Advanced biofuels industry to exhibit remarkable growth potential over 2018-2023, North America to emerge as lucrative growth ground for industry expansion

April 02, 2018

Advanced biofuels industry has garnered immense popularity over the recent years, backed by the increasing adoption of these fuels as an alternative to their fossil counterparts. This has come on the heels of the rising environmental concerns regarding the use of fossil fuels. To address this global concern, plant-based, renewable fuels from crops such as sugarcane and corn has gained a lot of traction worldwide. In fact, the government framework has played a vital role in augmenting the biofuel demand or rather the so-dubbed first-generation biofuels. However, the food-based biofuels have become rather infamous for their impact on food security & environment – a factor which indeed gave immense business opportunities to the second-generation or advanced biofuels. Experts deem that with second-generation biofuels proving to be advantageous over its contemporaries, the global advanced biofuels market is indeed turning out to be a lucrative growth ground for potential investors.

Why second-generation biofuels are gaining traction over first-generation biofuels?   

The first-generation biofuels which are derived mainly from food stuffs such as sugarcanes, corn, feedstocks, and vegetable oils have indeed created a debate on food versus fuel. In fact, estimates claim that bioethanol accounts for over 90% of the biofuels consumption in the United Sates and corn is the feedstock that is used in over 90% of all the bioethanol in the US. Industry critics further deem that it is infuriating that over 80% of the biofuels in the region is coming from the food crops while around 14% of homes in the United States are tagged as “low food secure.” In fact, research reports quote that to account for around 20% of the world’s energy needs by 2050 it would, in turn, require using up all the world’s annual plant residues, timber, crop harvest, and grass for livestock.

This fact has raised major controversies on the significant impact of biofuels that has made it much harder for homes to feed themselves. Nonetheless, the advancements in the second-generation biofuels which are derived from sources that are unfit for human consumption such as switchgrass, seed crops, waste vegetable oil, lignocellulosic feedstocks, Jatropha, grasses, solid waste and forest residues are subsequently addressing the inherent problems of conventional biofuels and are as well offering viable energy solutions. Thus, proving as a prominent channel for decreasing the impacts of biofuels on food security, the advanced biofuels industry is poised to maintain the upward growth trajectory in the forthcoming years.

The aforesaid trends clearly depict that advanced biofuels industry trends are propelled by the disadvantages of conventional biofuels. Furthermore, the efforts undertaken by the regulatory bodies to spread awareness regarding the use of second-generation biofuels have significantly propelled the growth prospects of advanced biofuels industry. For instance, as a part of the Renewable Energy Directive review, the European Commission has proposed a gradual phase-out of crop-based biofuels, which needs to be replaced by advanced biofuels that do not compete directly with food crops. The EU executive have proposed reducing the usage of first-generation biofuels in transport from a maximum of 7% in 2021 to 3.8% by 2030. Analysts deem that such favorable governmental backing and future efforts targeted toward second generation biofuels deployment is certain to fuel the growth prospects of advanced biofuels industry.

North America to hold major share in advanced biofuels market

If reports are to be believed, the commercialization matrix of advanced biofuels market has taken significant shape since 2013. In fact, in the same year, the U.S EPA called for over 22.7 million liters of cellulosic ethanol to be blended in the gasoline pool in the region. With the presence of renowned players such as the ZeaChem, INEOS, and KiOR, the U.S. undoubtedly has been one of the most outpacing regions partaking in the advanced biofuels industry expansion. In face of a number of simultaneous efforts being undertaken by the regional government and established players in the country, U.S is poised to be a lucrative investment ground for potential stakeholders.

Other than the U.S., the regional landscape of advanced biofuels industry is likely to fare along Brazil, Thailand, Mexico, and China which are also poised to gain substantial momentum from the ever-rising diesel prices and perpetually growing diesel vehicles demand. The governmental backing and stringent regulations toward curbing carbon footprints have also been a significant propeller of advanced biofuels industry in these regions. Recently, for instance, the government of India has announced to bring out a National Biofuels Policy for the regional biofuel sector that is poised to become an economy worth over RS 1 lakh crore. This initiative is likely to bring a detailed architecture for India to take a forward leap towards adopting second generation biofuels in the coming years.

Experts further deem these regions to be lucrative investment spots, on grounds of the myriad regional & international collaborations toward technology promotions and opportunity capitalization. Not to mention, a favorable regulatory framework would also provide a remarkable impetus to the advanced biofuels industry share. The overall market landscape, however, still requires plethora of research activities and initiatives to make biofuels a strong alternative that can completely eliminate the dependency on fossil fuels.

Speaking along similar lines, one of the major research trends to watch for is the introduction of Algae fuel, which is being considered as the third-generation biofuel trends. All in all, with biofuels certain to thrive on the cusp of slew of advancements in the coming years, advanced biofuels industry is poised to remain a profitable investment avenue for the market players.

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