London — The International Energy Agency has cut its near-term forecast for global biofuels production as the COVID-19 crisis triggers the first annual decline in transport biofuels in two decades.
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Biofuel output for transport is forecast to reach 186.1 billion liters, or 3.21 million b/d, in 2025, a 14% increase from 2019 levels, according to the central scenario in the IEA's Renewables 2020 report published Nov. 10.
"This is contingent, however, on the health crisis being brought under control and the avoidance of further widespread mobility restrictions," the IEA said.
Although production of ethanol and biodiesel is expected to recover to 2019 levels by late-2021, the IEA's latest estimates are below its year-ago forecast of biofuel output rising to 190.3 billion liters, or 3.28 million b/d in 2024.
The impact to biofuel output will mostly reflect lower transport fuel demand as a result of the crisis hits the volumes of biofuels blended with fossil transport fuels. Lower oil prices in the wake of the pandemic have also made biofuels less competitive with fossil transport fuels, the IEA said.
During 2023-25, average global output of 182 billion liters is expected, with the greatest production increases being for ethanol in China and Brazil, and for biodiesel and HVO in the US and the ASEAN region.
Globally, Biofuels are expected to meet around 5.4% of road transport energy demand in 2025, rising from just under 4.8% in 2019, the IEA said.
Slow ethanol recovery
This year, global transport biofuel production is forecast to average 144 billion liters, or 2.48 million b/d, an 11.6% drop from 2019's record output of 2.81 million b/d, the IEA said. Overall, the IEA expects global gasoline demand to contract by 10%, and diesel by 6% in 2020.
With the gasoline demand the biggest casualty of the pandemic related lockdowns globally in terms of volumes, the IEA said it expects global ethanol production to drop almost 15% in 2020, mainly due to lower output in Brazil and the US.
As gasoline consumption recovers, US ethanol production is expected to increase to 55-58 billion liters over 2021-22 after contracting by 12% to o 52 billion liters in 2020.
During 2023-25, US ethanol output is expected to stabilize at around 55 billion liters as greater passenger vehicle efficiency reduces gasoline demand and, in turn, the volume of ethanol needed for blending.
In Brazil, where ethanol output is expected to slump 16.5% to 30 billion liters this year, ethanol production is seen recovering by 2023 and averaging 37 billion liters in 2023-2025.
The IEA said it expects the pandemic impact on biodiesel markets to be less pronounced than for ethanol with production seen falling by around 5% to 46 billion liters in 2020 mostly in Europe.
"European production is expected to bounce back in 2021, which, combined with ongoing growth in ASEAN countries and the United States, causes global output to reach 53 billion liters in 2021 and 56 billion liters by 2022," the IEA said.