Future prospects for biofuels

While ten years ago there were only a handful of countries producing biofuels, by 2006 many countries around the world are using biofuels on a large scale. Forecasts for the future of this market are very optimistic as all types of countries, industrialised and developing, large and small, are implementing or planning to implement @directives to promote greater use of biofuels. Accordingly, production capacity is expected to rise as suggested by the establishment of many new projects around the World.

According to IEA (2004), with the entering into force of the Kyoto Protocol in 2005 and the first target period under the EU Biofuels Initiative coming into effect in December 2005, world biofuel production is expected to quadruple to over 120,000 ML by 2020, accounting for about 6 per cent and 3 per cent of world motor petroleum use and total road energy use, respectively. A more recent estimate from IEA increased this figure to 10 per cent of world fuel use for transport by 2025. Biofuels are not expected to totally replace oil-based fuel in the transport system; rather they are an alternative or a complement to it.

Brazil is expected to continue as the leading bioethanol producer and exporter. Although the internal market will still account for the largest part of production, exports will rise sharply. According to the São Paulo Sugar and Bioethanol Institute, the value of Brazil’s bioethanol exports are expected to jump from US$ 1 billion a year to US$ 8 billion by 2007.

The US is expected to continue demanding large quantities of bioethanol. The stronger demand will be served both by internal production and imports, mainly from Brazil and CBI countries. Other sugar-producing countries such as Indonesia and Southern Africa are also predicted to become exporters.

In order to implement the European Directive 2003/30/EC that sets a target of 5.75 per cent of biofuel within the mix of transport fuel by 2010, 18.6 million tonnes of oil equivalent of biofuels is needed. This will require imports to sustain the programme. Indeed, Malaysia and Indonesia are already expanding palm oil plantations to meet greater demand and are together expected to supply up to 20 per cent of this market. Brazil is also expected to be the main beneficiary of EU imports of soya for biodiesel.

Other promising import markets are likely to be Asian countries like Japan, Korea and Taiwan, which have very little land available for increased production. Japan, for instance, has been highlighted as potentially the world’s largest bioethanol importer.

Currently Japan allows a 3 per cent bioethanol content in gasoline, which requires 1.8 billion litres of alcohol-based fuel each year. Discussions are taking place on increasing the blend cap to 10 per cent, which would result in a 6 billion litres market. In order to secure this future supply, Japan and Brazil have recently formed a joint venture company that will produce bioethanol. Japan is also examining the options of palm and coconut oil from the Philippines to make B5 available from April 2006. In China, although supply capacity is increasing fast, growth in demand might well exceed growth in production. Projections show that 22.7 metric tonnes of biofuels will be needed to blend 10 per cent biofuels into all Chinese cars by 2020. The present target is only 11 metric tonnes capacity expansion. See more details about biodiesel project from http://www.biodieselproject.com.

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