Next Generation Biofuels: Market drivers, growth opportunities and regulatory change

Date: January 22, 2010
Pages: 190
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Publisher: Business Insights
Report type: Strategic Report
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Next Generation Biofuels: Market drivers, growth opportunities and regulatory change
Over 80% of the world’s primary energy supply is currently derived from coal, gas and oil (collectively known as ‘fossil fuels’), which are used to generate electricity, power, energy and heat for industrial, commercial, domestic and transportation purposes. The world’s dependence on crude oil for transportation is particularly marked, with the International Energy Agency (IEA) estimating that fuels from crude oil currently supply about 96% of the worldwide energy demand for transport purposes.

As the world’s population grows and developing countries look to expand their economies, this insatiable demand for fossil fuels is unlikely to show any sign of easing, with oil and gas accounting for 60% of the world’s increasing energy demand between now and 2030. Furthermore, with most significant reserves of fossil fuels unevenly distributed throughout the world, energy security is set to become an increasingly critical economic and political issue over the coming decades. Real or perceived disruptions to the global supply of fossil fuels – notably crude oil – are likely to grow in frequency and cause wild fluctuations in the price of energy, as they have done so in the past.

However, one of the most pressing reasons for seeking alternative sources of energy and fuel lies in the form of climate change. The combustion of fossil fuels releases carbon dioxide (CO2), a potent ‘greenhouse gas’ (GHG), which are considered to be responsible for ‘global warming’. According to the IEA, if no changes are made to the world’s existing energy economy, related emissions of CO2 will grow marginally faster than energy use, meaning that by 2030 global CO2 emissions will be more than 50% higher than today. Over two-thirds of that projected increase in emissions is expected to come from emerging economies, such as India, China – both of which are set to rely heavily on coal-based power stations to drive their rapidly developing economies.

Key features of this report

  • Analysis of biofuels by type, resources available, production volumes, production technology capacity installed.
  • Market projections to 2020, including an evaluation of energy type and national and international growth potential.
  • Overview of trends impacting on and shaping innovation in the energy market.
  • New renewable energy technology analysis including innovation, capacity and biofuels investment.


  • Scope of this report

  • Achieve a quick and comprehensive understanding of how global market trends and legislation are influencing the development of the biofuels industry.
  • Realize up to date competitive intelligence through a comprehensive review of global markets in the biofuels energy industry between 1990 and 2008.
  • Assess the emerging trends in the biofuels industry – Biomethanol, Hydro Thermal Upgrading (HTU) diesel, Fischer-Tropsch (FT) diesel, Lignocellulosic ethanol, Algae fuel, Photo-bioreactors carbon emission absorption.


  • Key Market Issues

  • Environmental regulations: Environmental targets set to control Carbon dioxide emissions globally are creating a path for lower carbon emission fuel technologies.
  • Energy security:- Oil pricing structures are volatile and uncontrollable, due to the majority imported from non-domestic countries. This volatility is likely to increase as reserves of the natural resources decline.
  • Resource allocation: Some of the currently available biofuels have a number of disadvantages that are related to their feedstock. The current costs of rapeseed biodiesel and ethanol from cereals or beets are much higher than the costs of petrol or diesel, with substantial subsidies required to make them competitive. Second generation biofuels have been developed due to limitations of first generation biofuels, primarily that the resources used threatens food supplies.


  • Key findings from this report

  • Worldwide production of biodiesel reached 11,016m liters per annum, with the EU representing 72% of that global biodiesel production and consumption.
  • Germany, France, Italy, the UK and Austria were the largest biofuels consumers in the EU in 2008. The USDA forecasts that biofuels consumption in the EU will continue to grow throughout 2009, despite the economic downturn. The increase is a result of mandates and tax incentives.
  • There are currently 192 bioethanol production plants in the US, which together have a production capacity of 36,300m liters per year.
  • The US accounted for 24% of the global biodiesel market in 2008 – accounting for 2,650m liters per annum.
  • It is also notable that Brazil is by far the world’s largest exporter of ethanol at 3.5bn liters (from production of 19bn liters). Production is estimated by the IEA to increase to over 4bn liters in 2009. Most exports go to the US, Europe, Korea and Japan.


  • Key questions answered

  • What are the drivers shaping and influencing development in the biofuel industry?
  • How will biofuels production share perform to 2020? What are the opportunities?
  • What are the forecast market growth rates 2008-2030? Which markets will see the highest value growth and which the highest volume growth?
  • Which regions and countries offer the greatest opportunity for growth?

  • Next Generation Biofuels
    Executive summary 14
    What are biofuels? 14
    Next generation biofuels 15
    Industry forecasts for biofuels 16
    Biofuels drivers and inhibitors 17
    The biofuels economy 18
    Biofuels market size and forecasts 19
    Biofuels policies and regulations 20

    CHAPTER 1 INTRODUCTION

    Audience 22
    How to read this report 22

    CHAPTER 2 WHAT ARE BIOFUELS?

    Summary 26
    World energy demand 27
    Climate change 27
    Renewable energy 28
    Biomass 30
    What is biomass? 30
    Population, energy consumption and biomass 31
    Regional resources 32
    What are biofuels? 39
    Solid biofuels 40
    Liquid biofuels 40
    Gas biofuels 41
    Biofuels in current use 41
    Ethanol 41
    Distribution, storage and blending 42
    End-use 42
    Biodiesel 42
    Distribution, storage, blending 43
    End-use 43

    CHAPTER 3 NEXT GENERATION – ADVANCED BIOFUELS

    Summary 46
    Introduction 47
    Second generation biofuels 49
    Second generation biofuels under development 51
    Biohydrogen 51
    BioDME 51
    Biomethanol 51
    Butonal and Isobutanol 52
    Dimethylfuran (DMF) 52
    Hydro Thermal Upgrading (HTU) diesel 52
    Fischer-Tropsch fuels 52
    Bioconversion of biomass to mixed alcohol fuels 53
    Wood diesel 53
    Key players in second generation biofuels 53
    Market possibilities for second generation biofuels 54
    Third generation biofuel 55
    Algae fuel 55
    Background 55
    Limitations of previous biofuels 56
    Algae types 56
    Algae cultivation 57
    Photo-bioreactors 57
    Closed loop systems 57
    Open pond systems 58
    Algae fuel potential 58
    Development timeline 60
    Aircraft biofuels testing 61
    Key players for third generation biofuel 64
    Market possibilities for algae biofuel 65

    CHAPTER 4 FORECASTS FOR BIOFUELS

    Summary 68
    Introduction 69
    Economic competitiveness of biofuels and biomass 69
    Biofuels technology development 72
    Biofuels drivers and inhibitors 73
    Chapter conclusion 76

    CHAPTER 5 BIOFUELS DRIVERS AND INHIBITORS

    Summary 80
    Market background 81
    Drivers of the biofuels market 85
    Greenhouse gases and environmental concerns 85
    Regulatory incentives/pressure 86
    Concern about energy security 88
    Rising cost of existing fuel supplies 88
    Consumer pressure 90
    Inhibitors of the biofuels market 91
    The biofuels economy 92
    Sustainability concerns and the rising price of food crops 92
    Limited biofuels infrastructure 93
    Biomass and land availability 94

    CHAPTER 6 THE BIOFUELS ECONOMY

    Summary 98
    Introduction 99
    American market 99
    American Recovery and Reinvestment Act of 2009 100
    Biofuels new direction away from corn-based ethanol 101
    The biofuels economy 102
    Production costs 102
    Cost of distribution 103
    Cost at filling station 105
    Third generation algae fuel costs 108
    Algae fuel leading players costs comparison 110
    Transport fuel blends 113
    Car costs and fuel efficiency 114
    Chapter conclusion

    CHAPTER 7 BIOFUELS MARKET SIZE AND FORECASTS

    Summary 120
    Worldwide energy demand 121
    Biofuels market sizing 124
    Worldwide 124
    Ethanol 124
    Biodiesel 127
    Europe 130
    Ethanol 130
    Biodiesel 134
    US 141
    Ethanol 141
    Biodiesel 145
    Brazil 147
    Ethanol 147
    Biodiesel 150
    India 153
    India’s fuel economy 153
    Ethanol 153
    Biodiesel 155
    China 157
    China’s fuel economy 157
    Ethanol 157
    Biodiesel 158
    China working with the US for biofuels development 159

    CHAPTER 8 BIOFUELS POLICIES AND REGULATIONS

    Summary 162
    Introduction 164
    Policy frameworks 165
    Renewable energy targets 166
    Kyoto Protocol 166
    European Union 166
    US 169
    Renewable Fuel Standard (RFS) 169
    Renewable Portfolio Standards (RPS) 170
    Developing nations 171
    Biofuels targets 172
    Biofuels policy overview by region 173
    The European Union 173
    Biofuels Directive 173
    Directive 2003/96/EC 174
    Incentives for biofuels 174
    Tax incentives 175
    The United States 177
    US Energy Policy Act 2005 177
    Brazil 178
    Proalcool Program 178
    India 179
    Biodiesel policy 179
    Bioethanol policy 180
    China 181
    National Biomass Ethanol Gasoline Project 181
    The Renewable Energy Law of the People’s Republic of China 181

    CHAPTER CONCLUSION

    Report conclusion 183
    Abbreviations 186
    Energy content and conversion rates 187
    Index 189

    LIST OF FIGURES

    Figure 2.1: World renewable energy, 2008 30
    Figure 2.2: Current and predicted EU biomass resources (Mtoe/y) 33
    Figure 2.3: Current and potential US biomass resources (Million dry tonnes/y), 2005 34
    Figure 2.4: Potential power generation from biomass among ASEAN countries (MW) 36
    Figure 2.5: Breakdown of currently available biomass in China by type 37
    Figure 2.6: Maximum regional bioenergy production potential, 2050 38
    Figure 2.7: Typical oil extraction from 100kg of oil seeds (kg) 44
    Figure 3.8: Global biosphere, 1998 60
    Figure 3.9: Biofuels time period to availability (years), 2009 61
    Figure 3.10: Cushing, OK WTI Oil Spot Price FOB prices (Dollars per Barrel), 1986-2009 66
    Figure 4.11: Relative competitiveness of alternative energies in five years, 2009 69
    Figure 4.12: Relative economic competitiveness of biofuels now and in the next five years, 2009 70
    Figure 4.13: What proportion of global fuel production will biofuels account for by 2020? 71
    Figure 4.14: Within how long will biofuels account for the primary source of global fuel production? 72
    Figure 4.15: Which regions will lead the development of biofuels over the next five years? 73
    Figure 4.16: How important will the following factors be in driving the biofuels market over the next five years? 74
    Figure 4.17: How important will the following factors be in inhibiting the biofuels market over the next five years? 75
    Figure 4.18: Biofuels impact on global food crop prices, 2009 76
    Figure 5.19: Projected world energy demand to 2030 (Mtoe) 82
    Figure 5.20: Growth in energy demand by region (2000-2030) 83
    Figure 5.21: Projected worldwide oil consumption (million barrels per day), 2005-2025 84
    Figure 5.22: Average annual oil price (US$ per barrel), 2008 89
    Figure 5.23: Opting for green energy is one behavioural aspect of rising environmental attitudes 90
    Figure 5.24: The potential biomass availability of EU15, AC10 and/or Europe according to five studies (left part of the figure) 94
    Figure 6.25: Cost of distribution and dispensation of various fuels from a central production facility to a filling station (€/GJ) 105
    Figure 6.26: Costs of various biofuels at the filling station using existing technology (2004) 106
    Figure 6.27: An algae production process, 2009 109
    Figure 6.28: Algal fuel capacity projections 2009-2014, 2009 112
    Figure 6.29: Gasoline ethanol (kpa/%v/v), 2008 114
    Figure 6.30: Car costs (€) and fuel efficiencies (km/GJ of fuel) of passenger cars by fuel and engine system 115
    Figure 7.31: Worldwide biofuels fuel production volume (billion liters), 2008 123
    Figure 7.32: Global bioethanol production growth (thousand tons of oil equivalent), 1998-2008 126
    Figure 7.33: Top bioethanol producing countries (thousand tons of oil equivalent), 2008 127
    Figure 7.34: Biodiesel (million L/a), 2009 129
    Figure 7.35: Bioethanol in Europe (million L/a), 2008 131
    Figure 7.36: Biodiesel production in Europe (million liters/annum), 2009 136
    Figure 7.37: EU market share of biodiesel production in 2008 (%), 2009 138
    Figure 7.38: Projected US ethanol production (billions of gallons), 2006-2012 142
    Figure 7.39: US ethanol market revenue forecast ($bn), 2006-2012 143
    Figure 7.40: US bioethanol development (million L/a), 2009 144
    Figure 7.41: US biodiesel (million L/a), 2009 147
    Figure 7.42: Brazil biofuels development (million L/a), 2009 150
    Figure 8.43: Renewable fuels targets in the US (billions of gallons per year), 2006-2012 170
    Figure 8.44: EU biofuels targets, 2008 174

    LIST OF TABLES

    Table 2.1: World renewable energy, 2008 29
    Table 2.2: Population, energy consumption and biomass contribution in selected regions, 2005 31
    Table 2.3: Current and predicted EU biomass resources (Mtoe/y) 32
    Table 2.4: Current and potential US biomass resources (Million dry tons/y), 2005 34
    Table 2.5: Potential power generation from biomass among ASEAN countries (MW) 35
    Table 2.6: Breakdown of currently available biomass in China by type 37
    Table 2.7: Maximum regional bioenergy production potential, 2050 38
    Table 2.8: Typical oil extraction from 100kg of oil seeds (kg) 44
    Table 3.9: Comparison of first and second generation biofuels 48
    Table 3.10: Biofuels comparison (Liters of oil yields (hectares/year)), to 2009 59
    Table 3.11: Viable Bio-SPK feedstock alternatives, 2009 61
    Table 3.12: Fuel property comparisons: Neat, 2009 63
    Table 3.13: Fuel property comparisons: Blends, 2009 64
    Table 5.14: Projected world energy demand to 2030 81
    Table 5.15: Growth in energy demand by region (2000-2030) 82
    Table 5.16: Projected worldwide oil consumption (million barrels per day), 2005-2025 84
    Table 5.17: CO2 equivalent emissions savings from biofuels (g/km), 2006 85
    Table 5.18: Average annual oil price (US$ per barrel), 2008 88
    Table 5.19: Key barriers for biofuels 91
    Table 6.20: Production costs of biofuels from various crops 103
    Table 6.21: Cost of distribution and dispensation of various fuels from a central production facilityto a filling station (€/GJ) 104
    Table 6.22: Costs of various biofuels at the filling station using existing technology (2004) 106
    Table 6.23: Cost comparison of biofuels with gasoline fossil fuels 107
    Table 6.24: Cost estimates of various biofuels at the filling station using future technology, post- 2010 108
    Table 6.25: Cost of harvesting, dewatering and drying algae, 2009 110
    Table 6.26: Top biofuels companies, 2009 111
    Table 6.27: Algal fuel capacity projections 2009-2014, 2009 112
    Table 7.28: Comparison of worldwide fuel production from hydrocarbon sources versus biomass sources, 2005 122
    Table 7.29: Worldwide biofuels fuel production volume (bn liters), 2008 122
    Table 7.30: Amounts of raw materials to meet worldwide fuel demand, 2005 123
    Table 7.31: Global bioethanol production (thousand tons of oil equivalent), 2008 125
    Table 7.32: Biodiesel (million L/a), 2008 128
    Table 7.33: Bioethanol in Europe (million L/a), 2008 130
    Table 7.34: EU bioethanol production, supply and demand (1,000MT) 132
    Table 7.35: EU bioethanol production - number of plants and capacity (1,000 MT) 132
    Table 7.36: Feedstock use for bioethanol production (1,000MT) 133
    Table 7.37: EU bioethanol consumption – main consumers (1,000 MT) 134
    Table 7.38: EU bioethanol and gasoline consumption (Ktoe) 134
    Table 7.39: Biodiesel production in Europe (millions liters/annum), 2009 135
    Table 7.40: EU Biodiesel production – number of plants and capacity (1,000 MT) 137
    Table 7.41: EU market share of biodiesel production in 2008 (%), 2009 138
    Table 7.42: Feedstock use for biodiesel production (1,000MT), 2009 139
    Table 7.43: EU biodiesel consumption (1,000MT), 2009 140
    Table 7.44: EU biodiesel and diesel consumption (Ktoe), 2009 140
    Table 7.45: Projected US ethanol production (billions of gallons), 2006-2012 141
    Table 7.46: US ethanol market revenue forecast (US$bn), 2006-2012 142
    Table 7.47: US bioethanol development (million L/a), 2009 143
    Table 7.48: Existing and future ethanol capacity in the US, 2009 145
    Table 7.49: US biodiesel (million L/a), 2009 146
    Table 7.50: Ethanol profile comparison of the US and Brazil (2006) 148
    Table 7.51: Brazil biofuels development (million L/a), 2009 149
    Table 7.52: Brazilian biodiesel production, supply and demand (January-December, 000 Liters), 2009 151
    Table 7.53: Brazilian fuel consumption matrix (000 m3) 151
    Table 7.54: Brazilian soybeans and products production (000 hectares, 000 metric tons) 152
    Table 7.55: Brazilian cotton and products production (000 hectares, 000 metric tons) 152
    Table 7.56: Projected demand and supply of ethanol in India for 5% blend with gasoline 153
    Table 7.57: India’s ethanol requirement for 5% blending with gasoline sugar 154
    Table 7.58: India’s production & distribution of molasses and alcohol/ethanol in sugar (million Tons/ million Liters), 2008 155
    Table 7.59: Projected demand for gasoline and diesel in India to 2012 (MT) 156
    Table 7.60: Diesel and biodiesel demand in India using Jatropha (MT) 157
    Table 7.61: China’s major biodiesel plants production capacity (MT), 2008 159
    Table 8.62: Biofuels infrastructure profiles,Q209 165
    Table 8.63: Mechanisms to incentivize renewable energy generation 166
    Table 8.64: EU renewable energy targets for 2020 (%) 168
    Table 8.65: Renewable fuels targets in the US (billions of gallons per year), 2006-2012 169
    Table 8.66: Biofuels energy targets 172
    Table 8.67: Biofuels policy overview of selected countries 182

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