2.2 Conventional biofuel production trends

The largest producers of ethanol are the United States and Brazil (Figure 2.4). Estimates indicate the United States produced 61% of the global total in 2012, with Brazil producing just over a quarter. Europe, China and Canada are other major producers. However, Europe, the third largest producer, only accounts for around 5% of global production. Production of ethanol in the United States is based almost exclusively on corn, while sugar cane is used in Brazil. Global ethanol production declined in 2011 and in 2012 from record production levels in 2010. In 2011, production growth slowed in the United States as corn prices climbed, while high sugar prices contributed to a contraction in Brazilian output of around one fifth. In 2012, Brazilian ethanol production remained flat compared to 2011, but production declined by around 5% in the United States. Projections for 2013 suggest a global increase in production (F.O. Licht, 2013), as production increases in Brazil are expected to offset a contraction of around 3% in the United States compared to 2012.

Global biodiesel production grew by 29 times its original size between 2000 and 2012 (Figure 2.5).10 Europe, where biodiesel production has grown from very low levels in 2000 to 10.4 billion litres in 2012 (IEA, 2013a and F.O. Licht 2013), has led the global increase. The rapid growth in biodiesel has been driven in part by the biofuels mandate.11 The United States is the second largest biodiesel producer with output of around 4 billion litres in 2012. Argentina is the third largest producer of biodiesel with production of 2.8 billion litres in 2012. Brazil is the fourth largest producer. Biodiesel production began in 2005 and rose to just over 2.7 billion litres in 2012. Indonesia is the next largest producer with output of 1.5 billion litres in 2012.

Figure 2.5: Global biodiesel production, 2000 to 2012

Sources: IEA, 2013 and F.O. Licht, 2013.

Global biodiesel production grew by 7% in 2012, with most of this growth occurring outside of Europe, the United States, Brazil and Argentina. FAME biodiesel production declined in Europe in 2012 to around 9 billion litres leaving significant underutilised production capacity. However, growth in hydrogenated vegetable oil production to 1.5 billion litres offset this decline and resulted in net growth of around 0.35 billion litres (F.O. Licht, 2013 and European Biodiesel Board, 2013).

Biodiesel production in North America fell by at least a quarter in 2010 compared to 2009 after the bio-diesel tax credit expired (F.O. Licht, 2013 and U.S. EIA, 2012). However, the retrospective reinstatement of the credit at the end of 2010 saw this decline dramatically reversed in 2011, and production increased to around 3.8 billion litres in 2011 and to 4 billion litres in 2012 (F.O. Licht, 2013). Production in 2012 was therefore three times higher than in 2010.

10 In this section, biodiesel production includes hydrogenated vegetable oil (HVO) that is produced in Europe the United States and Singapore. Total production was around 2.7 billion litress in 2012.

11 European production also helps to reduce diesel imports, as Europe has a structural deficit in its refining capacity for diesel and a surplus for gasoline.