© OECD/IEA 2016© OECD/IEA 2016

© OECD/IEA 2016

Overview:

Content from the IEA’s Medium‐Term Renewable Energy MarketReport 2016 (MTRMR 2016): Share of renewables in the power, heat and transport sectors.

Conventional biofuels medium term forecast

Prospects for E15 and E85 blends in the United States

Discussion of Carbon Intensity (CI) based policy frameworks

Advanced biofuels medium term forecast

Cellulosic ethanol cost reduction potential

Prospects for biofuels in aviation

Analysis of the impacts of lower oil prices on biofuels markets.

Content from Energy Technology Perspectives 2016 (ETP 2016) ‐ Whatrole for biofuels within the IEA’s 2 degrees scenario (2DS)? Geographical trends – decarbonising transport in OECD and non‐OECD countries

Fuels shares in passenger and freight transport within the 2DS

Urban and non‐urban transport and role of biofuels in the 2DS.

© OECD/IEA 2016

Renewables dominate electricity growth but less progress in heat & transport

The share of renewables rises in all sectors. However, persistent challenges in heat & transport mean lower shares are achieved than for electricity.  

Share of renewables in electricity, heat and transport sectors

0%

5%

10%

15%

20%

25%

30%

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

Share

of r

enew

ables

in se

ctor d

eman

d

Renewable electricity Renewable heat Biofuels in road transport

© OECD/IEA 2016

Global conventional biofuels production increased modestly during 2015 

Conventional biofuels industry expansion has slowed from previous levels, however strengthened mandate requirements in key markets improve the medium‐term outlook. 

0

25

50

75

100

125

150

175

2009 2011 2013 2015 2017 2019 2021

Prod

uctio

n (bi

llion

L)

United States biofuels Brazil biofuels EU28 biofuels Asia biofuels Rest of world biofuels

Historical Forecast

World conventional biofuel production, 2009-21

© OECD/IEA 2016

Asia poised to head medium‐term conventional biofuels market growth 

Security of supply considerations have resulted in strengthened policies in Thailand and India (Ethanol), and Indonesia and Malaysia (biodiesel), boosting production growth. 

Conventional biofuels production growth in selected countries / regions, 2015-21

0

1

2

3

4

5

6

7

United States Brazil EU28 Asia

Prod

uctio

n gro

wth

(billio

n L)

Ethanol 2015-21 Biodiesel 2015-21

© OECD/IEA 2016

Moving beyond the US “blend wall” possible with current vehicle fleet

…however, more widespread fuel distribution infrastructure is fundamental to unlocking the potential for E15 and E85 ethanol blends in the United States. 

United States E85 blend market overview

0

500

1 000

1 500

2 000

2 500

3 000

3 500

0.00

0.20

0.40

0.60

0.80

1.00

1.20

1.40

Q1-14 Q2-14 Q3-14 Q4-14 Q1-15 Q2-15 Q3-15 Q4-15

E85

servic

e sta

tions (c

umula

tive)

USD/

litre

Cumulative E85 stations Gasoline retail E85 retail adjusted for energy content

Sources: US EIA, US DOE

© OECD/IEA 2016

Implications of carbon intensity (CI) based policies for biofuels 

Technology neutral CI based policies favour technologies and fuels able to offer the deepest emissions savings for a given cost, and can diversify the fuel mix to ensure compliance. 

Carbon intensity legislation examples (left), and credits generated by fuel within California’s Low Carbon Fuel Standard (LCFS), 2011-15 (right)

Source: California Air Resources Board

0%1%2%3%4%5%6%7%8%9%

10%

Germ

any

California

Germ

any

California

Germ

any

California

Germ

any

California

Germ

any

California

Germ

any

California

2015 2016 2017 2018 2019 2020

Fuel CI redu

ction

0.0

1.0

2.0

3.0

4.0

5.0

6.0

2011 2012 2013 2014 2015LCFS credit (to

nnes)

Ethanol Biodiesel Renewable dieselBiomethane Electricity Natural gas

© OECD/IEA 2016

Advanced biofuels anticipated to scale up from current production levels

Advanced biofuels are needed in the longer term to sustainably reduce the overall carbon footprint of the transport sector, but the industry remains in an early stage of development. 

Advanced biofuels production forecast, 2015-21

0.0

0.5

1.0

1.5

2.0

2.5

3.0

2015 2016 2017 2018 2019 2020 2021

Prod

uctio

n (bi

llion

litres)

Announced advancedrenewable diesel

Announced advancedethanol

Operational and under-construction advancedrenewable dieselOperational and under-construction advancedethanol

© OECD/IEA 2016

Significant cost reduction potential identified for cellulosic ethanol

Industry expansion is anticipated to facilitate improved competiveness of cellulosic ethanol, but more widespread policy support  is needed to enable cost reduction potential. 

Cellulosic ethanol cost reduction potential

© OECD/IEA 2016

Biofuels are essential to the aviation industry’s decarbonisation plans 

Worldwide aviation biofuels activity is evident, and uptake can grow further with regional supply chain development and actions to reduce cost premiums over conventional jet fuels. 

. 

Global aviation biofuel developments over 2015-16

© OECD/IEA 2016

Biofuels and low crude oil prices ‐a complex interplay

A downturn in biofuels consumption and production as a result of lower oil prices is not anticipated, although some market‐specific adverse effects are apparent. 

Assessment of low oil price impacts on the biofuels industry

ImpactObserved since oil 

price reduction?

Potential to occur 

in extended low oil 

price 

environment? 

Decrease in consumption in key global markets related to oil price

✗ ✓

Decrease in global biofuels production ✗ ✗

Reduced policy support ✗ ✓

Increased difficulty to attain new capacity investment

✓ ✓

Compromised blending economics ✓ ✓

Discretionary blending opportunities limited

✓ ✓

© OECD/IEA 2016

The key transport decarbonisation challenge lies in non‐OECD countriesThe key transport decarbonisation challenge lies in non‐OECD countries

Meeting the 2DS requires ambitious policies across all transport modes, with roles for a range of low carbon fuels, vehicle efficiency improvements and modal shifts. 

OECD and non-OECD WTW GHG emissions from the 6DS to the 2DS

 0

 2

 4

 6

 8

 10

 12

2010 2020 2030 2040 2050

GtCO2‐eq

OECD Non‐urbanvehicle efficiency

Urban vehicleefficiency

Non‐urban low‐carbon fuels

Urban low‐carbon fuels

Non‐urbanavoid/shift

Urban avoid/shift

2DS

4DS6DS

0

2

4

6

8

10

12

2010 2020 2030 2040 2050

Non‐OECD

6DS

4DS

2DS

© OECD/IEA 2016

Biofuels have a role to play across both passenger and freight transport Biofuels have a role to play across both passenger and freight transport 

Conventional, and to a greater extent advanced, biofuels make key contributions within the 2DS by 2050. Especially in aviation and heavy duty road freight transport. 

Fuel shares in 2050 for passenger and freight modes by scenario

 0  10  20  30

2‐, 3‐wheelers

Small,medium cars

Large cars

Buses,minibuses

Rail

Air

EJ

Passenger 2DS

Fossil fuel products 1st generation biofuels 2nd generation biofuels Natural gas Electricity Hydrogen Other

 0  10  20  30

3‐wheelers

LCVs

MFTs

HFTs

Rail

Shipping

EJ

Freight 2DS

© OECD/IEA 2016

Commercialisation of a range of advanced biofuels needed by the 2DSCommercialisation of a range of advanced biofuels needed by the 2DS

Electrified transport is crucial for urban transportation in 2050 within the 2DS, while non‐urban mobility requires a range of biofuel solutions. 

Urban and non-urban contribution of fossil fuels alternatives within the 2DS

 0

 5

 10

 15

 20

 25

2010 2050

EJ

2DS urban

Ethanol Advanced ethanol Biodiesel Advanced biodiesel BiogasAviation biofuels Shipping biofuels Electricity Hydrogen

 0

 5

 10

 15

 20

 25

2010 2050

EJ

2DS non‐urban

© OECD/IEA 2016

Conclusions

Conventional biofuels production has slowed, but strengthenedmandates in key markets should underpin medium‐term growth.

Security of supply considerations mean Asia will lead conventionalbiofuels growth over 2015‐21.

Advanced biofuels production scale‐up by 2021 can be achieved viaincreased output from current plants & delivery of announced projects.

Clear long‐term demand signals have resulted in promisingdevelopments for aviation biofuels in a diverse number of countries.

Market specific impacts from low oil prices are observed but overallthese are not expected to stop global production growth.

Both conventional and advanced biofuels have a key role to play in theIEAs 2DS for the transport sector.

© OECD/IEA 2016

For further insights and analysis…

The Medium‐Term Renewable Energy Market Report 2016 and Energy Technology Perspectives 2016 can be purchased online at:

www.iea.org

Thank you for your attention