Biofuel Market in Asia Pacific to 2020 - Need for Energy Independence Will Spur Biofuel Demand in the RegionGBI Research
February 25, 2011
131 Pages - SKU: XGBR6164916
Additional InformationGBI Research's new report, “Biofuel Market in Asia Pacific to 2020 - Need for Energy Independence Will Spur Biofuel Demand in the Region provides key information and analysis on the market opportunities in the Asia Pacific Biofuel Market. The report provides the latest information on the biofuel production and consumption with a detailed assessment of the market forces influencing the Asia Pacific biofuel market. The report also provides analysis of key countries which includes China, Thailand, Malaysia and India
This report is built using data and information sourced from proprietary databases, primary and secondary research and in-house analysis by GBI Research's team of industry experts.
Need for Energy Independence to Drive the APAC Biofuel Industry
The demand for petroleum products across the globe will increase in the future due to rising income levels and increasing industrialization. The demands for petroleum products will lead to high imports of crude oil which will in turn impact upon foreign exchange reserves. The increased demand for petroleum products will have a negative impact on the environment. APAC countries are therefore striving to create their own energy sources so that they can have large foreign reserves and be independent of any other oil producing countries.
Policies and Trends will Act as a Catalyst for the Growth of Biofuel Industry in APAC Countries.
The development of the biofuel industry in APAC countries has been assisted by various policies that aim to promote the production of biofuel. These policies vary from targets to blending mandates to economic steps such as subsidies, fiscal incentives and tax exemptions. While most of the policies revolve around economic factors such as need for energy self-sufficiency and security and economic development, some of the policies also cover sustainability issues such as restrictions made by China for the production of certain types of biofuel. The table below shows the policies in some APAC countries.
Biofuel Mandates and Policies, APAC, 2009
Source: GBI Research
APAC Will Produce 253 Mbblpd of Biofuel by 2020
Biofuel production in the APAC in 2005 was 31.5 thousand barrels per day (Mbblpd). Production of biofuel rose to 89.9 Mbblpd in 2009 with a compound annual growth rate (CAGR) of 30% for the period 2005-2009. GBI Research estimates that biofuel production by the end of 2020 will be 253.2 Mbblpd. The CAGR for the period 2010-2020 will be 9%. The figure below shows biofuel production in the APAC for the period 2005-2020.
Biofuel Market, APAC, Biofuel Production (Mbblpd), 2005-2020
Source: GBI Research
Maintaining Sustainability will Present Challenges for the APAC Biofuel Market
First generation fuels such as ethanol which is produced from maize compete with food crops for land. The biofuel industry is dedicated to the use of biofuel grown in a sustainable way which does not consequently compete with food crops for land or water. This presents a major challenge for the growth of sustainable biofuel which does not take up productive arable land that could be used for food production. GBI Research believes that the short term and the mid term impact of this challenge will be medium to high. As more research is conducted and development investments are made by various biofuel manufacturers, the effect of long term sustainability issues will be reduced. GBI Research anticipates that in addition to developing fuels which reduce sustainability challenges, the biofuel industry will also face challenges in developing fuels which can be mass produced at a low cost, with a high yield and minimal environmental impact. To overcome these sustainability challenges, extensive research is required in the field of next generation fuels in order to potentially reduce the use of arable land and consequently deliver higher yields.
Lack of Profitability to Hinder the Growth of the APAC Biofuel Market
Lack of profitability has been a major concern for most countries, including the APAC countries. The biofuel industry requires significant investments to develop technologies to promote the use of biofuel in various applications. This has long been an area of concern for major investors as the development of biofuel for specific end users has a long payback period. Most investors are skeptical about the short term gains and tend to look for investments in other unconventional sources. The future of global biofuel will depend on its profitability. This depends on a number of correlating factors, such as global oil prices, government mandates, policies and other regulations, the availability of low-cost feedstock and technological breakthroughs that could reduce the cost of future generations of biofuel. Biofuel market dynamics correlate strongly with global oil prices. High oil prices provide a business with a need for alternative fuels. Between 2004 and 2009, steadily rising oil prices provided economic support for alternative fuels, unlike previous years, when oil prices spiked and then fell rapidly, undercutting the profitability of nascent alternative fuel programs. On the other hand, the sector’s profitability has been negatively affected by rising feedstock prices, which account for a very large share of the cost of production for biofuel. For this commodity-dependent industry, government support to reduce profit uncertainty has been a common occurrence in China, Malaysia, Thailand, Indonesia and India where biofuel production has been most significant.
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