The pace of global biofuels production growth will be slower than previously forecast over the next five years due to weaker prospects for Brazilian ethanol and as the US market becomes saturated, the International Energy Agency said Tuesday.
Updating medium-term forecasts made in June, the IEA said it sees global biofuels growth from 2010 to 2016 at just 400,000 b/d, versus 500,000 b/d previously. It now expects biofuels supply to reach 2.22 million b/d in 2016, up from 1.822 million b/d in 2010.
Brazilian ethanol production in 2011 is now expected to decline by 75,000 b/d to 375,000 b/d due to a poor sugar cane harvest and high sugar prices, the IEA said.
Over the next five years, the IEA has reduced its outlook on average for Brazilian ethanol output by an average 100,000 b/d, reaching 530,000 b/d in 2016.
"Challenging production economics and underinvestment in cane production and ethanol distillery capacity looks likely to persist over the medium term," the IEA said in its latest monthly report.
In the US, ethanol production growth is likely to slow over the medium-term, the IEA said, with the year-end expiry of a 45 cent/gallon blenders tax credit set to slow distillery investment amid increasing saturation in the US market.
The IEA said US ethanol output is still likely to reach 980,000 b/d in 2016, in line with the Renewable Fuels Standard, but revised down its outlook by an average 20,000 b/d over the 2012-2014 period.
US biodiesel production was also revised down, by 10,000 b/d on average from 2012-2016, the IEA said.
In Europe, The IEA revised down its biofuels production estimate by 10,000 b/d for 2010-2016, largely due to lower biodiesel output.
