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Global biofuel consumption could rise by 20% from 2022-2027, according to a forecast by the International Energy Agency (IEA).

In the IEA’s main-case forecast, growth in renewable diesel and bio-jet fuel consumption would be almost entirely in advanced economies.

“Here, policies designed to reduce greenhouse gas (GHG) emissions are driving demand because these fuels can be produced with low GHG emissions, blended at high levels and made from wastes and residues. In fact, nearly 70% of renewable diesel and bio-jet fuel came from wastes and residues in 2021,” the report said.

Meanwhile, rising ethanol and biodiesel use could be seen almost entirely in emerging economies aiming to reduce oil imports while also maximising the use of indigenous resources to benefit the local economy. In addition, biofuel use helped reduce GHG emissions in these countries.

The USA, Canada, Brazil, Indonesia and India made up 80% of global expansion in biofuel use, as all five countries had comprehensive policy packages that supported growth, the report said.

In Brazil, Indonesia and India, rising gasoline and diesel use also accelerated demand for biofuels, while in the USA and Canada, declining gasoline and diesel demand slowed biofuel growth and reduced the use of some fuels. In Europe, falling transport fuel demand nearly stalled volume growth even though state-level policies were increasingly stringent. Globally, the biofuel share in transport fuel consumption increased from 4.3% to 5.4% in 2022-2027.

Bio-jet fuel is forecast to make up 1%-2% of jet fuel globally by 2027, according to the report, with planned capacity increases in Europe and the USA meeting most of this increased demand, with additional supplies coming primarily from Singapore.

The USA, China, Europe and India accounted for 80% of biofuel consumption growth although the report said all four needed to increase their supplies of feedstocks, especially wastes and residues, to expand renewable diesel, bio-jet fuel and biodiesel production.

Meanwhile, the IEA said it forecast global biofuel demand in 2022 to rise by 6% - or 9.1M litres/year –compared to the previous year.

Renewable diesel made up the largest share of this year-on-year expansion, due to attractive policies in Europe and the USA, the report said, with blending requirements and financial incentives supporting demand growth in India and Brazil, and Indonesia’s 30% biodiesel blending requirement (due to rise to B35 in February) also boosting biodiesel use in that country.

However, the IEA said it had reduced its year-on-year growth estimate by 25% compared to its 2021 forecast, due to price and market developments in Brazil, Finland and Sweden responsible for 80% of the downward revision.

“While high biodiesel prices led the Brazilian government to reduce its biodiesel blending requirements for 2021/22, in Finland high fuel prices prompted the government to temporarily lower its renewable distribution obligation for 2022/23. Sweden froze 2023 greenhouse gas targets for transport fuels at 2022 levels. However, 2030 targets remain unchanged,” the report said.