Growth of Second Generation Biofuels

Non-Food Biofuels to Experience Greatest Growth, Lux Research Says

By Roy L Hales

Screen shot 2014-03-18 at 3.43.47 PMThe biofuel industry has been enjoying a 19.6% annual growth since 2005. That is about to change. The World’s 53.2 billion gallon biofuel industry could grow to over 60 billion gallons during the next few years. Much of this will come from riskier next generation technologies.

Approximately 65.9% of global biofuel capacity, in 2013, was ethanol. This should increase slightly over the next few years.

Biodiesel shall continue to be the Worlds’ second largest biofuel, and capacity should reach around 18.6 billion gallons a year by 2017.

The strongest growth will be in products such as non-food diesel, butanol, biojet and biocrude. They should increase at a rate of about 18.7% a year and control 3.3% of the market by 2017.

“Next-generation feedstocks like waste oils and cellulosic biomass are not tied up in the food supply and could unlock significant economic advantages, assuming novel conversions commercialize,” said Andrew Soare, Lux Research Senior Analyst and the lead author of the report titled, “Emerging Feedstocks and Fuels Spark Biofuel Capacity Expansion through 2017.”

“Meanwhile, next-generation fuels like renewable diesel will break down current barriers and drive long-term biofuel capacity expansion,” he added.

“Of the 782 MGY of announced cellulosic ethanol capacity, we expect 384 MGY to come to fruition, led by companies such as Beta Renewables, POET-DSM, and Abengoa,” the report states. “Renewable diesel from waste will emerge as a key biofuel process, while butanol and biocrude producers have the flexibility to sell into the chemicals market, and their effect on overall biofuel capacity remains minor.”

Close to 80% of the renewable diesel capacity over the next few years is already online, with players like Neste Oil and Diamond Green Diesel leading the market.

Gevo owns the only existent butanol facility. This is expected to come online soon.

AltAir has signed a 15 million gallon biojet contract with United Airlines. While this amount is relatively insignificant, it could signal the beginning of a shift in the industry.

Algal biofuels, such as Sapphire Energy’s much talked about green crude, are still years away from making a significant contribution to the market.

Americas’ biofuel industry enjoys high utilization and significant export, but is still threatened by regulatory instability.

There should be considerable growth in Europe, which has a 10% blending target for 2020, and in China. Non-food biofuels could meet China’s energy needs.

Lux Research analysts compiled a database of over 1,700 biofuel production facilities, in 82 countries, for this study

The report, titled “Emerging Feedstocks and Fuels Spark Biofuel Capacity Expansion through 2017,” is part of the Lux Research Alternative Fuels Intelligence service.

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