<article><p class="lead">The IEA expects global biofuels production to increase by more than 25pc by 2026, after output fell last year for the <a href="https://direct.argusmedia.com/newsandanalysis/article/2158459">first time in 20 years</a> as the Covid-19 pandemic cut road fuel demand.</p><p>In its medium-term <i>Oil 2021 </i>report, the Paris-based group sees output rising to 3.3mn b/d by 2026 from 2.6mn b/d last year, underpinned by a recovery in mobility and road fuels transport demand. Strengthened policies and planned capacity additions will drive gains thereafter, the IEA said.</p><p>It estimates that global ethanol production will grow by 330,000 b/d from 2020 to 2026, and biodiesel and hydrotreated vegetable oil (HVO) output will increase by 380,000 b/d over the same period.</p><p>Gains in ethanol production will be driven by China, India and Brazil. The IEA expects Chinese output to increase from 70,000 b/d in 2020 to 160,000 b/d by 2026 thanks to robust gasoline demand growth, E10 mandates in some provinces and the start-up of new facilities. India's ethanol production will rise from 30,000 b/d in 2020 to 70,000 b/d in 2026 following the country's proposal to move its 20pc blending target forward to 2025 from 2030. Brazilian output could grow by 90,000 b/d to 660,000 b/d by 2026 as gasoline demand recovers and the country sets higher decarbonisation goals.</p><p>US HVO production will grow strongly, supported by several policies that drive investments including the Renewable Fuel Standard (RFS). Biodiesel production in Indonesia and Malaysia will grow to 190,000 b/d and 40,000 b/d respectively by 2026 on the back of higher blending mandates and new production facilities. </p><p>In Europe, HVO and biodiesel production will increase by 40,000 b/d to 320,000 b/d by 2026, thanks to rising quotas under the recast Renewable Energy Directive (RED II) and new capacity additions, the IEA said.</p><p>A growing number of refiners are integrating biofuels in their value chain or have moved into the production of advanced biofuels and HVO. Around 345,000 b/d of refining capacity has already been converted to bio-refineries and there are plans for 840,000 b/d more, according to the IEA. These figures do not include co-processing of renewable feedstocks in conventional refinery units together with oil. </p><p>In its March<i> Oil Market Report (OMR)</i>, also published today,<i></i>the IEA revised marginally lower 2020 biodiesel and ethanol output in European OECD countries, each by 1,000 b/d to 261,000 b/d 89,000 b/d respectively. The IEA estimates February output of biodiesel and ethanol to be in line with January at 289,000 b/d and 99,000 b/d respectively. </p><p class="bylines">By Giulia Squadrin</p></article>
