Biofuels—A viable fuel source for the future?

This issue of Hydrocarbon Processing focuses on the use of alternative feedstocks and biofuels. The goal of utilizing these technologies is to produce fuels and products that lower total carbon output/emissions, which is a major focus in decarbonizing economies around the world. But how viable are biofuels as a major fuel source in the future? Although biofuels represent a small percentage of global fuel consumption, the increase in production and consumption—primarily through government mandates—cannot be ignored.

According to the International Energy Agency’s (IEA’s) 2017 medium-term market report on renewable energy, world biofuel production is forecast to increase by approximately 16% to more than 2.7 MMbpd by 2023. Asia will be the leader in biofuels consumption growth due to increasing consumption in transportation fuels. Biofuels in the global transportation sector is the main driver for biofuels consumption.

The leaders in biofuels consumption include Brazil, China, Europe and the US, representing approximately 90% of global biofuels consumption, according to the IEA. Although Asia will see a spike in biofuels consumption into the early 2020s, a number of countries around the world are taking steps to increase the use of biofuels in their total energy mix. In December 2017, Brazil’s Senate approved a bill that would set up a new biofuels program to promote the production and use of biofuels. The program, referred to as RenovaBio, would help the country reduce carbon emissions to help comply with the Paris Agreement.

China and India have made plans to increase the use of biofuels in their transportation sectors, as well. As part of its clean fuels program, China is experimenting with alternative fuels for the transportation market, as well as ramping up ethanol blending into the gasoline pool. India increased its ethanol blending rate in gasoline to 3.3% in 2016—the highest market penetration by ethanol to date, according to a report by the USDA Foreign Agriculture Service’s Global Agriculture Information Network. The increase in biofuels blending is part of the country’s ethanol blending program (EBP). Although the EBP has made significant progress, the tightness in ethanol supplies will limit market penetration in 2018. India plans to increase ethanol imports by approximately 200 MMl to 600 MMl, with nearly 80% of the imports sourced from the US. India also plans to blend methanol in petrol to help reduce pollution, especially in major cities like Delhi.

In 2018, the US EPA has mandated a blending quota of nearly 19.3 Bgal of renewable fuels into the gasoline pool. The US EPA mandate on blending, which falls under the Renewables Fuel Standard (RFS), also calls for more than 2 Bgal of biodiesel to be blended into the diesel fuel supply. Although blending quotas for 2018 are relatively flat when compared to 2017, the US is the largest producer of biofuels in the world. In turn, US ethanol production capacity has increased substantially over the past several years. According to the US EIA, domestic ethanol production has increased from nearly 14 Bgpy in 2014 to approximately 15.5 Bgpy in 2017.

The EU is the leader in biodiesel production, and is focusing its efforts on greater usage of renewables, biofuels and electric and hybrid-electric vehicles in efforts to decarbonize the region.

As previously mentioned, a number of countries are instituting regulations and mandates that call for the additional usage in biofuels to help mitigate emissions, primarily in the transportation sector. Although the IEA’s forecast increase in global biofuels consumption is relatively moderate—the agency forecast an increase of 1%, reaching 5% of the global transportation sector by 2023—many regions are focusing their efforts to increase the use of biofuels in their total energy mix. HP