Ethanol Dominates 2018 Biofuel Investments - an F.O. Licht Report
The projections for calendar years 2018 and 2019 point to ongoing growth in the global production capacity of biofuels for transport. This has to do with mid- and longterm prospects for demand in the Americas and parts of Asia. Investment in advanced biofuels plays no role in 2018.
Capacity utilization - mainly a function of short-term factors - should be no issue at the global level in the case of fuel ethanol, while overcapacities in biodiesel continue to persist.
The data only refer to industrial capacities and road transport. The term biofuel covers only fuel ethanol and biodiesel. The latter refers to fatty acid methyl esters (FAME) and hydrotreated vegetable oils (HVO).
Global biofuel capacity development
Global operational ethanol production capacity is set to rise by around 1.3 bln litres to 141.6 bln per year by the end of 2018, after levels of roughly 2.3 bln each in the preceding three years. In relative terms, the growth rate is seen declining to 1% p.a. from 2%. Regarding 2019, global ethanol production capacity may rise by roughly 1.5 bln litres.
Capacity growth cannot only be attributed to green- and brownfield investment but also to idled capacity that has been brought back online. E.g. this is a factor in Brazil. At the start of the decade, when the Brazilian sugar sector was in a severe depression in the aftermath of the subprime crisis, an estimated 5 bln litres of annual ethanol production capacity was idled. Meanwhile, this total has fallen to roughly 3 bln, a delta of 2 bln alone from restarted plants.
Global fuel ethanol production capacity can be estimated at 119.0 bln litres per year (based on high capacity utilization in the traditional sector), up 1% y/y in 2018 and 2% in 2017. The bulk of the contributions in 2018 and 2017 comes from the United States and Brazil, currently the key markets. The former benefits from its dominant position on the global export market. Regarding Brazil, legislative developments with fuel taxation and ethanol trade in recent years were supportive for local demand, and Brasilia’s recent
RenovaBio initiative may also add to a more upbeat outlook. This in conjunction with recently better sugar values has also revamped some production capacity. Green- and brownfield investment in ethanol exists but remains a far cry from the levels seen some years ago.
The situation for FAME is different. Only a small growth in global operational capacity to around 50 mln tonnes is on the cards, after an expansion by 1 mln in 2017. Global production capacity for HVO will continue to rise strongly in 2018, possibly to 5.1 mln tonnes annually, after 4.8 mln in 2017 and 4.4 mln in 2016... download now to read the full report.
>>Download the Full Report Here<<
