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According to Lux Research, the 53.2 billion gallon a year (BGY) biofuel industry is all set for a huge slowdown in capacity growth, to a 3.2% annual rate from 2013 to 2017 – reaching 60.4 billion gallons – off from 19.6% annually from 2005 to 2013.
The sharp decline is on account of a significant industry transition to novel fuels and feedstocks, to enable long-term growth in the face of impediments like the food vs fuel debate and the imminent blend limits for biodiesel and ethanol. Next-generation biofuels – such as renewable diesel and butanol – that can offer higher blends, in contrast, are not quite mature.
“Next-generation feedstocks like waste oils and cellulosic biomass are not tied up in the food supply and could unlock significant economic advantages, assuming novel conversions commercialise,” said Andrew Soare, Lux Research Senior Analyst and the lead author of the report titled, ‘Emerging feedstocks and fuels spark biofuel capacity expansion through 2017’.
He added, “Meanwhile, next-generation fuels like renewable diesel will break down current barriers and drive long-term biofuel capacity expansion.”
As per Lux Research study, ethanol’s dominance is likely to continue. Ethanol, which accounted for 65.9% of global biofuel capacity in 2013, will slightly increase its share to 66% in 2017. Other fuels, such as renewable diesel, butanol, biojet and biocrude, will grow at a significantly higher 18.7% annual rate, but remain just 3.3% of all biofuels.
Renewable diesel is expected to lead the next-generation biofuels. Driven by technology, renewable diesel will emerge as the leading next-generation fuel, attaining a capacity of 1.1 BGY in 2017. Renewable diesel from waste will emerge as a key biofuel process.
Lux Research study predicts slower growth for cellulosic ethanol. Companies led by Beta Renewables, POET-DSM and Abengoa have announced 782 MGY of cellulosic ethanol capacity but only 384 MGY will come to fruition.