World Grain - April 2022 - 36

FROM COVID-19 TO WAR,
BIOFUELS INDUSTRY TACKLES CHALLENGES
After first production decline in 20 years, biofuels regains market share
but faces feedstock price pressures, food-versus-fuel debate
by Susan Reidy
J
ust as the global biofuels industry was regaining
ground from a severe drop in production caused
by the COVID-19 pandemic, it is now facing new
struggles with rising feedstock prices caused in part by
Russia's invasion of Ukraine, and the return of the foodversus-fuel
debate.
After seeing growth of nearly 4% per year from 2010 to
2019, the production of biofuels plummeted in 2020 because
of the pandemic and related lockdowns that cut fuel
demand for all transport modes. The 11.6% drop in global
production to 146 billion liters (ethanol and biodiesel),
according to the International Energy Agency (IEA), was
the first reduction in annual production in two decades.
By 2021, as pandemic restrictions were lifted, biofuels
production started to recover, reaching an estimated 151.3
billion liters. For 2022, the IEA is estimating total production
of 158.6 billion liters.
But the war in Ukraine adds uncertainty not only because
of rising feedstock prices that make biofuels production
less cost-effective, but also because it is causing
some to again raise the food-versus-fuel argument. If
commodity availability is tight due to unrest in the Black
Sea region, coupled with drought in Latin America, priority
is to food use with energy production taking a backseat,
some will argue. Policies mandating the usage of a
36
certain percentage of biofuels are being called into question
around the world.
" Certainly, the feedstock prices going up on everybody
is going to inflict some pain because of what's happening
in Ukraine, " said Stephen Nicholson, global grain and
oilseed strategist for Rabobank. " But these are issues that
were already in place before we got to the conflict, and
the conflict has just exacerbated it. Whether it's commodity
prices or food inflation, it's a slippery slope. We as a
society have to have a discussion about where we want to
invest, and how we want to invest, and what's important
and not important. "
The biofuels industry argues that now is the right time
to increase usage of biofuels to lower prices for consumers.
In the United States, the Renewable Fuels Association
(RFA) is advocating for allowing broader use of ethanol
blends such as E15.
" Today, E15 is selling for 10 to 25 cents per gallon less
than standard gasoline, meaning year-round use of the
fuel would save the average American household at least
$125 to $200 on its annual gasoline bill, " the RFA and
1,000 farmers, ethanol workers and biofuels supporters
said in a letter to US President Joe Biden. " Those savings
would accrue immediately while also providing energy,
environmental and economic benefits for the long term. "
April 2022 / World Grain / World-Grain.com
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World Grain - April 2022

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