IEA Raises Liquid Biofuels Growth Outlook through 2031

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Written by Paul Wiseman for IIR News Intelligence (Sugar Land, Texas)

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Summary

Cost and reduced availability of fossil fuels for transportation worldwide have raised demand--and opportunities for renewables.

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Renewable Road Fuels Set for Growth

A new report by the International Energy Agency (IEA) sees renewable energy use in global transportation growing 60%, to almost 9 exajoules (EJ), by 2031, accounting for 6% of global demand in that category.

The agency sees many world governments raising renewable requirements to meet carbon standards--but the issue of global energy security also is a factor.

Of that 9 EJ, 35% will come from road biofuels (renewable electricity generation makes up 45%). Top drivers of that sector include "ethanol in Brazil and India, renewable diesel in the United States, and biodiesel in Indonesia and Brazil," the IEA said in its report.

Other predicted demand growth sectors include aviation and shipping, with government mandates behind that push. "Marine and aviation biofuels, biomethane, renewable hydrogen and hydrogen-based fuels account for the remaining 20%," said the report.

Industrial Info Resources is tracking more than 700 biofuels projects worldwide with completion dates through 2031, with a total investment value (TIV) of more than US$123 billion. Industrial Info Resources offers more information on these developments in its Global Market Intelligence (GMI) Alternative Fuels Project Database, where subscribers can find details--including construction schedules, investment values and necessary equipment--in list of project reports.

Securing the Future

The ongoing conflict in the Middle East has disrupted key oil supplies, pushing nations to turn to renewables that are produced locally or at least regionally.

As a result, the IEA recently raised its 2030 liquid biofuel demand forecast 40% when compared with last year's predictions, "led by ethanol growth in Brazil and India, renewable diesel growth in the United States, and biodiesel growth in Southeast Asia."

Here are some particulars the IEA listed on how nations are increasing biofuels standards:

U.S.: Extended waivers to allow the sale of E15 over the summer months--something usually prohibited over fears of vapor pressure affecting air quality in hot weather. However, the practicalities of limited storage and distribution channels meant this had limited impact last summer, the IEA said. Also, "Renewable fuel volume obligations for 2026 and 2027 have been increased from previously proposed levels, primarily to support farmers and boost demand for domestically produced feedstocks."

Indonesia: Recommitted to E10 blending by 2028, while adding increases to biodiesel mandate from B40 to B50, and a renewable diesel target of 5%, rising to 10% by 2028.

Brazil: Increased ethanol blending from 30% to 32%, which accelerates progress toward its "Fuel of the Future" ethanol-blending targets.

Argentina: Raised the voluntary limit of ethanol blending from E12 to E15.

One irony the report notes is that higher prices for diesel can hamper farming activity and production of crops used as renewable feedstocks.

Keeping Up with Joneses for Green Energy

Turning up the demand tap will involve more supply. The IEA sees feedstock demand for such fuels increasing by 30% worldwide, "with oil-based feedstocks growing fastest as demand rises for biodiesel, renewable diesel and biojet fuel." Sustainably producing such supply is an additional challenge, the report notes.

Growing the supplies will involve both originating (such as crop-growing) and processing operations. This would require significant investment--which, in turn, would require some form of derisking, the IEA said.

Options for processing assurance would include "grants for pilot and demo-scale technologies and low-interest loans for first-of-a-kind facilities), and strategies to support initial and sustained demand (e.g. public procurement agreements and amendments to regulations to ensure market access for new fuels and technologies)."

At the root of getting more supplies is planting and growing feedstocks like soybeans, corn and others.

Crop optimization and rotation, learning how to cultivate marginal land, mitigating wildfire risks in forests are among the possible measures. Enlargement of intermediate steps like storage and distribution facilities would also require investment.

"On top of food-based, first-generation feedstocks, second generation or synthetic fuels will be key to growing renewable fuel supply at scale," said Hillary Stevenson, VP of Energy Intelligence for Industrial Info Resources. "Recently a demo plant converting waste CO2 from nearby paper mills and ethanol plants into SAF was commissioned in the U.S., one of only two U.S. RD/SAF units to begin operations last year. The slowdown in 2026 was in part due to unclear regulatory support."

All the above require something that has been in short supply in many nations, which is coherent policies and long-term policy predictability. That's because all sectors must grow in tandem to make the system work--and all will require consistent and sustainable investment to get there.

Elections across the globe in recent years have led to reductions in energy transition legislation and investments that have given such investors hesitate to commit the necessary funds.

Key Takeaways

• Amid global conflicts, many nations are looking to renewables to improve energy security.
• The IEA sees this boosting demand for liquid biofuels at a much faster-than-expected rate.
• Investors must be assured there will be demand sufficient to repay the dollars they put in.

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About Industrial Info Resources
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news, and analysis on the industrial process, manufacturing, and energy-related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified, and verified plant and project opportunities. Across the world, Industrial Info Resources is tracking over 250,000 current and future projects worth $30.2 trillion (USD).