IEA (2018), "Renewables 2018", IEA, Paris https://www.iea.org/reports/renewables-2018
Of the three sectors, transport has the lowest penetration of renewables. While renewable energy in transport is expected to grow by 19% between 2018 and 2023, the overall renewable share remains small. In transport demand, renewables grow from 3.4% in 2017 to just 3.8% in 2023. Even so, renewables account for 12% of transport fuel demand growth.
Biofuel production continues to increase, rising 15% to 165 billion litres by the end of the forecast. In transport sector energy demand, biofuels still hold an almost 90% share of total renewables in 2023, even though electric mobility expands rapidly. Fuel ethanol makes up two-thirds of biofuel production growth, and biodiesel and hydrotreated vegetable oil (HVO) provide the remainder.
Renewable electricity in transport is expected to increase by two-thirds. Electric cars, two- and three- wheelers, and buses lead this growth; their electricity consumption almost triples over the forecast period. However, rail still accounts for most of renewable consumption in 2023. Overall, by the end of the forecast period, renewables provide almost one-third of the global demand for electrified transport.
In 2017, conventional biofuel production increased 4% year-on-year to reach 143 billion litres, with an energy value of 83 Mtoe. By 2023, world biofuel production is estimated to grow another 15% to 165 billion litres, equivalent to 97 Mtoe – an upward revision from last year’s forecast owing to robust growth prospects in Asia and Latin America.
Asian countries account for the most growth in biofuel output over the forecast period: China, India and ASEAN countries combined represent half of the global expansion in biofuel production. Latin America is responsible for 45% of production growth, which comes principally from Brazil, which has the highest growth in biofuel output of any individual country. The prime driver of this growth is the new RenovaBio policy framework that is set to be introduced in the first half of the forecast period.
Under favourable market and policy conditions, global conventional biofuel output in the accelerated case reaches 206 billion litres in 2023, which is 25% more than in the main case. Ethanol production could grow by more than 20%, with Brazil, China and the United States making the greatest contributions. Biodiesel and HVO output could climb more than 30%, mainly in Brazil, India and ASEAN countries.
Fuel ethanol accounts for two-thirds of the growth in conventional biofuels between 2018 and 2023. Ethanol production increased by 3% globally in 2017, when it reached 104 billion litres of output, with higher production primarily in the United States, the European Union and China. Ethanol production is projected to expand at an average annual growth rate of 2%, to reach 119 billion litres by 2023, an upward revision from last year’s forecast.
Growth is driven by Brazil, followed by China and expanding markets in India and Thailand. In 2023, China’s share of global production increases, but the United States and Brazil still dominate ethanol production, accounting for 80% of global output.
In the accelerated case, annual ethanol production rises by 26 billion litres to reach 145 billion litres in 2023, which is 22% higher than in the main case. The principal contributors to additional ethanol growth in the accelerated case are the United States, Brazil, China, India and Argentina.
Combined biodiesel and hydrotreated vegetable oil (HVO) production increased 7% from 2016, with a record output of almost 39 billion litres in 2017. Global production is expected to grow at an average growth rate of 3% until 2023, reaching 46 billion litres, with market expansion driven by higher mandated demand in the United States, Brazil and some ASEAN countries.
HVO, which is also known as renewable diesel, is increasingly prominent in our biofuel forecast. In 2017, an output of 5.5 billion litres of HVO accounted for 14% of global combined HVO and biodiesel production. HVO output is anticipated to grow through 2023 with the expansion of existing facilities and new plants coming online in Europe and the United States.
Biodiesel and HVO output increases by a further 15.5 billion litres to reach 61 billion litres by 2023 in the accelerated case, which is 34% higher than in the main case. The main contributors to this accelerated biodiesel and HVO production are Argentina, India, Brazil, and ASEAN countries.
Higher production of advanced biofuels is important for long-term decarbonisation of the transport sector because they generally offer more significant reductions in greenhouse gas emissions relative to fossil fuels than do conventional biofuels. In addition, because they are produced from non-food feedstocks, they do not compete with food crops for prime agricultural land. Policy interest in advanced biofuels remains strong. The Biofuture Platform, a 20 member country collaboration initiated by Brazil, has advocated an increase in low-carbon biofuel consumption.
Our main case forecast expects annual production of novel advanced biofuels to reach 1.4 billion litres (0.9 Mtoe) in 2023, a more than threefold increase from estimated 2017 production. Still, this represents a downward revision from last year’s forecast, reflecting the small number of announced projects that are currently moving into construction. Over three-quarters of the announced advanced biofuel plants and those under construction that are using less mature technologies are located in Europe, India and the United States, where policy frameworks to support deployment are in place.
A significant contribution from advanced biofuels in the transport sector is not anticipated by 2023. Cellulosic ethanol accounts for 60% of production within the novel advanced biofuels (e.g. cellulosic ethanol and thermochemically‑produced diesel) main case forecast, with the remainder from advanced biofuels for the diesel pool and aviation biofuels.
The accelerated case for novel advanced biofuels forecasts nearly 2.3 billion litres of production by 2023, almost 65% above the main case. The share of cellulosic ethanol increases to two-thirds of production in the accelerated case, with one-third from advanced biofuels for use within the diesel pool and aviation biofuels.