World Grain - April 2022 - 40

Looking ahead
Traditional biofuels such as ethanol and biodiesel may
face a bumpy road with increased competition of other
renewable energy options, particularly electric. Global
biofuel consumption could slow sharply by 2029, according
to Enerdata, an independent research and consulting
firm, due to a drop in fuel demand, increased competition
between transport technologies and the decarbonization
trend of public policies.
It estimates overall ethanol consumption to increase by
8.3% through 2029, while biodiesel consumption declines
by 3%. The slowdown in consumption will reduce international
trade, with biofuels mostly remaining a commodity
produced and consumed locally.
First-generation biofuels are expected to dominate
The primary
feedstock for
biodiesel in
the United
States is soybeans.
" They
went through a period of time where they were
not covering capital costs and the increase in feedstock
costs is not helping their case, " he said.
It is important to define what we are talking about first.
Biodiesel fuel uses multiple feedstocks, such as used vegetable
oil, animal fat and grease, Zuckerberg said.
" Should vegetable oil supplies remain tight, a problem
could emerge for production of renewable diesel, a fuel
that uses virgin vegetable oil in its production, " he said.
" Clearly current events have and will continue to tighten
already supply-constrained oilseed markets. "
In recent years, production levels of renewable diesel,
which is made in thermochemical processes such as
hydrotreating, gasification, and pyrolysis, has been increasing.
Capacity in 2021 increased from 791 million
gallons at the beginning of the year to 1.1 billion gallons
by December. Industry leaders are estimating production
could reach 6.5 billion gallons in the next five to six years.
" Right now, we have a tight vegetable oil market, but
we don't have excess demand yet, " Zuckerberg said. " If
the 6.5 billion gallons of capacity comes online, the industry
may face challenges should the veg oil market remain
tight. "
Nicholson said companies may rethink their plans to
build production facilities.
" I do think it will slow down production or slow down
the building of some of these renewable diesel refineries
from those players who maybe don't have as deep of
pockets as the oil companies do, " he said.
He noted Chevron's announcement in February to purchase
the Renewable Energy Group (REG) for $3.15 billion
as a move for the oil company to shore up supply.
REG operates 11 biorefineries in the United States and
Europe and produced 519 million gallons of cleaner fuel
in 2020. He expects there will be similar deals and joint
ventures in the future.
" So, we're already seeing the renewable diesel folks doing
what they need to do to ensure they have feedstocks, "
Nicholson said.
40
global production into 2030 with advanced biofuels not
exceeding 10% of world production, Enerdata said. The
EU is anticipated to have a high integration rate of advanced
biofuels, followed by China, Indonesia, the United
States and Brazil.
Public policies will remain one of the pillars of development
for biofuels, Enerdata said. However, the EU and
the United States are favoring alternatives to biofuels to
decarbonize transportation, such as electric vehicles, hydrogen
and other low-carbon technologies.
" This should lead to an increased competition from
electric mobility, hydrogen and LNG while the competitivity
of fossil fuels could further dampen prospects for
biofuels, " Enerdata said. " Moreover, the COVID-19 crisis
could market a lasting decline in mobility... "
In the United States, the government plans to end purchases
of gas-powered vehicles by 2035 and California
is requiring all new cars and passenger trucks sold in the
state be zero-emission vehicles by 2035. Other states are
considering similar policies.
Nicholson said already California's carbon credits are
telling a different story from just 10 years ago, when 80%
were ethanol. That number has dropped to 20% today.
" Is that a nationwide phenomenon or just a local one?
We don't know, " he said. " If we use it as a barometer,
I'd be concerned that ethanol is going to be challenged in
years to come. "
He noted that investment in renewable diesel facilities
is increasing, and so is oilseed crushing to meet the demand
for vegetable oil feedstock, but what happens 10
years down the road if a new technology is discovered.
" What if something changes that makes the ability to
find power for vehicles cheaper, safer and cleaner than liquid
fuels, " Nicholson said. " What is the new technology
that could upset the whole apple cart? "
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April 2022 / World Grain / World-Grain.com
Photo courtesy of United Soybean Board
http://www.World-Grain.com
World Grain - April 2022

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