Biofuels to be 10% of additional oil supply in 2022-28: IEA
The International Energy Agency (IEA) has forecast global oil demand to go up by 5.9 million barrels per day (mb/d) by 2028. It has also said biofuels (ethanol and biodiesel) will provide 10% of new liquid fuel supply growth to 2028. “Biofuels production expands nearly 600 thousand barrels per day (kb/d) from 2022 to 2028, led higher by significant growth from emerging economies,” the IEA said in its ‘Oil 2023: Analysis and forecast to 2028’ report.
India, Brazil and Indonesia account for 70% of the increase as each country pursues domestic blending targets. The global energy crisis has heightened energy security concerns and accelerated the deployment of clean energy technologies, the report said.
Ethanol and biodiesel supply will increase by 30% in emerging economies from 2022 to 2028, primarily to support rising domestic demand in response to policies designed to reduce oil imports and greenhouse gas (GHG) emissions while using domestic feedstocks such as sugar, corn and palm oil. Growing demand for liquid transport fuels also buoys biofuel production, it said.
“India is ramping up output to meet its 20% ethanol blending target by 2025, supported by guaranteed pricing and incentives for new ethanol facilities,” the IEA said. In Indonesia, production expands to meet a 35% biodiesel blending goal, up from 30% in 2022 while Brazil is aiming for 15% for 2026.
India, Indonesia and Brazil are all considering additional biofuel policies that provide considerable upside potential to growth.
Further, GHG reduction targets also fuel biofuel demand growth in advanced economies like the United States, Europe and Canada, even as slowing transport fuel demand over the forecast period temper the overall increase.
Renewable diesel and biojet fuel dominate new supply as it can be produced with low GHG intensity from residues and blended with few modifications. In ethanol’s case many jurisdictions do not have compatible infrastructure, such as pumps, to support higher blending levels, the agency said.
The turbulence in global oil markets, which started with the Covid-19 pandemic and was aggravated by the Russian invasion of Ukraine, has accelerated the transition away from oil, it said, adding the growth in world oil demand is set to slow down during the 2022-28 forecast period.
“Investment in clean energy is accelerating at a faster rate than for fossil fuels, helping bring peak oil demand into view,” it said. For every $1 spent on fossil fuels, $1.7 is now spent on clean energy, the agency said in another report. Five years ago this ratio was 1:1. The IEA, in its report ‘World Energy Investment 2023’ released last month, said that the agency estimates investment of around $2.8 trillion in energy in 2023.
“More than $1.7 trillion is going to clean energy, including renewable power, nuclear, grids, storage, low-emission fuels, efficiency improvements and end-use renewables and electrification,” IEA said.
The remainder, slightly over $1 trillion, is going to unabated fossil fuel supply and power, of which around 15% is to coal and the rest to oil and gas.
Petroleum and natural gas minister Hardeep Singh Puri has said biofuels will play a pivotal role in achieving reduction in import of fossil fuel and ultimately help to achieve the target of net zero emission.
“The energy security of the country will remain vulnerable until alternative fuels to substitute/ supplement fossil fuels are developed based on indigenously sustainable renewable feedstock,” Puri said in April.
India, Brazil and the US are working along with other interested countries to develop Global Biofuel Alliance, a priority area under India’s G20 Presidency.
Source Link :- https://www.financialexpress.com/market/commodities/biofuels-to-be-10-of-additional-oil-supply-in-2022-28-iea/3127844/
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