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Producers of FAME biodiesel, renewable diesel and biojet are hurtling towards a feedstock supply crunch over the next five years based on current trends, the International Energy Agency warned this week – an outcome that could only be avoided if the availability of key inputs such as used cooking oil and soy oil rises sharply in the wake of high prices.
The outlook on biofuel feedstocks was contained in an annual update on renewables published by the IEA on the week commencing on December 5 and provides further suggestions that there could be huge obstacles to massive scale-up in planned capacity in North America, Europe, and Asia.
“In our main case, demand for vegetable oil, waste and residue oils and fats increases 56% to 79 million tonnes over the forecast [2022-27] period,” the IEA said.
“Fuels made from wastes and residues are in particularly high demand because they satisfy GHG and feedstock policy objectives in the US and Europe,” the agency said, adding that “in fact, wastes and residues are expected to be used for 13% of biofuel production in 2027, up from 9% in 2021.”
The report added that the potential for biofuels to contribute to global decarbonization efforts could be undermined and that, longer-term, much more ambitious net-zero targets would require a more than three-fold rise in production in the biodiesel sector (FAME, renewable diesel, and sustainable aviation fuel or SAF).
The Paris-based agency said consumption of used cooking oil (UCO) and animal fats will nearly sponge up all of the estimated supply over the next five years, with the current 60% share of UCO and animal fats in overall biofuels production rising to almost 90% by 2025.
And even when a wider range of wastes (such as palm oil mill effluent, tall oil, and other agribusiness waste oils) are considered, demand still swells to nearly 65% of global supply, the report added.
Another chapter in the same renewables report has forecast that total global biofuel demand will expand by 35 billion liters a year or 20% over 2022-27 in the main-case forecast, with growth in renewable diesel and biojet fuel consumption concentrated almost entirely in advanced economies.
The supply crunch is expected to be particularly acute in Europe, where consumption of renewable diesel and biojet fuel will rise at a time that many feedstocks, such as palm oil and potentially soy oil, will be phased out or at the very least subject to increasingly stringent curbs – which in turn will drive up demand for wastes and residues.
However, the report did highlight ways that a supply crunch could be avoided, referring to measures in the US, Canada, EU, and individual member states in the European bloc, such as Germany, which aim to develop supply chains for biofuels and SAF in particular.
“Steep prices will prompt companies and governments to improve feedstock supply chains, seek out new supplies and develop new techniques,” the IEA said.
In terms of crop-based feedstocks, the IEA said there is strong potential to exploit the potential of conventional crop-based feedstocks that meet sustainability requirements and could support a near 70% increase in biofuel production by 2030 from the 2021 level.
“Although there are limits to the pace and scale of growth for certain feedstocks such as vegetable oils, crops already support a 20% increase in liquid biofuel production by 2027 in the main-case forecast,” the agency said.
“However, governments and companies will need to be diligent to detect fraudulent waste supplies and maintain the integrity of sustainability frameworks, as high costs are also an incentive to circumvent policies,” it added.