The Biofuels Market Outlook: Market drivers, growth opportunities and regulatory change

The Biofuels Market Outlook: Market drivers, growth opportunities and regulatory change

Over 80 per cent of the world’s primary energy supply is currently derived from fossil fuels. Concerns around energy security, climate change and rising oil prices are driving the search for cheaper and more environmentally friendly alternatives. However, it is only recently that technological advances and reduced production costs have meant biofuels can fulfil this need. ‘The Biofuels Market Outlook: Market drivers, growth opportunities and regulatory change’ is a new report published by Business Insights that provides forecasts for the biodiesel and ethanol markets, analyses the predicted growth of the biofuel economy, and how it is likely to influence fuel and biofuel prices. It details the strategies, incentives and legislation intended to boost the production and consumption of biofuels. It also contains the results of our proprietary industry survey detailing attitudes and perceptions towards biofuels. Quantify the size of the biofuels market and understand the key drivers, inhibitors, policies and regulations that will shape its future growth with this new report.

Table of Contents
The Biofuels Market Outlook
Executive Summary 10
What is biofuel? 10
Industry forecasts for biofuels 11
Biofuels market drivers and inhibitors 12
The biofuel economy 13
Biofuels market size and forecast 14
Regulations and policies 15
Chapter 1 Introduction 18
Audience 18
How to read this report 18
Chapter 2 What is biofuel? 22
Summary 22
World energy demand 23
Climate change 23
Renewable energy 24
Biomass 25
What is biomass? 25
Population, energy consumption and biomass 26
What is biofuel? 27
Solid biofuels 27
Liquid biofuels 28
Gas biofuels 28
Biofuels in current use 29
Ethanol 29
Distribution, storage and blending 29
End-use 29
Biodiesel 30
Distribution, storage, blending 31
End-use 31
Advanced biofuels 32
Chapter 3 Industry forecasts for biofuels 36
Summary 36
Introduction 37
Economic competitiveness of biofuels and biomass 37
Biofuel technology development 40
Biofuel drivers and inhibitors 41
Conclusions 43
Chapter 4 Biofuel drivers and inhibitors 46
Summary 46
Market background 47
Drivers of the biofuels market 49
Greenhouse gases and environmental concerns 49
Regulatory incentives/pressure 50
Concern about energy security 51
Rising cost of existing fuel supplies 52
Consumer pressure 53
Inhibitors of the biofuels market 54
The biofuel economy 55
Sustainability concerns and the rising price of food crops 55
Limited biofuels infrastructure 56
Biomass and land availability 57
Chapter 5 The biofuel economy 60
Summary 60
Introduction 61
The biofuel economy 63
Production costs 63
Cost of distribution 64
Cost at filling station 65
Car costs and fuel efficiency 68
Conclusions 70
Chapter 6 Biofuels market size and
forecasts 72
Summary 72
Worldwide energy demand 73
Biofuels market sizing 75
Worldwide 75
Ethanol 75
Biodiesel 77
Europe 78
Ethanol 78
Biodiesel 78
The US 79
Ethanol production 79
Biodiesel 80
Brazil 81
Ethanol 81
India 82
Ethanol 82
Biodiesel 83
China 84
Chapter 7 Biofuels policies and regulations 86
Summary 86
Introduction 87
Policy frameworks 88
Renewable energy targets 89
Kyoto Protocol 89
European Union 89
The United States 91
Developing nations 92
Biofuels targets 92
Biofuels policy overview by region 93
The European Union 93
Biofuels Directive 93
Directive 2003/96/EC 94
Incentives for biofuels 94
Tax incentives 95
The United States 96
US Energy Policy Act 2005 96
Brazil 97
Proalcool Program 97
India 99
National Biodiesel Mission 99
China 99
National Biomass Ethanol Gasoline Project 99
The Renewable Energy Law of the People’s Republic of China 100
Conclusions 100
References 102
Index 106
List of Figures
Figure 3.1: Relative competitiveness of alternative energies in five years 37
Figure 3.2: Relative economic competitiveness of biofuels now and in the next five years 38
Figure 3.3: What proportion of world fuel/demand will biofuels and biomass account for by 2017?
39
Figure 3.4: Within how long will biofuels account for 50% of global fuel/energy production? 40
Figure 3.5: Which regions will lead the development of biofuels over the next five years? 40
Figure 3.6: How important will the following factors be in driving the biofuels market over the
next five years? 41
Figure 3.7: How important will the following factors be in inhibiting the biofuels market over the
next five years? 42
Figure 3.8: What impact will biofuels production have on the global price of food crops? 43
Figure 4.9: Projected worldwide oil consumption 48
Figure 4.10: Opting for green energy is one behavioural aspect of rising environmental attitudes 53
Figure 4.11: The potential biomass availability of EU15, AC10 and/or Europe according to five
studies (left part of the figure) 57
Figure 5.12: Cost of distribution and dispensation of various fuels from a central production facility
to a filling station (€/GJ) 65
Figure 5.13: Costs of various biofuels at the filling station using existing technology (2004) 66
Figure 5.14: Car costs (€) and fuel efficiencies (km/GJ of fuel) of passenger cars by fuel and engine
system 69
Figure 6.15: Top 10 global ethanol producers, 2005 76
Figure 7.16: Mechanisms to incentivize renewable energy generation 89
Figure 7.17: Renewable electricity production in Germany and UK, 1995-2005 90
Figure 7.18: Renewable fuels targets in the US (gallons bn), 2006-2012 91
vii
List of Tables
Table 2.1: World Renewable Energy 2005 25
Table 2.2: Population, energy consumption and biomass contribution in selected regions 26
Table 2.3: Typical oil extraction from 100kg of oil seeds 31
Table 2.4: Comparison of first-generation versus ‘advanced’ biofuels 33
Table 4.5: Projected world energy demand to 2030 47
Table 4.6: Growth in energy demand by region (2000-2030) 47
Table 4.7: Projected worldwide oil consumption (million barrels / day), 2005-2025 48
Table 4.8: CO2 equivalent emissions savings from biofuels 49
Table 4.9: Average annual oil price (US$ per barrel) 52
Table 4.10: Key barriers for biofuels 54
Table 5.11: Production costs of biofuels from various crops 63
Table 5.12: Cost of distribution and dispensation of various fuels from a central production facility
to a filling station (€/GJ) 64
Table 5.13: Costs of various biofuels at the filling station using existing technology (2004) 66
Table 5.14: Cost comparison of biofuels with petroleum fossil fuels 67
Table 5.15: Cost estimates of various biofuels at the filling station using future technology, post-
2010 68
Table 5.16: Car costs (€) and fuel efficiencies (km/GJ of fuel) of passenger cars by fuel and engine
system 69
Table 6.17: Comparison of worldwide fuel production from hydrocarbon sources versus biomass
sources, 2005 74
Table 6.18: Amounts of raw materials to meet worldwide fuel demand, 2005 74
Table 6.19: Top 10 global ethanol producers, 2005 75
Table 6.20: Worldwide ethanol supply and demand, 2005 and 2010 (m3) for selected countries 76
Table 6.21: Top European ethanol producers 2005 (millions of gallons) 78
Table 6.22: EU market share of biodiesel production in 2005 79
Table 6.23: Projected US ethanol production, 2006-2012 79
Table 6.24: US ethanol market revenue forecast, 2006-2012 80
Table 6.25: Ethanol profile comparison of the US and Brazil (2006) 81
Table 6.26: Projected demand and supply of ethanol in India for 5% blend with gasoline 82
Table 6.27: Projected demand for gasoline and diesel in India to 2012 83
Table 6.28: Diesel and biodiesel demand in India using Jatropha 84
Table 7.29: Biofuels infrastructure profiles Q107 88
Table 7.30: Renewable fuels targets in the US (gallons bn), 2006-2012 91
Table 7.31: Biofuels energy targets 93
Table 7.32: Biofuel policy overview of selected countries 101