Global biofuels output to rise in 2021, 2022: IEA

The IEA expects global biofuels production to return to record levels seen in 2019 this year, after dropping for the first time in twenty years in 2020, because of Covid-19-related travel restrictions.

The IEA said that global biofuels output this year is set to climb back to levels recorded in 2019, at 162.8bn l (143mn t), but it warned that the recovery will be uneven.

Ethanol production is forecast to remain 3.6pc below 2019 volumes, largely because of a slower rebound in the US and Brazil, the IEA said. It estimates production in the two countries for 2021 lower by 8pc and 5pc from 2019, respectively, and said ethanol production in Brazil is expected to return to 2019 levels by 2022.

These declines will be partially offset by gains in India, which has already announced a 7pc ethanol blending target in 2021, an increase of 2.5 percentage points from 2019, according to the IEA.

The ongoing effects of the Covid-19 crisis as well as higher feedstocks and biofuels costs have delayed policy deployment set to boost biofuels production in several countries, including Indonesia, Malaysia, Thailand and Brazil, the IEA said.

The IEA expects biodiesel production, including HVO, to be 10pc higher in 2021 than in 2019 on the back of significant capacity expansions.

HVO capacity is expected to grow by 50pc in 2021 from 2020 if new projects are built on schedule, the IEA said.

The watchdog expects HVO capacity to nearly double in the next two years, significantly expanding the capability of producing biofuels from waste and residue feedstocks, with the product set to account for 11pc of the forecast global biofuels production in 2022, at full production capacity.

US policies are behind 85pc of HVO capacity additions globally, as the renewable fuel standard, California's low-carbon fuel standard and a biodiesel blender credit make HVO projects economically attractive, the IEA said. Outside the US, new projects will boost capacity by 12pc in 2022 in Europe, and by 32pc in the Asia-Pacific region, compared with 2020.

The agency also expects biofuels production to be up by 7pc on the year in 2022 as hydrotreated vegetable oil (HVO) output increases globally and ethanol production rises in India.

The IEA previously said it expects global biofuels output to increase by more than 25pc by 2026, compared with 2019.

Looking at demand, the IEA estimated total biofuels consumption in 2020 declined by 8pc on the year to 150bn litres (132mn t) because of the impact of the Covid-19 pandemic, but it was higher compared with previous forecasts of 144bn l (127mn t) for the year.

"The largest year-on-year drops in output were in Brazilian and US ethanol production, and in biodiesel production in Europe," the IEA said. Lower production in these markets accounted for 90pc of the decline in global biofuel output in 2020, it said.

By Giulia Squadrin