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Review on The Biofuel Market

The biofuel market is estimated at 33 billion Euros with a double digit annual growth. Two main sub-categories of biofuels exist, bioethanol and biodiesel accounting approximately for 85% and 15% of the global market, respectively. Main producers and consumers of bioethanol are Brazil and North America. Conversely, Europe is the world leader in biodiesel production, which represents about three fourths of the European biofuels market.

Biofuels are fuels produced from renewable resources (organic material), especially plant biomass, vegetable oils and treated municipal and industrial waste. Nowadays, the largest and most commonly used biofuels are biodiesel derived from vegetable oil and bioethanol derived from sugar and starch crops. These fuels are used to complement the world’s supply of petroleum and other fossil fuels. Bioethanol is most certainly the most significant market for all available and developed alternative fuels. Global fuel ethanol production grew by 25% in 2007 to more than 50 billion litres. USA’s corn and Brazil’s sugarcane account nowadays for 91% of the global bioethanol production, when in 2006 is was already at 89%. More recently, Asia (more specifically China, India and Thailand) has also embarked on large scale fuel-ethanol production and represents one of the largest production potential for the coming years. In 2007, the production of bioethanol in China amounted to 1.8 billion litres, thereby placing the country at a worldwide third position, ahead of the EU!

The first generation bioethanol was made from food crops. However, long-term and sustainable answers to fuel production cannot come from diverting food crops. Again, biotechnology - the 21st century technological breakthrough - is bringing innovative and effective solutions for the development of second generation biofuels. Research is underway to commercialise "second-generation" production techniques that can make biofuels from woody material, grasses, agricultural and some additional types of non food plant waste.

Biomass is a complex material composed of cellulose (30-50%), hemicellulose (20-40%), and lignin (15-30%). The exact composition varies from plant to plant. Since it is found in nearly all plant life, cellulose is the most abundant biological molecule on earth. Like starch found in corn kernels, cellulose is a sugar glucose polymer. It forms part of the cell wall and its design contributes to the structural integrity of the plant. Hemicellulose is a more random and amorphous structure of connected sugars.

There are several technical and economic challenges associated with the large-scale production of ethanol from cellulosic biomass, which includes: collecting and transporting the biomass raw material, preprocessing or "pretreating", enzymatic conversion of pretreated plant material to sugars, and fermentation of a mixed sugar stream. Many advances have been made in each of these areas over the past several years, greatly improving the likelihood that cellulosic ethanol will become a commercial reality in the very near future.

In 2007, sales of enzymes to the bioethanol industry accounted for 13% of Novozymes’ total enzymes’ sales. Enzymes for bioethanol are the fastest-growing segment within the enzyme market (an average annual increase of sales of 20-25% is expected over the next 3-4 years).

Biodiesel is emerging as a global industry. The EU currently represents 90% of global biodiesel production and consumption. However, the USA is now accelerating its biodiesel production capabilities. Biodiesel is a natural fit for Europe, Asia and Brazil where diesel-fuelled vehicles are more common than in the US. More than half of the biodiesel in the EU (nearly 3.3 billion litres) is produced in Germany. France, Italy, and Austria follow with produced volumes of 982, 410 and 301 million litres, respectively.

Biodiesel is currently produced from plant and animal oils. This could change in the near future with very promising ongoing development to produce biodiesel from microalgae. By containing 60 to 80% of oil by weight of dry biomass and by doubling their biomass within 24 hours, microalgae could revolutionise biofuel production.

However, in 2008, only 1% of the world’s energy supply is derived from ethanol or biodiesel. Market drivers for biofuels are oil supply and demand (prices, volatility), environmental concerns (emission of greenhouse gases and sustainability), national interests (security of supply, strategic independence, rural development opportunity) and biotechnological progress (better process, enzymes and microorganisms). But there are also inhibitors of the biofuels market such as infrastructures, process optimization and scalability, education, investment and implementation, and subsidies and tax incentives. "Even if biotechnology brings effective solutions mainly for second generation biofuels, derived from non-food biomass, the expansion of biofuels production and consumption will definitely depend on governmental policies and fiscal incentives" comments Philippe Tramoy, managing partner of CBDM.T®, the market and business intelligence company.

Some key players: Archer Daniels Midland, Cargill, Verasun, Aventine, Abengoa Bioenergy, Bluefire, Iogen, Losonoco, Mascoma, Xethanol, Dong, DuPont/Poet, Tate & Lyle, Verenium, Novozymes, DSM, Codexis, Maxygen, Genencor, Dyadic, BP, Total, Chevron, Shell…

About CBDM.T®

CBDM.T® - Market and Business Intelligence - is a Market and Business Intelligence Company with offices in France, Switzerland and in Israel. As an advisory services company, CBDM.T® boosts companies to develop revenue and growth by providing business and marketing services in the life science and biotech markets (market survey, market scouting, business development and strategic supports).