RESEARCH REPORT Executive Summary: Market Data: Biofuels

Ethanol, Biobutanol, Biodiesel, Green Diesel, Synthetic Gasoline, and Renewable Biojet Consumption and Production from Biomass Resources: Global Market Sizing, Segmentation, and Forecasts
NOTE: This document is a free excerpt of a larger report. If you are interested in purchasing the full report, please contact Navigant Research at research-sales@navigant.com. Published 1Q 2013

Mackinnon Lawrence Principal Research Analyst Kerry-Ann Adamson, PhD Research Director

Market Data: Biofuels

Section 1
EXECUTIVE SUMMARY
1.1 Market Overview
After more than a decade of healthy growth for conventional biofuels like ethanol and biodiesel derived from commodity-based feedstocks, the pool of commercially available biomass-derived fuels is beginning to expand. Advanced fuels derived from non-food feedstocks and drop-in synthetic substitutes to gasoline, diesel, and kerosene-based jet fuel sit atop the cusp of initial commercial scale-up. Meanwhile, policies like blending mandates for ethanol and biodiesel coupled with production-oriented goals like the Renewable Fuel Standard (RFS) in the United States and Renewable Energy Directive (RED) in the European Union (EU) are providing a key catalyst for investment across the dynamic global biofuels landscape. North America is leading the transition to advanced biofuels, but healthy growth in Europe, Asia Pacific, and Latin America is helping to diversify the fuel supply for transportation applications ranging from onhighway vehicles to marine shipping to commercial airlines.

1.2

Market Forecasts
This report provides an update to Navigant Researchs forecasts for biofuels consumption and production across the gasoline, diesel, and jet fuel pools; it includes the following fuel types:

Conventional ethanol Advanced ethanol (including cellulosic) Biobutanol Biodiesel (fatty acid methyl ester [FAME]) Renewable green diesel Synthetic gasoline Renewable Biojet (including bio-derived synthetic paraffinic kerosenes [Bio-SPK])

Forecasts are provided on a volumetric basis total gallons produced. They include an assessment of current biofuel blending and supply-oriented policies and forecast the total number of gallons carved out by governments for biofuels consumption and production. Forecasts also offer a critical assessment of the likely market growth of different fuel types across all global regions.

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Market Data: Biofuels

1.2.1

Policy Forecasts
Biofuels consumption and supply-oriented policies provide a blueprint for biofuels development globally. Since transportation fuels are heavily regulated, market access through blending requirements or production targets provides a useful proxy for understanding likely expansion within individual markets. Navigant Researchs forecasts estimate the volume of fuel required to meet obligatory and voluntary ethanol and biodiesel blending mandates present in more than 40 countries today. A separate forecast also aggregates the total volume of biofuels required to meet supply-oriented policies like the RFS in the United States and RED in the EU. Unless a specific biofuel volume requirement is provided as part of a mandate (i.e., RFS), Navigant Researchs forecasts calculate the biofuel volume requirement based on announced policy targets (e.g., E10, B5, or Bio20) as a percentage of expected fuel demand over the forecast period. Obligatory and voluntary blending policies are forecast to carve out a 55 billion gallon market for ethanol and biodiesel fuels, growing at a modest compound annual growth rate (CAGR) of 3% between 2013 and 2023. Supply targets, which in most cases provide a generalized target for all biofuel pathways, call for a 96 billion gallon market by 2023. Supply targets are expected to grow at a CAGR of 14.3% over the forecast period as governments shift policy emphasis away from embattled consumption-focused mandates to supply-oriented policies.

1.2.2

Production Forecasts
Navigant Researchs production forecasts for biofuels have been reduced from past forecasts due to slower than expected development of advanced pathways (such as cellulosic biofuels), an expected expansion in unconventional oil production in key markets like the United States, and a decline in global investment for biofuels in recent years. Still, global biofuels production is anticipated to grow at a healthy CAGR of 6% between 2013 and 2023. In contrast, the CAGR for fossil-based gasoline, diesel, and jet fuel is estimated to be 3.1% over the forecast period. Total biofuels production is expected to reach 62 billion gallons by 2023 or 5.9% of global transportation fuel production from fossil sources. Owing to its large existing production base and anticipated expansion in sugarcane growing regions, conventional ethanol derived from corn starch, coarse grains, and sugarcane is expected to remain the largest segment of biofuels throughout the forecast period. Biodiesel derived from conventional and advanced feedstocks will double its installed production base. Production of advanced ethanol and biobutanol are expected to generate an additional $14.5 billion in revenue with their production base growing at a CAGR of 38.7% and 72.2% respectively. Renewable green diesel and renewable biojet represent the fastest growing segments among drop-in bio-based fuels, reaching more than 5 billion gallons of installed production capacity by 2023 and generating $17.4 billion in revenue. Production of synthetic gasoline is expected to grow at an 18.7% CAGR over the forecast period.

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Market Data: Biofuels

Chart 1.1

Total Biofuels Production by Fuel Type, World Markets: 2013-2023

70,000

60,000

50,000

(MGY)

Conventional Ethanol Advanced Ethanol Biobutanol Biodiesel (FAME) Green Diesel Synthetic Gasoline Renewable Biojet

40,000

30,000

20,000

10,000

2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

(Source: Navigant Research)

Navigant Research anticipates that global biofuels production will exceed the aggregated volume of blending mandates by 2020. Meanwhile, the anticipated rollout of supply targets will exceed actual production that same year. This leaves the global biofuels industry hurtling toward a rock and a hard place. Accordingly, the next decade will likely see a shakeup of existing policies around biofuels to better calibrate policy objectives and actual production.

1.3

Regional Market Share

North America and Latin America continue to spearhead growth in the global biofuels industry on the back of the United States RFS and Brazils ProAlcool policy. Together, these two regions will account for 74% of global biofuels production in 2023. Europe sees its share of global biofuels production decline moderately due to a growing emphasis on sustainability compliance and restricted growth options for biodiesel production from commodity-based feedstocks. Both Asia Pacific and the Middle East & Africa will experience the fastest growth with CAGRs of 9.2% and 7.1% over the forecast period respectively. The two regions will see their collective market share of biofuels production increase from 9.4% in 2013 to 12.3% in 2023.

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Market Data: Biofuels

Section 5
TABLE OF CONTENTS
Section 1 ........................................................................................................................................................... 1 Executive Summary .......................................................................................................................................... 1 1.1 1.2 Market Overview ................................................................................................................................. 1 Market Forecasts ................................................................................................................................ 1 Policy Forecasts ........................................................................................................................... 2 Production Forecasts .................................................................................................................... 2

1.2.1 1.2.2 1.3

Regional Market Share ....................................................................................................................... 3

Section 2 ........................................................................................................................................................... 4 Biofuels Policy Forecasts ................................................................................................................................. 4 2.1 2.2 Overview ............................................................................................................................................ 4 Blending Mandates ............................................................................................................................. 5 Ethanol Blending Mandates ........................................................................................................... 6 Biodiesel Blending Mandates ........................................................................................................ 8 Biofuel Blending Mandates ........................................................................................................... 10

2.2.1 2.2.2 2.2.3 2.3 2.4

Supply Mandates ............................................................................................................................... 10 Comparing Policy Instruments ............................................................................................................ 12

Section 3 .......................................................................................................................................................... 13 Biofuels Production Forecasts......................................................................................................................... 13 3.1 3.2 3.3 Overview ........................................................................................................................................... 13 Forecast Assumptions ........................................................................................................................ 14 Biofuel Production Forecasts .............................................................................................................. 15 Gasoline Pool .............................................................................................................................. 17 Diesel Pool .................................................................................................................................. 19

3.3.1 3.3.2

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Market Data: Biofuels

3.3.3 3.4 3.5

Jet Fuel Pool ............................................................................................................................... 21

Regional Biofuels Production Forecasts .............................................................................................. 22 Conclusions and Recommendations ................................................................................................... 24

Section 4 .......................................................................................................................................................... 26 Acronym and Abbreviation List ....................................................................................................................... 26 Section 5 .......................................................................................................................................................... 27 Table of Contents ............................................................................................................................................. 27 Section 6 .......................................................................................................................................................... 29 Table of Charts................................................................................................................................................. 29 Section 7 .......................................................................................................................................................... 30 Scope of Study ................................................................................................................................................. 30 Sources and Methodology ............................................................................................................................... 30

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Market Data: Biofuels

Section 6
TABLE OF CHARTS
Chart 1.1 Chart 2.1 Chart 2.2 Chart 2.3 Chart 2.4 Chart 2.5 Chart 2.6 Chart 2.7 Chart 2.8 Chart 3.1 Chart 3.2 Chart 3.3 Chart 3.4 Chart 3.5 Chart 3.6 Chart 3.7 Chart 3.8 Chart 3.9 Chart 3.10 Chart 3.11 Chart 3.12 Total Biofuels Production by Fuel Type, World Markets: 2013-2023 ................................................. 3 Total Mandated Biofuel Consumption by Fuel Type, World Markets: 2013-2023 ............................... 5 Total Mandated Biofuel Consumption by Region, World Markets: 2013-2023 ................................... 6 Total Obligatory and Voluntary Ethanol Blending Volume by Region, World Markets: 2020 ............... 7 Obligated Ethanol Blending Volume by Key Market, World Markets: 2013-2023 ............................... 8 Obligatory and Voluntary Biodiesel Blending Volume by Region, World Markets: 2020 ..................... 9 Obligated Biodiesel Blending Volume by Key Market, World Markets: 2013-2013 ............................ 10 Volume of Biofuels Supply Targets by Key Market, World Markets: 2013-2023 ................................ 11 Total Biofuels Addressable Market by Policy Instrument, World Markets: 2013-2023 ....................... 12 Share of Total Biofuels Production in Liquid Fuels Market, World Markets: 2013-2023 .................... 13 Total Biofuels Production by Fuel Type, World Markets: 2013-2023 ................................................ 16 Annual Revenue by Fuel Type, World Markets: 2013-2023 ............................................................. 17 Gasoline Pool Market Share by Fuel Type, World Markets: 2013-2023 ........................................... 18 Cumulative New Gasoline Pool Revenue by Biofuel Type, World Markets: 2013-2023 ..................... 19 Diesel Pool Market Share by Fuel Type, World Markets: 2013-2023 ............................................... 20 Cumulative New Diesel Pool Revenue by Biofuel Type, World Markets: 2013-2023 ......................... 20 Jet Fuel Market Share by Fuel Type, World Markets: 2013-2023 .................................................... 21 Total Biofuels Production by Region, World Markets: 2013-2023 .................................................... 22 Forecasted Market Penetration of Biofuel by Region, World Markets: 2013-2023 ............................ 23 Cumulative Revenue from New Biofuels Production by Region, World Markets: 2013-2023 ............. 24 Biofuels Consumption, Supply, and Production by Forecast, World Markets: 2013-2023 .................. 25

Table 3.1

Biofuel Types, Applications, and Deployment Status ...................................................................... 15

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Market Data: Biofuels

Section 7
SCOPE OF STUDY
Navigant Research has prepared this report to provide participants in the liquid transportation fuel industry including producers, feedstock suppliers, refiners, project developers, policymakers, and investors with market forecasts of biofuel policy instruments in place worldwide and production of key biofuel pathways. The studys primary objective is to assess the market size and anticipated growth of ethanol, biodiesel, and drop-in biofuels in the overall gasoline, diesel, and jet fuel markets. All major global regions are included and the forecast period extends through 2023.

SOURCES AND METHODOLOGY

Navigant Researchs industry analysts utilize a variety of research sources in preparing Research Reports. The key component of Navigant Researchs analysis is primary research gained from phone and in-person interviews with industry leaders including executives, engineers, and marketing professionals. Analysts are diligent in ensuring that they speak with representatives from every part of the value chain, including but not limited to technology companies, utilities and other service providers, industry associations, government agencies, and the investment community. Additional analysis includes secondary research conducted by Navigant Researchs analysts and its staff of research assistants. Where applicable, all secondary research sources are appropriately cited within this report. These primary and secondary research sources, combined with the analysts industry expertise, are synthesized into the qualitative and quantitative analysis presented in Navigant Researchs reports. Great care is taken in making sure that all analysis is well-supported by facts, but where the facts are unknown and assumptions must be made, analysts document their assumptions and are prepared to explain their methodology, both within the body of a report and in direct conversations with clients. Navigant Research is a market research group whose goal is to present an objective, unbiased view of market opportunities within its coverage areas. Navigant Research is not beholden to any special interests and is thus able to offer clear, actionable advice to help clients succeed in the industry, unfettered by technology hype, political agendas, or emotional factors that are inherent in cleantech markets.

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Market Data: Biofuels

Published 1Q 2013

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