Wood Mackenzie’s latest study ‘Biofuels – Growing in commercial viability?’ shows that, contrary to consensus, global land availability is not going to restrict the supply of biofuels, but economic and technological issues will. The company therefore forecasts a lower demand for biofuels across the globe than is quoted by other studies.
Furthermore, Wood Mackenzie believes that current prices for many biofuels feedstocks would be high regardless of the demand for biofuels due to continually growing demand for food and animal feed combined with structural issues, such as years of under investment in the agriculture industry.
In the US, lignocellulosic material will come to account for a growing portion of fuel ethanol production by 2020, as plants start to be commercialised in the US. The cellulosic contribution will remain well short of current US targets for cellulosic biofuels in that timeframe, but would still represent a significant development for the industry, with potential for substantial expansion around the world in the years beyond 2020.
The study concludes that biofuels use will remain relatively low in Asia compared to other regions, although the region will continue to grow as a net exporter of biodiesel and palm oil. “The extremely high feedstock costs will present a challenge for Asian countries trying to promote domestic biofuels consumption,” explains Gelder.
From its analysis, Wood Mackenzie believes the most likely scenario for the future will be a ‘Bio-Balance’; “Biofuels will become one of many solutions to environmental and energy security challenges. Government policy towards biofuels, in this scenario, can be best described as balanced; meaning no strident moves for or against policies that would support biofuels,” says Gelder.
The study is the result of collaboration between Wood Mackenzie, the highly respected Energy research consultancy and Celeres, a leading consultancy to the agricultural industry. It provides a unique view on biofuels combining strong experience in both oils analysis and agricultural analysis, is the only study of its type in the market which models supply and demand fundamentals at a global level, as well as providing clear trends in expected cross-regional trade flows.
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