Bio-based Fuels and Materials Through 2015: Growing Capacity Past a Drop in the Bucket forecasts the most likely industry growth, but also models four different alternative scenarios for biofuel and bio-materials.

Each explores the impact of a potential disruptor: advanced technologies, new government regulations, deeper corporate involvement, and falling oil prices.

“It is now obvious that incumbent technologies like ethanol and biodiesel will drive new capacity less and less. Instead, the industry will capitalise on the technical advantages of emerging platforms, such as bio-based jet fuel, algal oil, and renewable diesel, in order to expand,” says Andrew Soare, an Analyst at Lux Research, and the lead author of the report.

Highlights from the report include:

• Although limited, growth in ethanol biofuel will rely on supportive government regulation. Increasing the US ethanol blend limit to 15% would free up new demand for the biofuel in the states, while increased Brazilian control over sugar speculators would prevent that country’s volatile sugar prices from encouraging its ethanol producers to switch to sugar production. Combined, these measures could boost ethanol biofuel capacity to 43 billion gallons by 2015, up from 34 billion gallons in the base case;
• Technology advances drive new capacity in biofuel and bio-materials. New technical processes based on algae oil and butanol could drive growth in biofuel to 78 billion gallons of total capacity by 2015. On the materials side, advances in technology could help expand capacity to 10.5 billion tonnes, largely driven by growth in succinic acid and ammonia producers; and
• Biofuel and bio-materials need corporate backing. Increased corporate investment in either industry could fuel massive growth, particularly on the materials side where it could bring total capacity up to 12.4 million tonnes in 2015. Biofuel capacity also benefits from increased corporate participation, which could expand capacity to 65 billion gallons in 2015.

“Biofuel capacity is sensitive to the price of oil,” says Soare. “But even in the unlikely case of oil prices below US$50 per barrel, capacity will grow because there is momentum and corporations will keep their hands in until oil prices rise.”