IEA predicts growth in global ethanol production through 2023

By Erin Voegele | October 08, 2018

The International Energy Agency released its Renewables 2018 market analysis on Oct. 8, predicting that fuel ethanol will account for two-thirds of the worldwide growth in conventional biofuels between 2018 and 2023.

The IEA’s report focuses on the share of renewables within the global power, heat and transportation sectors, with a particular focus on bioenergy.

According to the report, of the three sectors, transportation currently has the lowest penetration of renewables. While renewable energy in the sector is expected to grow 19 percent over the next five years, the overall share is expected to remain relatively small.

The report predicts that renewables used in the transportations sector will grow from 3.4 percent in 2017 to 3.8 percent in 2023. Despite this modest growth, the report indicates renewables will account for 12 percent of transportation fuel demand growth.

The IEA’s forecast shows biofuels production is expected to increase 15 percent over the next five years, reaching 165 billion liters (43.59 billion gallons). By 2023, biofuels are expected to account for nearly 90 percent of the renewables used in transport. Fuel ethanol accounts for two-thirds of biofuel production growth, while biodiesel and hydrotreated vegetable oil (HVO) account for the remainder.

Asian countries account for the majority of the growth in biofuel output over the next five years, with the IEA predicting China, India and member states of the Association of Southeast Asian Nations representing half of the global expansion in biofuel production. Latin America will be responsible for an additional 45 percent of that growth, particularly Brazil.

Under favorable market and policy conditions, the IEA said the growth in biofuels could be even more significant over the next five years, reaching nearly 206 billion liters of production.

According to the IEA, ethanol production increased by 3 percent globally last year, reaching 104 billion liters of production. Increased production was primarily realized in the U.S., European Union and China. Ethanol production is currently expected to expand at an average annual growth rate of 2 percent, reaching 119 billion liters by 2023.

Growth in ethanol production is driven by Brazil, followed by China and expanding markets in India and Thailand. While the IEA predicts China’s share of global production will increase though 2023, the U.S. and Brazil will still account for 80 percent of global output.

Under favorable conditions, the IEA said ethanol production could increase by as much as 26 billion liters, reaching 145 billion liters 2023, with growth primarily in the U.S., Brazil, China, India and Argentina. This level is 22 percent higher than the IEA’s main case forecasts.

The IEA predicts biodiesel and HVO production increased 7 percent last year, reaching 39 billion liters. Global production of the two fuels is expected to reach 46 billion liters by 2023.

Within the report, the IEA also addresses advanced biofuels. The group’s main case forecast predicts annual production of novel advanced biofuels will reach 1.4 billion liters by 2023, a threefold increase from 2017. Cellulosic ethanol accounts for 60 percent of production within the novel advanced biofuels, with the remainder from advanced biofuels for the diesel pool and aviation biofuels.

An accelerated case for novel biofuels suggest nearly 2.3 billion liters could be produced by 2023 if the right conditions are present. Under this scenario, the share of cellulosic ethanol would increase to two-thirds of production, with one-third from advanced biofuels used within the diesel pool and aviation biofuels.