Global Biofuels Market: Bioethanol Market to Remain Most Significant Fuel Type, reports TMR

The global biofuels market, comprising of both bioethanol and biodiesel, is a highly fragmented arena. This is because several players in the oil and gas industry have started producing biofuels in response to increased demand for the same, which has resulted from volatile oil prices. Multinational companies such as Archer Daniels Midland, Cosan, LLC, POET, and DuPont operate across the value chain and are among the key players in the biofuels market, finds Transparency Market Research (TMR) in a new study.

The global biofuel market stood at a volume of 35.38 bn gallons in 2015 and is expected to rise to 50.92 bn gallons by 2019, expanding at a CAGR of 9.6% from 2013 to 2019. Based on fuel type, bioethanol will continue to lead the market until 2019, representing 82.8% of the overall volume. Due to the rapidly increasing number of diesel-fueled vehicles globally, biodiesel will expand at a higher CAGR during the forecast period.

“The development of substitutes such as petrodiesel and bio-methane is likely to pose a significant threat to the demand for biofuels in the coming years,” says the author of the report. High capital investment requirements in research and technology development and a strong brand presence of multinational companies are making it difficult for new players to enter the market.

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North America to Lead Overall Market

North America was the leading regional market in 2015. Due to increasing government initiatives to reduce carbon footprint from the transportation sector and reduce the dependence on foreign fuel sources, the region is expected to retain its dominance until 2019, holding 39.56% of the overall market volume. The market is broadly classified into bioethanol and biodiesels. While the Europe bioethanol market will rise at a significant CAGR between 2013 and 2019, the Asia Pacific biodiesel market will expand at a CAGR higher than other regions during the same period.

Rising Concerns Regarding Environment Pollution to Propel Demand for Biofuels

The increasing use of fossil fuels for meeting energy requirements to run industries and motor vehicles has caused environment pollution. The release of harmful gases such as CO2, CO, SO2, and CFC has raised the global average temperature. This has compelled several governments across the world to implement stringent environment regulations to cut down these hazardous emissions. This, in turn, is promoting the use of biofuels globally.

Biofuels act as a source of economic development by creating employment and infrastructure. “Biofuels production provides employment in value chain areas such as the generation, blending, and sales. This model of economic development can be thought of as a sustainable development model,” says a TMR analyst. This factor is, therefore, boosting the demand for biofuels. Other factors bolstering the growth of the global biofuel market are rising concerns related to energy security and increasing oil import and energy import bills.

Rising Food Prices Owing to Increasing Biofuel Production to Impede Growth of Biofuels Market

Globally, the increasing food prices are attributed to adverse weather conditions, increasing demand for food, growing usage of crops for biofuels production, and unfavorable government policies. Of these, biofuels are being considered the primary reason for causing an increase in food prices. The negative impact of this trend is likely to increase in the near future, thereby, restraining the growth of the global biofuels market. Moreover, the barriers related to development, distribution, and retailing of biofuels are challenging the growth of the market.

However, the development of sustainable biofuels using new technologies and policies that reduce the adverse effects of biofuels on the environment is estimated to present lucrative opportunities to the market in the forthcoming years.

The global biofuels market has been segmented as follows:

Global biofuels market: By fuel type

• Bioethanol
• Biodiesel

Global biofuels market: By form

Solid

• Pellet Fuel
• Biochar
• Biocoal

Liquid

• Bioethanol
• Biodiesel

Gas

• Biogas
• Syngas
• Bio propane

Accelerated Measures to Prevent Environmental Deterioration to Drive Biofuels Market, reports TMR

The global biofuels market is highly fragmented with no single player holding more than 10% of the global market for both biodiesel and bioethanol, finds Transparency Market Research (TMR) in a new report. This is due to the emergence of a large number of biofuel producers to cater to the increasing demand for biofuels following the spurt in oil prices. Some major players in the global biofuels market that operate across the value chain for both biodiesel and bioethanol are Archer Daniels Midland Company, Green Plains Renewable Energy, and Total S.A.

TMR analyst says, “Top players in this market are focused on tapping into underutilized markets and acquire state-of-the-art production units to capitalize the opportunities.” A case in point is ARfuels, wherein the company uses latest technologies to produce biodiesel that meets international standards. To capitalize on this, Shell Australia Limited opened a biodiesel facility that utilizes ARfuel’s biodiesel, which meets international standards.

Use of superior technology is another key growth strategy that top players in this market are focused on. This is mainly to use technology for the conversion of waste into biofuel at low cost. Maintaining strong ties with partner companies is also one of the key growth models that companies in this market are adopting. This helps companies to create a strong supply and distribution channel.

Economic Benefits of Biofuels to Attract Progressively Higher Investments

TMR analyst points out, “Stringent environmental regulations is one of the prominent factors promoting the use of biofuels.” The use of fossil fuels for running industries has been a major factor for environmental deterioration and rise in the Earth’s temperature. To address this, accredited environmental agencies and several governments around the world have formulated laws to control carbon emissions in the atmosphere. These are directly or indirectly related to the use of biofuels and other renewable sources of energy.

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Need for economic development is another key factor driving the growth of the biofuels market. The use of biofuels is not only less harsh on the environment, but also helps in economic development by providing employment.

Concerns related to energy security, in the long run, is also a major factor boosting the growth of the biofuels market. Due to depleting crude oil reserves and increasing concerns about energy security in the long run, several countries around the world are seeking alternate sources for transportation fuel.

Lack of Adequate Infrastructure for Biofuels Detrimental to Market Growth

Increasing conflict between farmers and biofuel developers is detrimental to the growth of the global biofuels market. With increasing demand for biofuels, vast areas of land that is used for food cultivation would eventually be used for cultivating cash crops for biofuels production. This will have an impact on food prices due to their reduced production.

The hindrances pertaining to the development, distribution, and retailing of biofuels is also challenging the market’s growth. The slow technological development for the utilization of biofuels and limited availability of biofuels stations is also challenging the market’s growth.

The global biofuels production is expected to reach 50,921.4 million gallons by 2019. North America is the leading market for biofuels due to the increasing awareness about the use of biologically derived fuels and stringent environmental regulations for burning fossil fuels. Europe is also a significant market for biofuels. However, the developing economies of India and China will emerge as significant markets for biofuels in the coming years.

The market is segmented as follows:

Biofuels Market: By Fuel Type

• Bioethanol
• Biodiesel

Biofuels Market: By Form Analysis

• Solid (fuel pellets, biochar, biocoal)
• Liquid (bioethanol and biodiesel)
• Gaseous (biogas, biopropane, syngas)