Report outlines biofuels' contribution to global economy

By Holly Jessen | May 09, 2012

A new report reveals the biofuels industry contributed $277.3 billion to the global economy in 2010. By 2020, it predicts, the global biofuels industry will produce more than 51 billion gallons (196 billion liters) and support more than 2.2 million jobs.

“Contribution of Biofuels to the Global Economy” was completed by Cardno Entrix on behalf of the Global Renewable Fuels Alliance.

“It is promising to see the global biofuels industry growing during these difficult economic times,” Bliss Baker, spokesperson for GRFA. “The global biofuels industry is a bright spot in the current world economy and is contributing billions of dollars to output and creating hundreds of thousands of jobs all while reducing our reliance on crude oil.”

Specifically, ethanol produced globally doubled from 2005 to 2010 and increased three-fold in the last decade. In all, global ethanol production is expected to increase by 66.2 percent from 2000 to 2020, the report said. The three top players in ethanol production are the U.S., Brazil and the EU, which produce 87 percent of the ethanol produced globally. “This report demonstrates that our industry has come a long way in the past decade and the future prospects for growth remain extremely positive,” Baker said. 

Looking at the EU, the third largest producer globally, ethanol production is expected to increase strongly over the next decade. That growth is being stimulated by the EU Renewable Energy Directive, which requires renewable energy sources to make up 10 percent of transport fuels by 2020. The largest European ethanol producers—which churn out nearly 50 percent of the installed ethanol production in the EU—are France, Germany and the United Kingdom, according to the European Renewable Ethanol Association, ePURE. About two-thirds of ethanol production in the EU utilizes grain as a feedstock while the remainder comes from sugar beets.

In Europe in 2010, ethanol production sustained nearly 70,000 jobs. With more ethanol production facilities built in recent years the biofuels sector supports 100,000 direct and indirect jobs, mostly in agriculture, ePURE pointed out. By 2020, that number is predicted to rise to 190,000 jobs. “This report shows that the biofuels industry is contributing substantially to the global public good. As global biofuels production increases, the economic benefits of biofuels are being further maximized,” said Rob Vierhout, secretary general of ePURE.

Still, the GRFA points out, the U.S., Brazil and the EU will not be able to satisfy global demand alone. While the EU and Japan are exceptions, the most significant growth in ethanol production in the next decade is expected to take place mostly in Asia, specifically China, Thailand, the Philippines and Vietnam, and African countries such as Tanzania and Mozambique. Most of the growth is expected to happen with first-generation feedstocks and technology, meaning ethanol production from sugarcane, sweet sorghum and cassava. “These developing nations will see exceptional growth in their own countries, but from a volumetric perspective the amount of biofuels they will produce will remain a small share of global production,” the report said.

With increased demand for biofuels comes an increase in agricultural commodity prices, which results in agricultural growth and rural development in developing countries. The report pointed to an analysis conducted by the UN Food and Agriculture Organization, which suggested that cash-crop production for markets won’t necessarily happen at the expense of food crops and that it may actually contribute to improving food security.

The production and use of ethanol and biodiesel displaces petroleum consumption, especially for major importers such as the U.S. and EU and emerging and rapidly growing markets such as China, India and Brazil. The combined production of 110.8 billion liters of ethanol and biodiesel in 2010 is the equivalent of 1.2 billion barrels of crude oil valued at $135.4 billion at 2011 prices. By 2020, biofuels is projected to displace nearly 2.2 billion barrels of crude oil valued at $253.6 billion.