World demand to be driven by government policies
World biofuel demand will continue torise through 2018, supported by governmentpolicies designed to promote energyindependence, support domestic agriculture,and reduce the emission of globalwarming gases. Healthy growth will beexperienced in all regions with the exceptionof North America, where conflictinggovernment regulations and waningpublic support in the United States -- theworld’s largest market for biofuels -- willlimit advances. Increases in biodieseldemand will outpace those of bioethanol,reflecting greater global growth indistillate fuel consumption. However,next generation advanced biofuels suchas biobutanol, renewable diesel, andbiocrude-derived diesel and gasoline willsee the fastest growth.
European countries to post strong demand growth
Long term policy goals targeted atensuring energy security and reducinggreenhouse gas emissions will continueto be the primary driver of biofueldemand growth going forward. Stronggrowth in Western Europe and theEuropean Union (EU) member countriesof Eastern Europe will reflect EU effortsto source 20 percent of their energy needsfrom renewable resources by 2020.However, to fully meet this goal, EUmember countries may be forced to relaxtheir position on minimizing the use ofbiofuels associated with indirect land usechange. Healthy growth will also occur inthe Asia/Pacific and Central and SouthAmerica regions where a number ofcountries will rely on biofuels to helpmeet rising motor vehicle fuel demand.Similar policy goals will drive gains inthe Africa/Mideast region, albeit from avery small base.
North America to show limited biofuel gains
Contrasting the growth throughout muchof the world will be the limited gains inNorth America. The biggest impact willcome from the situation in the UnitedStates where conflicting regulations onbioethanol use in gasoline, as well asdeclining political and public support forthe biofuel mandate, will contribute to apractical cap on US bioethanol consumptionover the forecast period. Biodieseldemand will also appear to suffer due tocomparison with a particularly strong2013 base year. While demand for other,more advanced biofuels will climbrapidly, it will not be sufficient to offsetthe weakness in bioethanol and biodieseldemand. Outside of the US, a lack of newpolicy targets in Canada will limit growththere, while demand in Mexico will beheld back by a lack of domestic productioncapacity, and biofuels’ higher cost.
Bioethanol, biodiesel to remain dominant biofuels
Bioethanol and biodiesel will continue tobe the two dominant types of biofuelgoing forward, reflecting their wellestablished technologies and integrationinto the global fuel supply system.However, growing concern about the useof food crops to produce these biofuels(maize and wheat for bioethanol, vegetableoils for biodiesel), as well asconcerns about the destruction -- directlyor indirectly -- of rainforests for biofuelproduction, have resulted in policies andregulations that will favor the greater useof advanced biofuels with better environmentalprofiles. Cellulosic ethanol, aswell as biomass-derived diesel andgasoline, will benefit, as will biobutanoland renewable diesel. The latter two willalso experience strong demand due totheir compatibility with existing fueltransport and blending operations.