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Global Biofuels Outlook: 2

Presented by

Hart Energy Consulting 

October 7, 2010
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Presentatio

•

Global Overview 

–

Biofuels Mandates in 2010

–

Regional Ethanol Supply and 

Demand Outlook to 2020

–

Regional Biodiesel Supply and 

Demand Outlook to 2020

•

Regional Findings for North 

America

–

Findings

–

Policy Outlook

–

Global Ethanol and Biodiesel 

Outlook 

•

Regional Findings for Latin 

America

–

Findings

–

Policy Outlook

–

Global Ethanol and Biodiesel 

Outlook

•

Regional F

–

Findings

–

Policy O

–

Global E

Outlook

•

Regional F

Pacific

–

Findings

–

Policy O

–

Global E

Outlook

•

Next Gene

Findings

–

Overall F

–

Demand 

–

Capacity 

• C

o

n

clu

sio

n
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Global Outlook
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EthanolBiodieselEthanol & BiodieselNo known biofuels program

North America:

RFS2 & LCFS implementation

Intermediate blends?

Latin America: more 

countries pushing for 

mid and higher

Level Blends

Eur

RED imple

GHGs, su

Africa: start

mandated 

biofuels usage

Middle 

Ethano

Jatrop

R&D pro

Alga

Biofuel M

Half the Programs i

Source: Global Biofuels Center, September 2010
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Total Biofuels Sup

Substantial Growth for Ethanol, M

-

20,000.0040,000.0060,000.0080,000.00

100,000.00120,000.00140,000.00160,000.00180,000.00200,000.00

Total Supply Total Demand Total Sup

Ethanol 

Million Liters

2010 2015 2020

• Ethanol demand represents 73% of biofuels demand in 2020.• Capacity will likely need to be added to keep up with demand requi

and biodiesel by 2020.

• Biodiesel analysis generally includes only on-road diesel but for so

significant demand for off-road biodiesel applications as well.

Source: Hart’s Global Biofuels Center, September 2010; data taken from 

GBC’s Global Biofuels Supply & Demand Outlook 2010-2020
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Gasoline v. Ethanol De

Significant Penetration 

0%

20%40%60%80%

100%

Asia Pacific EU 27 Latin

America

North

America

Asia Pacific EU 27 

2010 

Ethanol 

• Over 25% ethanol penetration in the Latin America regio• Gasoline demand to decline in North America by 2015 d

ethanol penetration could increase with intermediate ble

• 10% penetration in Asia-Pacific by 2020• Strong demand growth in Europe driven by member stat

Source: Hart’s Global Biofuels Center, September 2010; data taken from GBC’s Global Biofuels Supply & Demand Outlook 2010-2020 and World Refining & Fuels Service
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On-Road Diesel v. Biodiesel De

Small Penetration of Biodiesel into the Diesel 

0%

10%20%30%40%50%60%70%80%90%

100%

Asia Pacific EU 27 Latin

America

North

America

Asia Pacific EU 

2010 

On-Road Diesel Biodiesel

• EU-27 and Latin America to see greatest penetration of biodiesel into the die

• Sluggish growth in North America – about 2% penetration• Significant growth in Asia, representing 6% penetration by 2020

Source: Hart’s Global Biofuels Center, September 2010; data taken from GBC’s Global Biofuels Supply & Demand Outlook 2010-2020 and World Refining & Fuels Service
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Regional Finding

North America
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Regional 

• Cellulosic biofuels requirements under RFS2 will not be met 

We expect the renewable fuel (corn ethanol) and possibly ad(sugarcane) will be increased. 

• We continue to expect that obligated parties will look to Braz

for additional volumes to meet the LCFS in the 2011-2015 timquadruple through 2020.

• Regional ethanol outlook (2010-20):

–

Utilization rates increased from 2009 (85%) to 2010 (90%) and will st

2020

–

Total demand to reach 84 billion liters in 2020 and supply 79 billion lit

– Intermediate blends (E15) could see represent 30+ market penetratio

–

Near 100% E10 penetration in U.S.

–

Canadian RFS2 to increase demand for ethanol in Canada

• Regional biodiesel outlook (2010-20):

–

Utilization rates around 10% of capacity 

–

We project supply will meet demand by 2020 of 4.5 billion liters

–

We have estimated an overall 2-3% penetration in the on-road diesel 

–

Aside from mandates, no independent demand driver for biodiesel

–

Renewable diesel may capture some of this demand
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2008 2010 2011 2013 2015 

Note: • Green • Red – • *Mand

Pennsmeetin

2009

2009: Minnesota: B5

2013: Minneso

2007: Minnesota: B2

2015: Minneso

2007

2005:

U.S. RFS 1 Enacted

2006: Hawaii: E10

Policy Timeline

Constant Changes in Policies Create 

2009: Iowa: State 

RFS (un-enforced)

2007: Ontario: E5

2012

2012: Minnesota: B10

2012: New Mexico: B5

2008: Washington: 

E2, B2*

2008 Manitoba: E8.5

2008: Missouri: E10

2008: Saskatchewan: 

E7.5

2007: U.S. RFS2 Enacted

2010: Canada: E5, B2

2010: Ontario: E10

2010: Quebec: E5

2010: British Columbia: 

B5

202

2009: Oregon: E10, B2

2010: Florida: E10

2010: Massachusetts: 

B2

2013: Massachu

2005: Louisiana:

B2, E2*

2002:

California: CaRFG3 

Standards effective

2010: Pennsylvania: B2*

2009: Montana: E10*

1997: Minnesota: E10

Source: GBC, September 2010
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Practical 2010 Ethanol B

Hart Low Case Shows Near Ma

50-74% PenetrationBelow 10% Penetration 10-50% Penetration

75-100% Penetration

Alaska – 10Hawaii – 95

Source: Hart’s North American Ethanol Database, June 2010.
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Regional Ethanol & Biodiese

Strong Growth for Ethanol in U.S. Driven by 

-

10,00020,00030,00040,00050,00060,00070,00080,00090,000

Supply Demand Supply 

Ethanol B

Million Liters

United S

Source: Global Biofuels Outlook 2010-2020, September 2010
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Regional Finding

Latin America
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Regional 

• Biofuels potenti

al in Latin America is strong considering many 

land available for expansion of feedstock production, and t

he g

and j

ob creation coming out of the financial crisis is a priority a

• Regi

o

n

al Etha

n

ol O

utl

o

o

k for 2010-2020

– Brazil will continue to set the tone for the region– Most blend mandates range bet

w

een 5 vol% - 25 vol

%, 10 vol

% is most common

– LatAm suppl

y to reach 65.35 billion liters (17.26 billion gallons) b

y 2020

– LatAm demand to reach 50 billion liters (13.21 billion gallons) by 2020– Exports may rise to 15.35 billion liters (4.05 billion gallons) b

y 2020

• Regional Biodiesel Outlook for 2010-2020

– Most blend mandates range bet

w

een 2 vol% - 10 vol

%

– LatAm suppl

y to reach 15.34 billion liters (4.05 billion gallons) by 2020

– LatAm demand to reach 12.56 billion liters (3.32 billion gallons) by 2020– Most countries’ suppl

y expected to satisfy int

ernal demand 

– Exports could reach 2.77 billion liters (733 million gallons) 

b

y 2020

• Increasing flex-fuel vehi

cle (FFV) sales in Brazil and t

he approa

Colombia (2012) will be significant drive

rs in ethanol demand as 

competitive. Also, Jamaica and Paraguay have lowered tariffs o

• Col

ombi

a and Argenti

na continue to raise biodiesel blend levels 

hopi

ng to eventually reach B20. 
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Policy Timeline

Investment Opportunities Exist as Manda

2002

Brazil: E20-E25

Paraguay: E24

2007

Colombia: B5

2008

Costa Rica: E3, 

B5 Jamaica: E10

Brazil: B2

2009

Costa Rica: E5

2010

Argentina: E5, B5-B7

Brazil: B5

Colombia: E10, B7-

B10

2011

Peru: E7.8 

Venezuela: E7

2012

Uruguay: B5

Mexico: E6 (GDL, MTY, 

DF)

Colombia: B20 

FFV mandate begins: 

60% of all vehicles sold 

less than 2.0 Liter must 

be FFV 

2015

Uruguay: B2

Source: GBC, September 2010
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Expected Ethanol G

Brazil will continue to lead the region 

Source: Global Biofuels Outlook 2010-2020, September 2010
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Expected Biodiesel G

Brazil will continue to lead, Argentina and Co

Source: Global Biofuels Outlook 2010-2020, September 2010
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Regional Finding

Europe
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Regional 

• Two directives, the amended FQD and the RED are shaping t

–

They introduce a renewable energy in transport mandate for 2020, su

minimum GHG reductions) and a GHG reduction target for fossil fuels 

• In volumes, 2010 biodiesel demand is twice t

hat of ethanol li

the car fleet but ethanol demand is projected to grow more rtotal demand volumes in 2020 

• Regional ethanol outlook (2010-20):

–

Current blending levels stand at 5-10 vol% (amended Fuel Quality Di

–

Utilization rates around 50% of capacity but rising to 69% by 2020

–

Total EU dem

and to reach 13.3 billion liters in 2020 and supply 7 billio

– Imports to meet 47% of demand by 2020

• Regional biodiesel outlook (2010-20):

–

Current blending levels stand at 5-7 vol% (amended Fuel Quality Dire

–

Utilization rates around 57% of capacity but rising to 66% by 2020

–

Total EU dem

and to reach 27.1 billion liters in 2020 and supply 17.6 b

– Imports to meet 35% of demand by 2020

• Sustainability is a major issue in the EU 27 and with potentia

industry with Indirect Lan

d Use Change still an unknown fac

• Advanc

ed biofuels promoted under new Renewable Energy 

significant volumes expected by 2015 
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Policy 

Im

2010 2011 2015 2017 2020

EU:

Dec. 2010 Implementation of 

Renewable Energy Directive

in ALL MS

GHG cut target 35%

re

EU:

GHG cut target 50%

60% for new biofuels

plants

Austria, Belgium, Cyprus, Czech Republic, 

Finland, France, Germany, Ireland, Italy,

Latvia, Lithuania, Luxembourg, Poland, 

Portugal, Romania, Slovakia, Slovenia, 

Spain, the Netherlands and the U.K have a 

MANDATE already

ALL MS to 

release 

National 

Action Plans

Commission 

started Public 

Consultation 

on ILUC until 

Oct. 31 2010

Source: GBC, September 2010
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Expected Regional Ethanol G

France to Lead in Supply and the U.K

Source: Global Biofuels Outlook 2010-2020, September 2010
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Expected Regional Biodiesel 

Spain to Lead in Supply and Germa

Source: Global Biofuels Outlook 2010-2020, September 2010
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Regional Finding

Asia Pacific
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Regional 

• 2010 saw an increase in ethanol blending under the national 

and biodiesel blending under t

he national mandates for Indon

Taiwan and Thailand. However, full implementation in Indonesia 

• Ethanol supply is not expected to meet demand through 2020 

requirements at 5-10 v

ol% and issues with feedstock supply and p

do not proceed with construction or existing capacity is expanded 

imports from Brazil will continue to suffice. 

• Biodiesel supply is expected to meet demand up until 2020 d

requirements at 1-5 vol% and overcapacity (even with utilization rExcess supply is expected to be absorbed by increasing blending 

road vehicles and sectors, or export to Europe or other countries.

• On a regional basis, total ethanol demand is estimated to com

gasoline demand in 2010, which is expected to grow to 5.5% in 

• Total biodiesel demand is estimated t

o comprise 1.6% of the 

fuel demand in 2010, which is expected to grow to 3.4% in 2015 

shows that ethanol accounts for a higher share in the gasoline po

expected to grow faster than biodiesel in the region.

• No current or future policies or mandates require use of adva

produced at pilot level in Australia, China, India, Japan, New Zeal
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Policy Timeli

Various Man

Note: 

NationPartiaUnder 

become a 

Volunt

2008 2009 2010 2011 2012 2017 2020

Thailand: B2 

Taiwan: B1

Indonesia: 

E1, B1

Philippines: 

B2, E5

Taiwan: B2

Japan:

500,000 kl of biofuels

China:

200,000 tons of biodiesel

2 million tons of ethanol

Taiwan: E3

Philippines: E10

South Korea: 

B3

China:

2 million tons of b

10 million tons of 

Thailand: B5

South Korea: B1 

Thailand: E20, E85

India:

E20, B20

2007

Philippines: B1

India: E5

Malaysia: B5

China 

(10 provinces):

E10

Australia (NSW): 

E4, B2

Philippines: 

E15, B10

2015 

Philippines: E20

Thailand: B3

Australia (NSW): 

E2 

Philippines: B5

Source: Hart’s Global Biofuels Center, Sept. 2010
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Expected Regional Ethanol G

Thailand to Lead in Supply and Chin

0.00

2000.004000.006000.008000.00

10000.0012000.0014000.00

Australia China India Indonesia Japan New

Zealand

P

Million liters

Supply Demand

Source: Global Biofuels Outlook 2010-2020, September 2010
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Expected Regional Biodiesel 

India to Lead i

0.00

500.00

1000.001500.002000.002500.003000.003500.004000.004500.005000.00

Australia China IndiaIndonesia JapanMalaysia New Zealand Philippines 

Million liters

Supply Demand

Source: Global Biofuels Outlook 2010-2020, September 2010
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Next Generatio

Biofuels Finding
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Next generation Biofuels 

• Most development in Next Gen. biofuels is in cellulosic 

number of projects and total capacity).

–

Most commercial plant capacity though is for renewable diese

BTL with Fischer Tropsch.

• Several projects are based in Asia Pacific and supply w

region.

• Global Cellulosic ethanol outlook (2010-20):

–

Deficit of supply versus demand in 2015

–

Deficit made worse when considering that most demand com

supply comes from Asia Pacific

–

Additional capacity is required to meet the 2020 forecasted d

• Global Renewable diesel outlook (2010-20):

–

Apparent overcapacity in 2015

– In fact due to lack of specific government demand for renewa–

Product quality expected to create demand for it

–

Forecasted demand for 2020 should absorb planned capacity

• Still financial and technological hurdles to overcome 
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Global Next Gen. Biofuels G

Cellulosic Ethanol to Lead Supply and D

Source: Global Biofuels Outlook 2010-2020, September 2010
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Expected Regional Distribu

Asia Pac. largest cellulosic ethanol capac

ethanol, EU 

Source: Global Biofuels Outlook 2010-2020, September 2010
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Concludin

Countries Still Moving Prog

 Ethanol may represent 13% of the gasoline pool by 2020; 

road diesel pool.

 Hart’s analysis shows that most countries will be in a poten

ethanol by 2020. On a global basis, supply could be short liters (5 billion gallons).

 The only country that will be in a position to supply the glob

be Brazil, which Hart project

s will be able t

o supply a minim

(3.5 billion gallons) to the global market by 2020. No other anywhere close to being able to supply these kinds of volu

 Chief competitors for Brazilian ethanol are expected to be 

and Japan representing a combined demand of at least 15 gallons). China is a surprise! The demand requirement wbillion gallons) by 2020, more than doubling over 2010. 

•

We do not expect sufficient volumes of next gen biofuels to 

available on the market through 2015-2020 to meet GHG-d

–

RESULT: Again, a scramble for sugarcane ethanol...will prob

Pacific production.
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Concluding O

Biodiesel Supply Will Need to Do

 A number of countries have already moved or are conside

blends of ethanol (beyond E10) and biodiesel (beyond B5) U.S., Colombia, Argentina, Indonesia, and several EU 27 m

 Global biodiesel supply will have to double over the 2010-2

accommodate demand requirements that are governments aiming to implement. We expect fewer new facilities will bat existing facilities increases by 2020. 

 Only 57% of existing biodiesel capacity is required in Euro

compared to expressed demand, taking into account FAMcapacity. The utilization could then rise to 66% of the capacapacity is added beyond 2015. But in spite of this capacitrepresent 7% of demand in 2010, increasing to 20% in 201as no new capacity is added.

 Sustainability remains a very important issue with regard to 

indirect land use change (ILUC) GHG emissions. The RED GHG emission reductions and may limit the use of several states remain divided over how to take ILUC into considerato handle ILUC has not been decided yet by the European nevertheless could be a hurdle for future biofuels or biofueinto the EU.
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Thank you! Questio

Tammy Klein, Assistant Vice P

tklein@hartenergy.com; +1.701.