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The global Liquid Biofuels market size stood at USD 116.00 billion in 2019 and is projected to reach USD 219.97 billion by 2027, exhibiting a CAGR of 8.4% during the forecast period (2020-2027).
Liquid Biofuels are transportation fuels derived from agriculture, forestry, and other organic feedstocks. Ethanol and biodiesel are the most common biofuels used in the transportation sector. Depleting fuel reserves have stimulated the oil and gas companies to look for more effective and eco-friendly alternatives to cater to the growing demand for propulsion fuel. This is the major factor that is expected to propel the Liquid Biofuels market growth from 2019 to 2027.
Liquid Biofuels Demand Decline due to COVID-19 Pandemic
Currently, the unprecedented restrictions on travel, work, and industry due to the coronavirus are expected to cut billions of barrels of oil, trillions of cubic meters of gas, and millions of tonnes of coal from the global energy system in 2020 alone. Production of this Biofuel is likely to be directly affected by declining demand for road transport as they are blended with gasoline or diesel under existing blending mandates. Ethanol and biodiesel production facilities in Brazil, the European Union, and the United States have reduced their outputs as a result of sluggish local and international demand. The U.S. ethanol production was down by nearly 50% between the end of February and early April as numerous plants lay idle or had reduced output.
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Focus on Supply Security & Risk Abatement of Conventional Oil to Boost the Market
Crude oil reserves are mostly concentrated in the Middle East & North American countries. However, with rising demand in industrialized nations and even faster-increasing demand in developing countries such as China and India, supply pressure on these reserves has increased. This could well be a basis for conflicts in the future between oil-producing nations aiming to secure the remaining reserves for themselves. Hence, the diversification of energy sources is one option for risk abatement in this situation. Also, the some of the world's largest biomass producers, such as South America, Russia, and Sub-Saharan Africa, offer particularly promising prospects. Of these regions, only Russia is also a fossil fuel producer. Hence, new countries will enter the global energy market, which might reduce dependency on the few countries with most of the global oil reserves. Liquid Biofuels development can reduce the dependency on energy for transport, cooking, and other conventional usages. It will also help in the reducing usage of fossil fuel vehicles as development of biofuels can take place in the energy-consuming countries and regions themselves.
Volatility in The Price of Crude Oil
Prices of crude oil are affected by events that can potentially disrupt the supply of oil and gas. These include geopolitical and weather-related issues. Geopolitical tensions are a major disruptive factor that has created uncertainty about the supply or demand for oil and gas. This can lead to higher volatility in the prices of oil and gas. The Middle East & North Africa account for a significant share of oil and gas reserves. It is a highly unstable region due to political and cultural issues. Geopolitical risk and sanctions, U.S. crude inventory draw, speculative positioning by oil producers, and slowing demand growth are some of the factors that have influenced oil prices heavily. Recently, Russia–Saudi Arabia oil price war which started in March 2020 has resulted in a sheer drop of oil price in April 2020. Such volatility in prices of oil affects the production of oil and gas. This is expected to propel Liquid Biofuels consumption in the coming years.
Substitution of Conventional Fuels with Biofuels to Propel Market Growth
Shortage of conventional fuels such as oil & natural gas and environmental degradation caused by them are major global problems. Production and use of renewable energy resources are likely to help overcome these problems. Biofuels are majorly used as substitutes of petroleum-based fuels for transport, and they are considered as a part of important strategies to improve fuel security, mitigate climate change, and support infrastructure development. According to the U.S. Department of Energy, ethanol produces around 48% less carbon dioxide than conventional gasoline. Moreover, biodiesel releases only 25% of the amount of CO2 that conventional diesel releases, making it a much more attractive option from the standpoint of the environment. Aviation is one of the major consumers of energy in the transport industry. In 2018, aviation biofuel production was about 15 million liters. To date, more than 150,000 flights have used biofuels. Thus, several benefits associated with these new-age fuels are furthering the Liquid Biofuels market growth.
Biofuel Promotion and Renewable Energy Targets to Augment the Market Growth
The Renewable Energy Directive (RED) II set by the EU Council and the European Parliament mandates that 6.8% of transportation fuels must be derived from renewable sources such as biofuels and renewable electricity generation. This will aid the EU’s efforts towards achieving the goal of 20% of the energy mix by 2020. There is a growing need for energy security in developing countries such as India and China. Thus, any disturbance in the supply chain of petroleum or an increase in petrol prices can have a negative impact on the growth of their economy. Indigenously produced biofuels are the best solution and they are being increasingly considered as one of the most efficient options to partially substitute petroleum and reduce dependence on crude oil imports.
China has been promoting its biofuels production and consumption since the early 2000s, and it is currently the fourth largest bioethanol producer worldwide. The Chinese government has set production targets of 10Mt ethanol (12.7 billion liters) and 2Mt (2.3 billion liters) of biodiesel by the end of 2020. Also, Brazil's government is committed to reducing domestic greenhouse gas (GHG) emissions by 37 percent by 2025 and by 43 percent by 2030, both based on 2005 levels. To help meet those commitments, the Government of Brazil launched the RenovaBio Program in December 2016, and it was instituted as the "National Biofuels Policy" in December 2017.
High Retrofit Cost May Hinder Market Growth
Replacement of existing diesel engines and systems powered by conventional fossil fuels with biofuel systems could be a cost-intensive process as the whole or partial upgrades are needed to be done without affecting the operational hours. Also, the investment costs of these plants differ from region to region, depending on the solar intensity and its uniformity in that region. In Asia Pacific region the investment costs of these plants is low compared to Europe mostly due the availability of low cost labors and abundance of raw material. To ensure performance and efficiency with bio-based diesel fuels as similar to petroleum-based diesel fuel, you will need to locate all materials in the engine (i.e., seals and hoses) that can be degraded by biodiesel and replace them with biodiesel-rated components.
Ethanol Segment to Hold Dominant Market Share
Based on type, the market is bifurcated into ethanol and biodiesel. The ethanol segment is projected to lead the Liquid Biofuels market share. Ethanol has been identified as a clean fuel that is mixed with petrol to run automobiles without the need for modifying the engine design. The U.S. and Brazil are the significant ethanol producers across the globe. Together, these countries accounted for 84% share of the global ethanol production in 2018.
Biodiesel can be used as an additive to reduce vehicle emissions or in its pure form, as an alternative renewable fuel for diesel engines. Europe is the largest producer and consumer of biodiesel in the world. Additionally, more than 125 biodiesel plants are operating in the U.S. with the capacity to produce 3 billion gallons per year. The biodiesel industry in the U.S. produced around 2.6 billion gallons of biodiesel in 2018.
Use of Starch Crops Feedstock as Primary Raw Material for Liquid Biomass Production to Boost the Market
Based on feedstock, the market can be primarily divided into sugar crops, starch crops, vegetable oils, animal fats, and others. Starch crops segment is projected to lead the market as corn is the primary feedstock for fuel ethanol in most of the countries owing to its abundant availability and low price. Most of the ethanol in North America is produced from corn, which is one of the lower-yield feedstock. Corn produces just about 400 gallons of ethanol per acre. The U.S. Government subsidizes the production of corn, which has made it cheap for many countries to import. In sugar crops, sugar cane and sugar beet are expected to be major feedstock used for ethanol production.
China, India, Brazil, and Australia are major producers of sugar cane. Australia's sugarcane production averages around 35 million tons per year, with a majority of production witnessed in Queensland. There exist around 4,000 cane-farming enterprises in Australia. Biodiesel is made from vegetable oils or animal fats. According to the German Association of Biodiesel Producers, the share of rapeseed increased to 58% in 2018 from 56% in 2017, while used cooking oil gained 2%, reaching 27% share in 2018.
Fermentation Process Is Anticipated to Hold a Commanding Share
Based on process, the market can be primarily divided into fermentation, transesterification, and others. The fermentation segment is projected to lead this market. Under the fermentation process, sugar is converted into ethanol by microbes, which are inoculated into the feedstock. In 2019, more than 100 billion liters of ethanol were produced. Fermentation is the primary process employed in the production of ethanol. Transesterification is a chemical reaction used for the conversion of triglycerides contained in oils into usable biodiesel. Europe has a large number of transesterification plants.
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Transportation Application to Dominate the Market Share
Based on application, the market can be divided into transportation, power generation, and heat. The transportation segment is projected to lead this market. The segment is projected to expand at a rapid pace from 2020 to 2027, majorly due to the enactment of stringent government regulations regarding carbon emissions across the globe, which is boosting the demand for alternative fuels. IRENA’s Renewable Energy Roadmap shows that Liquid Biofuel, including conventional and advanced forms of ethanol and biodiesel, are expected to account for 10% share of energy usage in the transport sector by 2030. Electricity generation and heat generation segments are expected to reach and hold minimum share during the forecast period.
North America Liquid Biofuels Market, 2019 (USD Billion)
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Geographically, the global market has been analyzed across five key regions, including North America, Europe, Asia Pacific, the Middle East & Africa, and South America. North America is anticipated to lead the market over the forecast period. Around 45% of global Liquid Biofuels production happens in this region. The U.S. is the largest producer of ethanol in the world, producing about 15.8 billion gallons of ethanol in 2019. Under the Energy Independence and Security Act of 2007, the Renewable Fuel Standard (RFS2) requires that 36 billion gallons per year (bg/y) of biofuels be produced by 2022, 16 bg/y from cellulosic sources, 5 bg/y from other advanced sources, and no more than 15 bg/y of corn ethanol.
Latin America is the second-largest producer of Liquid Biofuels across the world. The region produced more than 45 billion liters of biofuels in 2019. Brazil is the second-largest producer of ethanol in the world after the U.S. The country produced 30 billion liters of ethanol in 2019. Argentina also continues to expand its renewable energy sources to reduce greenhouse gas emissions in the country. Argentina's government has mandated a 5% mix of biodiesel in diesel. Since 2016, the blend mandate has been increased to a 12% mix for ethanol and a 10% mix for biodiesel. Argentina has 36 biodiesel plants, 33 of which are currently operating, with the largest plant being capable of producing up to 700 million liters of biodiesel per year.
Europe is another major region for biofuels in the world. The region has set several mandates regarding renewable energy for each country in the European Union. The region is also the largest producer and consumer of biodiesel in the world, accounting for around 35% share in the global biodiesel production. Germany is the largest producer of biodiesel in Europe. The country produced around 3,100 million liters of biodiesel in 2019. Moreover, Germany was the top consumer of ethanol (1.5 billion liters) in the European Union in 2018. It was followed by the U.K. (925 million liters) and France (880 million liters).
Asia Pacific is the net importer of energy and the most rapidly growing consumer of electricity, crude oil, and natural gas. In 2019, Asia Pacific produced 20 billion liters of biofuels. Indonesia was the largest producer of biodiesel in the Asia Pacific region, with a total production of 6 billion liters in 2019. China, India, and Thailand are the other major producers of Biofuels of liquid form in the region. In October 2017, Sinopec Shanghai began offering B5 diesel at US$ 0.05 per liter discount to regular diesel as part of a pilot program. By the end of 2018, Shanghai reported over 200 stations supplying B5 diesel and over 110 million liters (80,000 tons) of B5 consumed in the city.
The BC Hemp Corporation is investing in New Plants to Increase its Capacity and Geographic Presence
Key Participants to Concentrate on Expanding Production Capacities
Different players across this market are increasingly participating in organic & inorganic developments to fortify their market position globally. Additionally, the companies are also expanding their production capacities by introducing new plants or expanding the existing ones. For instance, in September 2019, Italian energy major Eni opened its bio-refinery in Italy. Launched in August 2019, the plant has a processing capacity of up to 750,000 tons a year. It will be able to treat increasing quantities of used vegetable oil, animal fat, algae, and by-products to produce high-quality, next-generation biofuels.
Growing demand for renewable fuel propels the expansion of this market. Furthermore, growing measures to curb the carbon emissions and volatile prices of crude oil will upsurge the demand for these fuels. Moreover, as a result of the increasing concerns over COVID-19, many industries across the globe are experiencing negative impacts on their business due to lockdown measures. Thus, the demand and investment in biofuels might decrease during the forecast period.
The Liquid Biofuels market report offers qualitative and quantitative insights on the global market and a detailed analysis of market size & growth rate for all possible segments in the market.
Along with this, the report provides an elaborative analysis of market dynamics, emerging trends, and competitive landscape. Key insights offered in the report are the production of this Biofuel in each region, recent liquid biofuels industry developments such as partnerships, mergers & acquisitions, consolidated profiles of key players, Porter’s five forces analysis, business strategies of leading market players, macro and micro-economic indicators, and key industry trends.
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Value (USD Billion) and Volume (Billion Liters)
As per Fortune Business Insights study, the global liquid biofuels market was USD 116.00 billion in 2019.
The global market is projected to grow at a CAGR of 8.4% in the forecasted period.
The market size of North America stood at USD 42.96 billion in 2019.
Based on application, the transportation segment is holding the dominating share in the global market.
The global market size is anticipated to reach USD 219.97 billion by 2027, growing at a substantial CAGR of 8.4% during the forecast period (2020 -2027).
Based on type, the ethanol segment is holding the dominating share in the global market.
Growing demand for substitutes of petroleum-based fuels and biofuel promotion & renewable energy targets are the major drivers for the global market.
The top players in the market are Archer Daniels Midland Company, POET, LLC, Enerkem, Renewable Energy Group, Inc., and CropEnergies AG, among others.
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