The 53.2 billion gallon a year (BGY) biofuel industry is poised for a huge slowdown in capacity growth, to a 3.2% annual rate from 2013 to 2017 – reaching 60.4 billion gallons – off from 19.6% annually from 2005 to 2013, according to Lux Research. The sharp decline is on account of a significant industry transition to novel fuels and feedstocks, to enable long-term growth in the face of impediments like the food vs. fuel debate and the imminent blend limits for biodiesel and ethanol. Next-generation biofuels – such as renewable diesel and butanol – that can offer higher blends, in contrast, are not quite mature.
“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. To quantify global capacity expansion of biofuels, Lux Research analysts built a database of over 1,700 biofuel production facilities in 82 countries with capacity data through 2017, besides evaluating leading technology providers.
According to Lux Research, ethanol’s dominance will continue. Ethanol, which accounted for 65.9% of global biofuel capacity in 2013, will slightly increase its share to 66% in 2017. Other fuels, such as renewable diesel, butanol, biojet and biocrude, will grow at a significantly higher 18.7% annual rate, but remain just 3.3% of all biofuels.
Driven by technology, renewable diesel will emerge as the leading next-generation fuel, attaining a capacity of 1.1 BGY in 2017. Renewable diesel from waste will emerge as a key biofuel process. And the growth of cellulosic ethanol will be slower. Companies led by Beta Renewables, POET-DSM and Abengoa have announced 782 MGY of cellulosic ethanol capacity but only 384 MGY will come to fruition.