IEA Cuts Global Biofuels Forecast as Pandemic Hits Transport Fuel Demand

by Robert Perkins (S&P Global Platts) Pandemic to shrink biofuel output for first time in two decades; Global transport biofuels to reach 3.21 million b/d in 2025; Biofuels seen recovering from pandemic by 2022 -- 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.

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.

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.

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. READ MORE