The market for renewable fuels and biofuels – including ethanol, biodiesel, renewable diesel, sustainable aviation fuel (SAF), renewable natural gas (RNG), bio-based syn-gas, and bio-based pyrolysis oil – has witnessed dramatic growth in recent years. This trend is expected to accelerate, driven by several key factors:
- Stringent environmental regulations: New environmental policies and regulations are pushing for cleaner transportation fuels.
- Corporate sustainability push: Companies are increasingly focused on energy transition and showcasing strong environmental, social, and governance (ESG) practices to attract investors.
- Shifting societal values: Public support for sustainability is growing, creating a strong market pull for renewable fuels.
These factors are fueling research and development breakthroughs, technological advancements, and the emergence of commercially viable solutions. This momentum is evident in both demand and supply:
- Demand growth: Airlines worldwide are adopting SAF, showcasing the growing demand for cleaner aviation fuels.
- Supply expansion: Project announcements and investments in production capacity are accelerating.
- Strategic acquisitions: Major oil and gas companies are acquiring positions in ethanol, bio-based diesel, and renewable natural gas through mergers and acquisitions.
Despite the positive outlook, there are significant challenges to overcome for large-scale market adoption:
- Feedstock sourcing: Identifying, securing, and sourcing sustainable bio-based feedstocks remains a key constraint.
- Lifecycle carbon emissions tracking: Verifying net lifecycle carbon reduction from biofuels is crucial. Sustainable production practices are essential to avoid negative environmental impacts, such as land-use change, deforestation, and competition with food production.
- Advanced biofuels: Developing advanced biofuels from non-food sources like algae or waste biomass will be critical for long-term sustainability.
- Lifecycle assessments: As the industry matures, lifecycle assessments (LCAs) will become more complex and require careful consideration.
Government policies play a significant role in fostering the growth of renewable fuels. Key examples include:
United States
- California Low Carbon Fuel Standard (LCFS)
- Oregon, Washington, and British Columbia LCFS (harmonized)
- US Renewable Fuel Standard (RFS)
- US Blender Tax Credit (BTC)
- Inflation Reduction Act (IRA)
Canada:
- Canadian Clean Fuel Regulation (CFR)
- BC Low Carbon Fuel Standard (BC LCFS)
- Canadian Carbon Policies:
- Federal Carbon Price
- Alberta TIER Program
- Saskatchewan OBPS Program
European Union:
- Renewable Energy Directives (RED I and II)
These policies offer various incentives and credits, such as Renewable Identification Numbers (RINs) and LCFS credits. However, increasing complexity in these credit systems and price discovery mechanisms within the deepening global biofuel markets pose challenges for market participants.
In conclusion, the renewable fuels and biofuels market is experiencing a period of exciting growth, driven by environmental regulations, corporate sustainability initiatives, and societal support. However, addressing feedstock sourcing, lifecycle carbon emissions, and policy complexities are crucial for ensuring a sustainable future for this sector.
How ADI helps Renewables and biofuels
ADI Analytics offers a powerful toolkit for success in the renewable and biofuels market. Our extensive experience, robust models, and data resources provide a comprehensive understanding of global biofuel trends. Specifically, we can help with the following types of work:
- Biofuel feedstock supply chain analysis: We help companies optimize their feedstock sourcing strategies, ensuring a reliable and sustainable supply chain.
- Feasibility studies for new projects: ADI guides clients through feasibility assessments, evaluating the viability and potential of new biofuel ventures.
- Business & commercial strategy development: We collaborate with clients to craft winning business and commercial strategies for navigating the biofuels market.
- Decarbonization strategy integration: Our experts assist companies in maximizing the role of renewable fuels in their decarbonization plans.
- Cost & economic analysis with forecasts: ADI provides insightful cost and economic analyses, including forecasts for supply, demand, and pricing of RINs and LCFS credits.
- Market research & competitive intelligence: We conduct in-depth market research and gather competitive intelligence to give clients a clear edge.
- Regulatory support: ADI assists clients in navigating the evolving regulatory landscape of the biofuels market.
- Commercialization strategy assessment: Our team evaluates commercialization strategies, ensuring clients can effectively bring their biofuel solutions to market.
ADI prioritizes a collaborative and transparent working relationship. We employ an iterative approach for all projects, with clearly defined timelines, deliverables, and regular meetings to keep all stakeholders informed. We understand that project outputs need to be tailored to specific needs. That’s why we work closely with clients to define deliverables that perfectly align with project scope, target audience, and final objectives.
Proactive risk management is fundamental to our process. We identify and communicate key risks and assumptions throughout the engagement, ensuring clients make informed decisions. Finally, our deliverables are designed to be adaptable and user-friendly. This includes working supply/demand models and financial models that can be manipulated and updated as the industry evolves, allowing clients to stay ahead of the curve.
Relevant examples
A few examples of our work in the renewable fuels and biofuels sector are presented here. Please contact us to learn more about how ADI can help you.
Market research and assessments
- Leveraged ADI databases to estimate the market size for eight feedstock pathways and provided a growth outlook through 2030 for a leading investor in renewables
- Reviewed historical data (through 2027) on North American ethanol supply, capacity, demand, and exports for a leading renewable investor
- Assessed and forecasted global biogas/RNG adsorbents market for a specialty materials manufacturer
- Collaborated with an oil & gas major's downstream strategic planning group to develop a refined product market analysis for North America, supporting their biofuels strategy development.
- Developed a market assessment and forecast for biofuel production and trade in North America for a global commodities trader.
Corporate strategy and business planning
- Advised a Latin American government on negotiations with investors in a new $10 billion refinery and biofuels blending and trading hub.
- Led an in-depth biofuels study for a European refining independent considering entry into the North American market.
- Supported an integrated oil refiner in evaluating and optimizing its biofuels strategy as part of a larger program to meet carbon reduction obligations.
- Led a comprehensive 12-week project to develop a refining independent's North American biofuel strategy and planning outlook.
Costs and economics
- Assessed ethanol crush margins by plant type and across target plants for a private equity firm considering an investment in an ethanol supplier.
- Competitive benchmarking of various algae-based biofuel pathways for an oil major.
- Algae biofuels: Navigating the competitive landscape
- Partnered with a national oil company to develop a robust suite of biofuel cost and economic models.
- Evaluated alternative uses for t-butanol (TBA), if not consumed for isobutylene production, and related economics for a renewable biofuel and chemical joint venture
Competitive intelligence
- Profiled and positioned competitors for a specialty chemicals company and identified strategic implications by key applications
- Conducted high-level landscaping that was focused on ethanol plants considering CCUS investments
- Survey operational practices on biofuels storage, blending, testing, and certification for a leading manufacturer of analytical instruments and test equipment
Access our thinking
ADI is a thought leader in the renewables and biofuels. Access our latest thinking including blog posts, white papers, conference presentations, and videos on the ADI insights section.
