World Grain - April 2011 - 88

BIOFUELS QUARTERLY: BIOFUELS MARKET OUTLOOK

Ethanol growth by region, 2010-2020
Global demand to grow assuming no policy rollbacks (in million liters)

90,000 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10,000 0 Supply Demand Supply Demand Supply Demand Asia Pacific E.U. 27 Latin America North America

78% by 2015. The supply is currently constrained in the region, but could triple in the next four years. Total ethanol demand was estimated to represent 1.8% of the total gasoline demand in 2010 and is expected to grow to 5.5% in 2015 and 8.2% in 2020. Klein said Thailand has excess sugar and is using it for ethanol production, and Indonesia is also looking at some kind of ethanol program. While several countries in Africa are looking at biofuels programs, the continent will not really be a signiﬁcant player in the next several years. About 24 countries have started projects, with feedstocks such as sugarcane, jatropha, cassava and palm oil. “Africa is not in the mix right now. The dynamics are kind of dicey,” Klein said. “They’re dealing with fundamental issues like having a stable regulatory environment, enforceable laws and property rights.” BIODIESEL UTILIZATION Overcapacity is a major issue for the biodiesel industry across the globe, particularly in the U.S., the E.U., Asia and to a lesser extent Latin America, Klein said. Utilization of production capacity is about 40% globally. “It’s been really dreadful for the industry. We expect that to improve as countries get programs going and the tax credit is reinstated in the U.S.,” Klein said. “We’re seeing things moving forward this year and into the future.” It is unlikely new facilities will be built, but rather there will be utilization of the existing capacity, she said. “Feedstock is a real problem globally,” Klein said. “The prices are volatile for soy, palm and rapeseed.” The E.U. will remain the largest consumer of biodiesel with a 44% share, with Asia-Paciﬁc a close second at 39% by 2015. In Latin America, countries such as Brazil and Colombia will increase blending limits to absorb supply internally. Currently, the E.U. is blending biodiesel at levels ranging from 5% to 7%. Capacity utilization is about 57% right now, but is expected to increase to 66% by 2020. Total demand in the region is estimated at 27.1 billion liters, with a supply of 17.6 billion liters. In Asia-Paciﬁc, total biodiesel demand was estimated at 1.6% of the total automotive diesel fuel demand last year, and is expected to grow to 4.7% in 2020. Supply is expected to meet demand until 2020 due to lower blending requirements and overcapacity. Excess supply will be absorbed with higher blend levels or usage in off-road vehicles and sectors, or export, Klein said. Latin America’s biodiesel supply is expected to reach 15.34 billion liters by 2020, with demand growing to 12.56 billion gallons. Individual nations such as Colombia and Argentina will increase their biodiesel blend levels as supplies allow, eventually reaching B20.
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2010

2015

2020

Biodiesel growth by region, 2010-2020
Massive overcapacity/oversupply remains (in million liters)

30,000 25,000 20,000 15,000 10,000 5,000 0 Supply Demand Supply Demand Supply Demand 2010 2015 2020 Asia Pacific E.U. 27 Latin America North America

Source: Hart Energy’s Global Biofuels Center, September 2010; data taken from GBC’s Global Biofuels Supply & Demand Outlook 2010-2020

estimated at 13.3 billion liters in 2020 with a supply of 7 billion liters. “That’s not even close to North America at 80 billion liters or Latin America at 60 billion liters, but considering right now the E.U. market is not even 2 or 3 billion liters, it is substantial for a region that is a big biodiesel user,” Klein said. Developing nations overall are expected to see substantial supply and demand growth by 2015. In 2009, developing nations accounted for 40% of ethanol demand and 43% of supply. That could increase to 48.5% demand and 57.7% supply by 2015. Biodiesel is expected to see even more of an increase with 17% of the demand and 49.8% of the supply in 2009, growing to 42.6% demand and 59.2% supply by 2015. In Asia-Paciﬁc, 90% of the demand in this region last year came from developing countries; that’s expected to drop to
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