Nations race to build alternative fuel capacity

Capacity for alternative fuels such as ethanol, biodiesel, and renewable diesel is at 44.6 billion gallons a year in 2011, but systemic hurdles will constrain their growth to under 5% annually through 2015. But pockets of promising growth still exist as variations in local policy, demand, and feedstock availability mean that new nations will arise as global hotspots in the constrained industry, according to a report by Lux Research.

Specifically, ethanol capacity will grow to 35.1 billion gallons a year in 2015, and the best opportunities for ethanol growth are in Brazil, Australia, China, Sweden, and Thailand. Biodiesel capacity growth follows close behind, reaching 15.8 billion gallons that same year, as France, Canada, Thailand, and Germany emerge as the best nations for biodiesel capacity opportunities. According to the report titled, “ all other alternative fuels – such as biobutanol, renewable gasoline, bio jet, and bio crude – will reach just 3.2 billion gallons total in 2015.

“These nations offer the best opportunities for first-generation ethanol and biodiesel development,” said Andrew Soare, Lux Research Analyst and lead author of the report. “However, the market is shifting to second generation fuels like renewable diesel and cellulosic ethanol. These fuels bypass the major logistical hurdles of first-gen alternative fuels, and investors, as well as governments, are realigning investment to grow capacity.”

Lux analysts built a comprehensive database of over 1,200 alternative fuel production facilities throughout the world, and analyzed the dataset by geography, technology, feedstock, and fuel. It also analyzed 20 countries around the world on both eight short-term growth factors and nine long-term growth factors. Among its other findings:

  • Focus on wastes. As concerns about food security grow, the alternative fuels industry begins a long march to utilize wastes. For example, the ethanol industry will seek to tap cellulosic feedstocks, especially in countries such as Sweden and Australia with ample agricultural and forestry wastes. The biodiesel industry will eye waste oils such as used cooking oil or brown grease in municipal wastewater.
  • Ethanol growth likely to be capped. Beyond 2015, growing populations and food security threats will constrain the growth of ethanol and biodiesel, which today account for 97% of all biofuels. Along with downstream compatibility issues, these factors mean ethanol’s growth will be limited; it will cede ground to drop-in renewable gasoline and renewable diesel.
  • Airlines pursue biofuels. Confronted with rising oil prices, the world’s airlines are pushing forward efforts to develop biojet fuel out of sheer self-interest. Earlier this year, United Airlines signed a letter of intent to purchase 20 million gallons of fuel a year from Solazyme, starting as early as 2014.

The report, titled “Nations Race to Build Alternative Fuel Capacity,” is part of the Lux Research Alternative Fuels Intelligence service, with the report’s data driven by Lux’s Alternative Fuels Supply Tracker.


About Lux Research

Lux Research provides strategic advice and on‐going intelligence for emerging technologies. Leaders in business, finance and government rely on us to help them make informed strategic decisions. Through our unique research approach focused on primary research and our extensive global network, we deliver insight, connections and competitive advantage to our clients. Visit for more information.

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