Why energy firms must cater for soaring biofuel demand
Governments in countries all over the world have been placing greater emphasis on biofuels in the past decade and this is something that energy companies have had to adapt to.
The term biofuel is somewhat generic. It refers to a multitude of energy solutions that are deemed to be more sustainable than fossil fuels, ranging from electricity generated from wave power to solar energy. Most people have linked the word with alternatives to diesel, petrol and aircraft fuel, though.
According to a recent study by Navigant Research, the global biofuel industry is on the brink of a new phase of development and this could revolutionise the transportation sector in particular.
Why biofuels are becoming more prominent
One of the biggest challenges facing the energy industry in 2014 is coping with dwindling natural resources.
Although oil and gas companies in countries such as Malaysia and Singapore, for example, have reported a strong upturn in production in the past year, it seems oil wells across the globe are drying up quickly. Energy corporations need to explore other options and renewable biofuels are predicted to become commonplace in the long-term.
The Navigant Research report suggested worldwide demand for biofuels for the road transportation industry will rise from 32.4 billion gallons in 2013 to 51.1 billion gallons by 2022. In the US - which is renowned for its extremely high petrol and diesel consumption - biofuels will account for 8.7 per cent of fuels used by vehicle owners by 2016 and a similar trend is emerging in other parts of the globe.
Scott Shepard, Research Analyst with Navigant Research, commented: "Developed nations in Europe and North America are beginning to see declines in liquid fuel consumption from the road transportation sector, due to increased vehicle fuel efficiency and growing interest in alternative fuel vehicles.
"The continued growth of conventional biofuels relies either on policies increasing biofuel blend requirements, or on growing vehicle markets in the Asia-Pacific region.
"Meanwhile, advances in biofuels derived from non-food feedstocks, and biofuels that require no changes to infrastructure or vehicles, promise to significantly alter the petroleum industry landscape."
Challenges and key developments
While biofuels are viewed as a far more eco-friendly option than fossil fuel-generated power sources, they are far from perfect.
According to Navigant Research, biofuels are affected by feedstock issues, supply chain infrastructure inefficiencies and price differentials when compared with the petroleum industry. Identifying new methods for creating biofuel is another major challenge that energy companies will need to overcome.
There have already been some breakthrough developments in the biofuel sector in 2014, with governments demonstrating that they are committed to using more sustainable forms of fuel. In China, government officials approved a biobased fuel for commercial use in the nation's aviation sector.
The Civil Aviation Administration of China confirmed it had awarded Sinopec - a leading petrochemical corporation - the first ever certificate of airworthiness for biobased jet fuel. Last year, an Airbus A320 owned by Chinese Eastern Airlines completed a test flight from Shanghai Hongqiao International Airport using 1.7 tonnes of biofuel. The fuel in this case had been developed from palm oil and recycled cooking oil.
Airbus - one of the world's most successful aircraft manufacturers - announced in January 2014 that it had signed a Memorandum of Understanding with key partners in Malaysia that will see more research conducted on innovative sustainable fuel sources. The Asian country plays a leading role in the global oil and gas industry and this latest agreement could help the nation to establish itself as a hub for biofuel research and development too.
Frederic Eychenne, Airbus New Energies Programme Manager, explained that the Asia-Pacific region will be a world leader in air traffic by 2032 and it makes sense to invest in the area.
"South-east Asia is a wide and productive region in terms of biomass. The creation of a Centre of Excellence in Malaysia with local partners is an opportunity to ensure that any selected biomass satisfies strict sustainability criteria," he remarked.
It is clear that biofuels are being developed and used more frequently - particularly in Asia - and it is important that businesses in all sectors follow this trend, as sustainable fuel sources will play a crucial role in helping governments meet their carbon reduction targets in the coming years.