Biofuels: Outlook 2010
10 February 2010 Despite the development of second-generation biofuel production, particularly in the US, it will be bio-ethanol and biodiesel from conventional processes and crops that will have the most impact on agriculture globally in the next five years.
A recent report, “Biofuels – Their impact on crop production worldwide”, written for the benefit of agrochemical and other crop input industries, projects that three regions and four crops dominate the biofuel scene today and will continue to do so until 2013 and beyond.
Brazil leads the way. In 2008, half of the 6.5 million hectares of harvested sugar cane was used for bio-ethanol production. Based on local demand and investments in place, or planned, an additional 2 million to 3 million hectares of cane will need to be planted by 2013. Brazil is well placed in having the pasture land available without encroaching on rain forest. The low cost of production is also a major advantage. Brazil and Argentina are also heavily committed to biodiesel production from soybeans. Already some 8% of Brazilian soybeans are grown for biodiesel with up to 20% of the area projected by 2013. Much of the biodiesel produced in Latin America is for export, with the EU as the prime market.
In the US, the squeeze on land to grow corn for bio-ethanol is a major issue. The initial rush to invest in processing plants and the consequent effect on feed markets and price instability was a major factor in stoking up the “food versus fuel” debate on a global scale. Some 17% of US corn was used for bio-ethanol in 2008. By 2013 it could be 25%. Not often mentioned by the antagonists is the fact that the distillers grain, a rich source of protein recovered from bio-ethanol plants, goes a long way to reducing the impact on the corn feed markets.
The EU is the global leader in biodiesel production mainly from oil seed rape and sunflower oils. Germany is in fact the No. 1 producer in the world. Diesel fuel is more popular in the EU than many markets and with a target of 5.75% of transport fuels to be from renewables by 2010, this has led to the installation of more than 270 plants across the region. Some biodiesel will continue to come from imports as over half of the oilseed rape is already used for biodiesel. Nonetheless it is projected that an additional 3 million to 4 million hectares will be required.
China converted 20% of its corn crop to bio-ethanol in 2008. But the Chinese government is aiming to avoid the conflict with feed markets and is looking to develop cassava as a source for the future.
Estimated annual agrochemical expenditure by 2013 specifically for biofuel crops are: US$750 million on sugar cane in Brazil, $1.6 billion on corn in the US and $1.8 billion on oilseed rape in the EU. The situation is quite dynamic though. Growth estimates for the US have been reduced since forecasts made in 2008 due to the market instability. While later in 2010, the EU is scheduled to bring in new sustainability criteria which could affect the ratio of tonnage of locally produced to imported biodiesel.
But one thing is clear: Demand for biofuel crops will increase for several more years and in almost every crop producing region of the world. Many Asian countries, although starting later, show every sign of turning to biofuel consumption and, where possible, local production. Non-agricultural sources, such as biodiesel from algae, look encouraging but it is too early to say whether, and when, they will make a significant impact.
Get The Newsletter Today!
