BAKU, Azerbaijan, Nov.13
By Leman Zeynalova – Trend:
Global transport biofuel production is expected to decrease by 11.6 percent from 2019 levels to 146 billion litres (L), equivalent to 2.5 mb/d, in 2020, Trend reports with reference to the International Energy Agency (IEA).
This is the first reduction in annual production in two decades. Pre-Covid-19, the IEA projected 3 percent growth from the sector.
Lower transport fuel demand resulting from the Covid-19 crisis reduces biofuel consumption in countries where policies mandate a set percentage of biofuels to be blended with fossil transport fuels. Overall, global gasoline demand is anticipated to contract by 10.6 percent and diesel/gasoil by 6 percent in 2020. Diesel is less affected, as a substantial share of its consumption is for the transport of goods, which the crisis has impacted less than personal mobility. In addition, lower crude oil prices since the start of the pandemic have made biofuels less competitive with fossil transport fuels.
The greatest y-o-y drops in output are for US ethanol (a 12 percent decline to 52 billion litres), Brazilian ethanol (a 16.5 percent decline to 30 billion litres), and European biodiesel (a 13.5 percent decline to 13.6 billion litres). In the US and European markets biofuel declines are closely linked to declines in gasoline and diesel use. However, Brazil’s ethanol industry is facing multiple pressures including an 11% decline in gasoline consumption, low oil prices that reduce the relative competitiveness of ethanol and competition for sugarcane for sweeteners that are more profitable than ethanol in the current market context. Across all markets, biofuel production is expected to return to 2019 levels in 2021 if transport patterns return to those before Covid-19.
Aviation bailouts may also have been a missed opportunity for sustainable aviation fuels. Of the USD 76 billion provided only 4 billion were subject to ‘green’ conditions. Applying a 2 percent sustainable aviation fuel (SAF) blending requirement to all would have created demand more than 50 times the 2019 production levels, boosting SAF capacity investment.
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