commercial-scale plants just beginning production and increasing cellulosic ethanol’s share of biofuels consumption. Algal fuels, which offer multiple advantages over conventional biofuels, continue to face, as do other emerging technologies, cost issues.

Despite having huge potential, biofuels are still challenged by issues such as feedstock access, supply chain infrastructure development, and achieving price parity with the well-established petroleum industry, Navigant observed. In addition, ongoing social and environmental debates about conventional biofuels regarding land use change (LUC), food versus fuel, water consumption, and efficiency stand to erode aggressive government support and investment in conventional biofuels development.