a look at

2016 overview and outlook for biofuels

With falling fossil fuel prices, 2015 was marked by a general decline in the appeal of
alternative fuels. But although growth in worldwide volume of biofuel production and
consumption is slowing, blending requirements continue to increase and investment,
though declining, is still taking place.

To ensure the long-term sustainability of biofuel processes, a variety of conditions must

be met, such as an increase in fossil energy prices and/or CO2 taxation, the use of
policy levers including implementation of post-2020 objectives (incorporation levels,
reduction of greenhouse gases, etc.) and fuel blending standards.

Biofuels in the road transport sector On a global scale, the share of biofuels consumed in
transport is constantly rising, though at a slower pace
during 2011-2014 (Fig. 2).
Worldwide energy consumption in the road transport
sector rose by nearly 2 billion toe (Btoe). During 2014, Latin America posted the highest overall biofuel incor-
alternatives to gasoline and diesel fuels continued to poration rate of more than 10% (in energy). North
expand, representing 6.7% of fuels consumed. Among America and Europe followed, posting a rate of approxi-
these alternatives (biofuels, LPG, NGV, electricity), bio- mately 5% (in energy).
fuels represent 69 Mtoe (Fig. 1). Their consumption rose
by nearly 8% between 2013 and 2014. At the same time, Fig. 2 – Worldwide change in consumption of ethanol and biodiesel
demand for road transport fuel rose by only 2.1%. 70
Bioethanol
60 Biodiesel
Fig. 1 – Worldwide energy consumption in road transport during 2014
Total
50

40
821 Mtoe
Mtoe

42% 30
69 Mtoe 4%
20
132 Mtoe
25 Mtoe 1%
7%
10
1,010 Mtoe 38 Mtoe 2%
51% 0
1975

1978

1981

1984

1987

1990

1993

1996

1999

2002

2005

2008

2011

2014

Source: Enerdata

Following a downward shift between 2012 and 2013, the

Gasoline Diesel Biofuel LPG NGV incorporation rate in Europe gained ground between
Source: IFPEN, Enerdata 2013 and 2014. Biofuel consumption in the road transport
a look at
2016 overview and outlook for biofuels

sector returned to growth, though still below the level consumption, due to the importance of diesel engines
recorded in 2012. At present, only Finland and Sweden market share in road transport.
have already achieved the 2020 objective set forth in the
Renewable Energy Directive proposed by the European Fig. 4 – Changes in the price of vegetable oils, biodiesel and diesel in
Commission, which set a 10% target for energy from Europe
renewable sources in transport (Fig. 3). 1,190

Fig. 3 – Share of energy from renewable sources in the transport sector 1,090
for various European Union member states in 2014
990
25
890

20 790

$/t
690
15
Palm oil
590
%

Soybean oil
10 Diesel 10 ppm
490
Rapeseed oil
5 390 FAME
290
0
2013 2014 2015 2016
Finland
Sweden
Austria
France
Hungary
Slovak Republic
Germany
Czech Republic
EU - 28
Denmark
The Netherlands
Poland
Bulgaria
Luxembourg
Ireland
United Kingdom
Belgium
Norway
Malta
Italy
Lithuania
Romania
Portugal
Latvia
Cyprus
Slovenia
Croatia
Greece
Iceland
Spain
Estonia

Source: Enerdata

Fig. 5 – Growth in biodiesel production by region

Source: Eurostat
35
North America
While France ranks fourth, a number of countries Central and South America
30
remain below the 5% incorporation rate as of 2014. Europe
Eurasia
25
Africa
Biodiesel
Billions of liters

Asia and Oceania

20

Until 2014, global biodiesel consumption – Fatty Acid Methyl

15
Esters (FAME)1 and Hydrotreated Vegetable Oils (HVO) –
was gaining ground, reaching record volumes (nearly 30 Mt, 10
Fig. 5), especially due to recent growth in the Brazilian mar-
ket. Brazil became the world’s second largest producer and 5
consumer, behind the United States. However, 2015 is
expected to show a decline, mainly due to falling oil prices 0
and regulatory changes in Germany, another major 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

biodiesel consumer. The price difference between vegetable Source: UNCTAD 2016

oils and diesel rose significantly during 2015 (Fig. 4). The
Food and Agriculture Organization of the United Nations
(FAO) announced a discouraging outlook for 2016 palm oil
production, while global demand is constantly rising.
In addition, producer countries that export a large portion
of their production to the European Union (EU), such as
Argentina and Indonesia, have faced significant import tax
increases imposed by the EU. This rise in customs duties
led to reduced imported volumes. Nonetheless, Europe
remains the leading region for biodiesel production and
(1) FAME: includes all fatty acid methyl esters such as vegetable oils (VOME), waste cooking oil
and animal fats
Among biodiesels, Vegetable Oil Methyl Esters (VOME)
remain the major product, with an incorporation rate
between 2% and 7% volume depending on the country (up
to 8% vol. in France) in traditional diesel vehicles. Waste
cooking oil methyl esters and animal fats have rapidly
emerged, especially in Europe, due to the environmental
and regulatory benefits of a “waste” type of resource.
However, their growth potential remains limited by avail-
able resources, which are still relatively weak. Finally,
HVOs have gradually gained ground since 2011 and, in
2015, represented 12% of biodiesel consumed worldwide.
The market is primarily focused in Europe and the United
States, and in Singapore for production.

2
 a look at
2016 overview and outlook for biofuels

Fuel ethanol n Consumption of E85 super-ethanol rose by 8.5% from

2013 to 2014, and a significant increase is also
Aside from a slight slowdown between 2011 and 2012 expected for 2015.
caused by a poor sugar cane harvest in Brazil and regu-
latory bottlenecks in the United States, worldwide Fig. 7 – Change in market share of SP95-E10 among gasolines in France
bioethanol consumption has consistently risen. Only the 12 34
31,6%
EU posted a decline in 2015 (Fig. 6), triggered by fewer 10,881 32,2% 32
10,336 29%
30
incentive policies and a general decline in energy prices. 9,666
10 2,202 9,367 9,368 9,483 28
1,988 1,789
In Europe, 2014 saw falling consumption of fossil fuels 1,742 1,856 1,989 26
24%
and low agricultural resource costs, which led to the 7,299 SP98 24
8 6,594
22

Millions of m3
region’s near-self sufficiency in biofuels, at 99% for 5,561
4,911 4,551 4,348 20
ethanol and 97% for biodiesel. 17%
18

%
6
16
13% SP95 14
Fig. 6 – Growth in fuel ethanol production by region
4 12
10
90 8
North America
2 6
80 Central and South America E10
4
Europe 1,379 1,754 2,317 2,714 2,961 3,146 2
70
Eurasia 0 0
Africa 2010 2011 2012 2013 2014 2015
60
Billions of liters

Asia and Oceania Sources: SNPAA, CPDP

50
40
30
20
10
0 (+10.8%) than bioethanol (+5.2%). This growth is primarily
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Source: UNCTAD 2016
Outside of these geographic regions, consumption of
ethanol as a substitute for gasoline is expected to rise,
even though falling oil prices and market rates for starch
and sugar crops do not favor growth as robust as was
seen in the two previous years. In addition, little is still
known about the industrial production of lignocellulosic
ethanol, known as second-generation, launched in 2014
with only around ten projects worldwide.
A look at France
In France, the principal biofuels available for consump-
tion are:
n grain-based ethanol (primarily from beets and sugar
cane, for imported volumes) totaling 5% max. vol. in SP98
and SP95 (unleaded), 10% max. vol. in SP95-E10,
and 85% vol. in super-ethanol for flex-fuel vehicles.
Consumption of SP95-E10 is constantly growing, reaching
one third of total gasoline consumption in 2015 (Fig. 7).
n biodiesel from rapeseed, palm, soy and waste cook-
ing oil, primarily FAME, totaling 8% volume in on-road
diesel fuel. The overall diesel fuel pool included
nearly 5% vol. of HVO2 in 2014.
After stagnating in 2013, consumption of biofuels resumed
its growth in 2014. Biodiesel posted stronger growth
explained by increases in the general tax on polluting
activities (TGAP), which rose from 7% to 7.7% for diesel as
of January 1, 2014. In that same year, the overall incorpo-
ration rate for biofuels reached 7.5% (in energy).
In terms of the outlook for biofuel growth in France, the
Energy Transition and Green Growth Act (LTE) passed in
May 2015 includes a 15% consumption goal for renewable
fuels in the transport sector by 2030. According to the
work taking place at IFPEN, this goal could be achieved
with an energy mix that includes first and second-generation
liquid biofuels up to a potential 14%, supplemented by
renewable electricity and biomethane.
General outlook on processes: toward
a transition of biomass resources supply
With respect to first-generation biofuels in Europe,
approximately 4% of total area under cereal and beet pro-
duction is used for energy crops (bioethanol production),
with a clear preponderance of cereals (more than 75%).
(2) HVO or Hydrotreated Vegetable Oil, synthetic biofuels that fall under diesel fuels

3
a look at
2016 overview and outlook for biofuels
However, the share of sugar beets may increase, with
the elimination of sugar quotas from the Common
Agricultural Policy (CAP) in 2017. With respect to biodiesel,
limits on the area available for oilseed crops have nearly
been reached. With more than half of the area under rape-
seed production used for energy crops, the limitations on
expanding this process are being reached.
In this context, the European Commission is attempting
to define sustainability criteria for the use of biomass
resources in energy production, in order to limit addi-
tional reliance on food resources and ensure best envi-
ronmental practices. The first-generation processes
using these food resources will no longer benefit from
public assistance in 2020, and will be capped at a maxi-
mum rate of 7% incorporation in the energy mix for the
transport sector. In addition, waste resources count
twofold for target accounting purposes. Hence the rapid
development of waste cooking oil and other animal fat
biodiesels, which represented nearly a quarter of
resources in the European biodiesel market for 2014. For
example, France has three biodiesel production units that
primarily treat this type of residue (Veolia in Limay, Nord-
Ester in Dunkerque, Estener in Le Havre). The ethanol
sector can already count waste resources, with the recy-
cling of wine distillation residues.
Lignocellulosic processes using forest or agricultural
resources, or industrial residues (such as straw, forest
residues or paper mill black liquors) will also benefit.
The planting of dedicated lignocellulosic crops (mis-
canthus, short rotation coppice, etc.) may be regulated
by restricting the type of areas used for their cultivation.
Fig. 8 – Geographic distribution of lignocellulosic ethanol production
capacity in 2015 (including commercial, demonstration and pilot units)
United States
China
9%
Canada
9% Brazil
35%
EU
22%
24%
Source: UNCTEAD 2016
4
These lignocellulosic resources are currently being stud-
ied with a view to developing second-generation biofuels.
The first commercial lignocellulosic ethanol units were
launched at the end of 2013 and then in 2014, in the United
States, Brazil, Europe and China. Today there are more
than ten commercial 2G ethanol units worldwide, includ-
ing five in the United States, two in Brazil and in China,
and one in Europe and in Canada. The United States,
China, Canada and Europe also have a number of demon-
stration projects in development.
In Europe as in France, their development currently
awaits more specific regulation of carbon emission
reduction targets in the transport sector and related
sustainability criteria. The French second-generation
ethanol demonstrator (Futurol project in which IFPEN
is part of the partnership) is under development at the
Pomacle site (Marne, France). New outlets for the
technology in green chemistry are also planned. There
is not currently a lignocellulosic industrial unit for the
diesel sector. Several BtL3 pilot units were launched,
accompanied by the emergence of pyrolysis pilot units
in the refinery. The French BioTfueL project is under
development, with a gasification demonstration facility
in Dunkerque and a biomass torrefaction demonstra-
tion unit near Compiègne, expected to launch in 2017.
Over the longer term, methods for producing molecules
of interest through cultivation of micro-organisms such
as micro-algae (autotrophic method) or yeasts (het-
erotrophic method) are being studied. Mainly still in the
laboratory phase, these technologies may allow produc-
tion of diesel substitutes, kerosene for aviation and
numerous biosourced products for the chemical sector.
Though a number of actions are ongoing to develop
alternative fuels for aviation, the extreme temperatures,
pressure, fungibility, the critical safety challenges and
the multinational nature of product use have hindered
the product approval process and the expanded use of
biojets over the short term.
In conclusion, a marked decline in demand for alternative
fuels during 2015, triggered by low fossil fuel prices,
has slowed growth in the biofuel sector.
In Europe, product inventory is swelling, prices are
falling, and imports declining, but around the world,
incorporation mandates continue to grow and invest-
ment continues.
Growing awareness of the need to reduce carbon emissions
in the transport sector supports the development of
(3) BtL or Biomass to Liquid: process for producing synthetic diesel through biomass gasification
and Fischer-Tropsch synthesis
a look at
2016 overview and outlook for biofuels
alternative fuels. Liquid fuels will remain the principal
energy source for the transport sector over the short
to medium term. Nonetheless, to ensure the long-
term sustainability of biofuel processes, a variety of
conditions must be met such as rising fossil energy
prices and/or CO 2 taxation in the transport sector,
the use of policy levers, specifically implementation
IFP Energies nouvelles
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of post-2020 objectives in Europe, clarification of
sustainability criteria and the increase in blending
grades (including E20). Lastly, the development of new
processes will undoubtedly require investment support.
Daphné Lorne – daphne.lorne@ifpen.fr
Final draft submitted in June 2016
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