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PwC: Biofuels Funding Future Looks Bright

fundingThe role of venture capital funding in future biofuels production is “much higher” than expected, according to a PricewaterhouseCoopers survey.

Some 54 percent of  biofuels industry respondents to PwC’s 2014 Biofuels Market Insights Survey say venture capital will be a source of biofules funding in the next 12 to 24 months.

However, corporate research and development was the funding source named most frequently by respondents. Some 80 percent of those surveyed named it as a potential funding source over the same time period, followed by private equity (68 percent) and government (63 percent).

Some 85 percent of respondents are confident or cautiously optimistic in company prospects for revenue growth over the next year compared to 14 percent who are concerned, according to the survey.

Renewable diesel is the biofuel most likely to reach mass production quickly, according to the survey. Some 65 percent expect renewable diesel to reach 1 billion gallons or more in global production volume by 2020, compared to 55 percent for cellulosic ethanol, a fuel that Spain’s Abengoa Bioenergy will soon be producing in the US, and 52 percent for aviation biofuels.

The US, Europe and Canada are the regions considered most important for overall company growth over the next 12 months, according to the survey.

The 53.2 billion gallon a year biofuel industry is poised for a “huge” slowdown in capacity growth, according to a study by Lux Research released in March.

The industry will grow to 60.4 billion gallons a year between 2013 and 2017, representing a 3.2 percent annual growth rate, but this is a far slower rate of growth than the 19.6 percent achieved annually from 2005 to 2013, according to Emerging Feedstocks and Fuels Spark Biofuel Capacity Expansion through 2017.

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 versus fuel debate and the imminent blend limits for biodiesel and ethanol, the report says. Next-generation biofuels – such as renewable diesel and butanol – that can offer higher blends, in contrast, are not quite mature, the report says.

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