Biofuels - OECD-FAO Agricultural Outlook 2011-2020

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Ethanol prices: Brazil, Sao Paolo (ex-distillery).
Biodiesel prices: Producer price Germany net of biodiesel tariff.
>> See all data for biofuels

World ethanol prices increased by more than 30% in 2010 in the context of a new commodity price spike of ethanol feedstocks, mainly sugar and maize, and firm energy prices. This situation contrasts with 2007/08 where ethanol price movements did not follow the pace of the commodity price increases and ethanol profit margins were reduced. The US became for the first time a net exporter of ethanol in 2010, while exports from Brazil were reduced significantly in a context of sky-high raw sugar prices and relatively more competitive corn-based ethanol when compared to the previous years.

World biodiesel prices have increased in 2010 in a context of rising rapeseed and other vegetable oil prices and high crude oil prices. This price increase is smaller in proportion than for ethanol; due to the fact that biodiesel prices remained relatively firm in 2009 compared to crude oil and world vegetable oil prices.

• World ethanol and biodiesel prices are expected to continue to rally in 2011. Over the Outlook period, ethanol and biodiesel prices are expected to remain firm as policies promoting biofuel use are being implemented and crude oil prices are expected to remain strong (Figure 1). Global ethanol and biodiesel production are projected to continue to expand rapidly over the next ten years.
  
  
• The US is expected to remain the largest ethanol producer and consumer. As raw sugar prices are projected to fall, sugar cane based ethanol should become more competitive than in 2010 and exports from Brazil should recover in the early years of the Outlook period. The European Union is expected to be by far the major producer and user of biodiesel. Some developing countries (Argentina, Malaysia and Thailand) could play a significant role in biodiesel exports.
  
  
• Biofuel production projections in many developing countries are quite uncertain following little or no production increases in recent years. The cultivation of new feedstocks, like jatropha or cassava, does not yet allow for large-scale biofuel production.
  
  

Biofuel use will continue to represent an important share of global cereal, sugar and vegetable oil production over the Outlook period. By 2020, 12% of the global production of coarse grains will be used to produce ethanol compared to 11% on average over the 2008-10 period. 16% of the global production of vegetable oil will be used to produce biodiesel compared to 11% on average over the 2008-10 period and 33% of the global production of sugar compared to 21% on average over the 2008-10 period. Over the projection period, 21% of the global coarse grains production’s increase, 29% of the global vegetable oil production’s increase and 68% of the global sugar cane production’s increase are expected to go to biofuels.

Ethanol production
In developed countries, the share of corn based ethanol over total ethanol produced should decrease from 89% on average over the 2008-10 period to 78% in 2020. Wheat based ethanol should account for 6% of ethanol production in developed countries compared to 3% over the base period, most of this development being in the EU. Sugar beet based ethanol should account for about 4% of ethanol production throughout the projection period. Cellulosic ethanol production is expected to become increasingly important in developed countries from 2017, to represent about 8% of total ethanol production by 2020.

In developing countries, more than 80% of the ethanol produced in 2020 is expected to be based on sugar cane which results from the dominance of Brazilian ethanol production. Ethanol based on roots and tubers such as cassava is projected to account for only about 4%. The picture differs if the Brazilian ethanol market is excluded. In that case, in the developing world, if the share of molasses in ethanol production reaches 40% of ethanol production, the shares of sugar cane based ethanol as well as coarse grains based ethanol should be of 17%. The share of roots and tuber is also much higher (15%). In particular the cultivation of cassava for ethanol production might have a high potential in the developing world. However, high production costs and small-scale production structures, especially in comparison to sugar cane, currently hamper a noticeable market expansion.

Biodiesel production
In developed countries, the share of vegetable oil based biodiesel over total biodiesel produced should decrease from 85% on average over the 2008-10 period to 75% in 2020. Biodiesel produced from non-agricultural sources such as fat and tallow, as well as from waste oils and by-products of ethanol production, should represent about 15% of total biodiesel produced in the developed world over the projection period. Second generation biodiesel production is expected to grow in developed countries from 2018 and to represent about 10% of total biodiesel in 2020.

The most important biodiesel feedstock in the developing world should remain vegetable oils based on palm or soybean oil. This will be a result of the strong production increase in Argentina and Brazil, where biodiesel is produced predominately from soybean oil. The share of jatropha is expected to only account for 10% (19% when excluding Brazil and Argentina) of biodiesel produced in 2020 in the developing world due to the slow growth of cultivation capacities. Rapeseed oil is of minor importance for biodiesel production in developing countries, with the exception of Chile where the climatic conditions allow for rapeseed cultivation. Biodiesel production from rapeseed oil is also expected to develop in transition countries like Ukraine and Kazakhstan.

Less important from a global perspective but notable from a national perspective is the production of biodiesel based on tallow in Paraguay and Uruguay, as a result of the large livestock sector in these countries.

>> Read the full Outlook chapter on biofuels (pdf, 710 KB)

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