North American Biofuels Markets: Investment Analysis

Frost & Sullivan
April 4, 2008
56 Pages - SKU: MC1741018
License type:
Table of Contents Related Reports
Countries covered: North America

This Frost & Sullivan research service titled North American Biofuels Markets: Investment Analysis provides growth monitor, asset management scorecard, venture capital attractiveness, segment analysis, mergers and acquisition analysis and investment themes. In this research, Frost & Sullivan's expert analysts thoroughly examine the following markets: biodiesel, and bioethanol.

This analysis is available through our Financial Benchmarking in the Chemical Industry program. With this program, clients receive industry-leading market research such as this, along with technical and econometric data and many interactive features including Analyst Inquiry Time and Client Councils.

Policy Initiatives Drive Growth

Energy policies aimed at reducing the dependency on oil are likely to be the key drivers for the North American biofuels market. On 18 December, 2007, U.S. President, George W. Bush, signed the Energy Independence and Security Act of 2007, which mandates an increase in the consumption of biofuels and improvement in vehicle fuel economy. Furthermore, in January of the same year, President Bush announced his ambitious 'twenty in ten' plan. This plan targets that by 2017, 20 percent of the energy consumed should be from renewable sources.

The other big advantages of biofuels are environmental support, agricultural support, and geopolitical support. The transport sector accounts for approximately 67 percent of all U.S. oil consumption. It also contributed to nearly one-third of the entire air pollution levels in 2006. "The Energy Information Administration estimates that imports account for more than 65 percent of crude oil supplies in the country, and oil imports are the largest constituent of the increasing trade deficit," notes the analyst of this research service. "The Renewable Fuels Association opines that bioethanol reduced oil imports by 228.2 million barrels of oil, valued at $16.50 billion in 2007."

Accelerated Research on Second-generation Biofuels

Second-generation biofuels are garnering much attention as they are expected to be more efficient, using algae, waste, straw, wood, and other forest-based inputs that can be found in abundance in the United States. Research on second (next)-generation biofuels is expected to accelerate because of increasing feedstock costs, resulting in pressure on the margins of the first-generation biofuel producers. Industry experts expect an improvement in feedstock technologies, because 80 percent of the cost is feedstock-related. They opine that jatropha and canola are promising feedstock in the short term, while algae to oil and cellulosic ethanol could be interesting feedstock in the long term. Advanced biofuel technologies could also provide a stepping stone to other areas such as renewably-produced hydrogen.

Overall, the North American biofuels market is fast-growing, with an expected compound annual growth rate (CAGR) of 13.2 percent from 2007 to 2012. "Among the market segments, the biodiesel segment was worth $1,050.0 million in 2007 and is expected to record a CAGR of 29.3 percent from 2007 to 2012," says the analyst. "On the other hand, the North American bioethanol market is expected to achieve a CAGR of 10.5 percent from 2007 to 2012."


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