In France, the International Energy Agency says biodiesel, renewable diesel and biojet fuel producers are headed for a feedstock supply crunch during 2022-2027 if current trends do not change. In its main analysis case, demand for vegetable oil, waste and residue oils and fats increases 56% to 79 million tonnes over the forecast period. Fuels made from wastes and residues are in particularly high demand because they satisfy GHG and feedstock policy objectives in the United States and Europe. In fact, wastes and residues are expected to be used for 13% of biofuel production in 2027, up from 9% in 2021.
However, demand is approaching the supply limits of the most-used wastes and residues. Nevertheless, markets are dynamic. High prices are a signal to seek out new supplies, which is prompting the development of government programmes and industry innovation to help avoid the crunch.
Compared with wastes and residues, the sugars and starches used to produce ethanol are under less pressure. Although biofuel demand for these feedstocks is growing, sugar cane and corn production expands as well, keep the share dedicated to biofuel production nearly flat over the forecast.
The United States, Europe, Brazil and Indonesia are responsible for the majority of biodiesel, renewable diesel and biojet fuel consumption growth. Combined, demand for these fuels increases by 44% or 21 billion litres in our main case over 2022-2027. In the United States, the renewable fuel standard, state-level low-carbon fuel standards and the IRA’s tax credits boost demand for renewable diesel and biojet fuel. Most requirements are met with domestic production from a mixture of feedstocks (e.g. soybean oil, rapeseed oil, corn oil, used cooking oil and animal fats).
In Europe also, consumption of renewable diesel and biojet fuel increase the most. Total demand growth is relatively small, but the European Union is phasing out the use of palm oil and has placed limits on other feedstocks, which is boosting production from wastes, residues and rapeseed oil. Meanwhile, Brazil and Indonesia both have biodiesel blending mandates that will become more stringent over the forecast period. Indonesian biofuel manufacturers primarily use palm oil to produce biodiesel, and Brazilian ones rely on soybean oil.
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