Biofuel demand is expected to halve by 2050, according to a new report by RaboResearch announced on 3 November.

The decarbonisation of EU road transportation in the European Union (EU) will increasingly impact the demand for both fossil fuels and biofuels, particularly after 2030, according to the report.

Due to this, the long-term outlook for biofuels – beyond 2045 – was not promising, the report said, with the expected decline in demand likely to encourage biofuel companies to look for alternative uses for their products.

On 14 July, the European Commission proposed a package plan, ‘Fit for 55,’ to reduce gas emissions to at least 55% by 2030 compared to 1990, the report said.

Against this backdrop, electrification and hydrogen adoption in road transport would negatively impact demand for biofuels, particularly after 2030, according to Rabobank.

In the short-term until 2025, due to the higher replacement rate of diesel vehicles, Rabobank forecast that diesel and biodiesel demand would decline at the same rate of almost 4% from 2020 levels.

Demand would be steeper in the following years, according to the report, as new technologies started to replace the old vehicle fleet.

“By 2050, biofuel demand will be more than half lower than 2020 levels,” Rabobank senior analyst (sugar, grains & oilseeds) Maria Afonso said.

However, demand for feedstocks would not decline to the same extent, according to the report, with the phasing out of palm oil in EU biofuel production through 2030 likely to drive competition between rapeseed oil and used cooking oil (UCO) to fill the gap.