China, India and Indonesia will account for 40% of biofuel production growth between 2019 to 2024, according to the International Energy Agency (IEA).
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Enhancing security of the supply was the primary logic for the introduction of biofuel policy support policies in the nations, which in turn had raised production prospects, the IEA said in a 21 October report.
However, crude oil import dependence was also set to rise in the countries in the forecast period due to higher vehicle ownership, with fuel demand from petrol vehicles rising by 32bn litres in China and by over 12bn litres in India, and with Indonesian fuel demand for diesel vehicles increasing 2bn litres.
Replacing a portion of petrol and diesel demand with biofuels was also a means of increasing a country’s domestic fuel supply, the IEA wrote.
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China produced ethanol from corn and cassava, India used feedstocks such as molasses from its sugar industry to make ethanol and Indonesia manufactured biodiesel from palm oil.
To strengthen the security of supply, all three countries had established blending mandates and policies:
- China: 10% of petrol demand to be met by ethanol nationwide.
- India: E5 blending mandate nationwide, but E10 in major ethanol-producing states with an E20 target for 2030.
- Indonesia: B20 biodiesel, with vehicle testing underway for B30 in road and rail transport.
Full compliance with these policies would result in domestic supplies meeting a higher share of road transport fuel demand in 2024.
In energy terms, biodiesel consumption in Indonesia already resulted in a notably higher share of domestically produced fuel supplies in 2017. By 2024, its contribution could expand to offset 17% of diesel demand. If vehicle testing results indicated that it was possible to use B30 fuel, it would offset 26% of fossil diesel demand, the IEA wrote.
In 2017, ethanol use had only a minor effect on domestic fuel supplies in China and India. However, if nationwide E10 was achieved, its contribution would be much more visible in 2024, replacing 6% of petrol demand.
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Nevertheless, the IEA said the countries would still remain reliant on imported oil to meet transport fuel demand.
Replacing imported oil with domestically produced biofuels also raised national trade balances. Blending E10 with petrol in 2024 would improve China’s trade balance by US$4.9bn and India’s by US$1.2bn while meeting 20% of road transport diesel demand with biodiesel would improve Indonesia’s trade balance by US$1.3bn.
Moreover, if Indonesia were to use B30 across all sectors of the economy, its trade deficit would fall by almost US$4bn. However, biofuel subsidisation and fiscal support costs must also be considered alongside these savings, the IEA said.
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Accounting a vital share of petrol and diesel with conventional biofuels alone would require thorough consideration of sustainability implications, as it could entail considerable land-use change and lead to debate about using edible feedstocks for fuel production. For this reason, China had expressed excitement in producing cellulosic ethanol to complement crop-based ethanol production. India was also developing several cellulosic ethanol plants.
Via:OFIMagazine
