Advanced biofuels will nearly double in five years — from 59 billion gallons per year in 2016 to 67.2 billion gallons per year in 2022 — as next-generation technologies enable commercial-scale production of these low-carbon fuels, according to Lux Research.
While first-generation biofuels will continue to dominate the market, they will lose share as facilities based on non-food feedstocks and producing novel fuels account for over half of new capacity deployment for the first time in the biofuel industry’s history, according to Biofuels Outlook 2022: The Dawn of a New Era in Global Biofuel Capacity Expansion.
Advanced biofuels, derived from biomass as opposed to food crops, can help corporate fleets and the aviation industry reduce transportation emissions. But producing these next-generation low-carbon fuels at commercial scale and in a way that is cost competitive has been a challenge to widespread adoption.
That is about to change, Lux Research says.
“A new era of technology commercialization has brought the global biofuels industry to the cusp of a tipping point, as new facilities target low-carbon and high-performance drop-in biofuels,” said Runeel Daliah, Lux Research Associate and lead author of the report. “With many of the technologies capable of producing advanced biofuels still at demonstration scale, the next five years will be critical as companies raise capital, establish value chain security and produce commercial volumes as these projects come online.”
Lux Research analysts quantified the commercial deployment of new technologies in the global biofuels industry using a database of nearly 2,000 facilities from 1,461 companies in 90 countries with nameplate capacity data through 2022. Among their findings:
- Growth slows but advanced biofuels rise. The global biofuels industry will grow at a slower 2.2 percent annual rate to 67 BGY of nameplate capacity by 2022. First-generation biofuels, which hold a 91.5 percent market share, will continue to dominate but will lose nearly 6 percent of market share, as advanced biofuels see rapid growth, nearly doubling capacity to 9.6 billion gallons per year.
- Biodiesel begins to fade. Second-generation biodiesel makes up 65 percent of the 5.0 billion gallons per year advanced biofuel market today, but is projected to lose 26 percent market share by 2022 due to the rapid growth of low-carbon and high-performance drop-in biofuels such as renewable diesel.
- Thermochemical and catalytic processes usher in new era. Emerging thermochemical and catalytic technologies will surpass bioconversion processes to make up over half of the new capacity deployment for the first time in the biofuel industry’s history.
The Lux Report comes as US biofuel interests gear up for a court battle over the EPA’s mandated renewable fuel volumes.
In addition to the ongoing legal challenges from the oil and gas industry, which have long argued that the biofuel blend mandate is too high, the National Biodiesel Board filed a petition Feb. 10 asking the US Court of Appeals to review EPA’s final volume standards for 2017 and the biomass-based diesel volume set for 2018, Biodiesel Magazine reports. The NBB argues that the EPA should not have reduced overall advanced biofuel volumes in its 2014-2016 required levels.