LONDON, Nov 27, 2020 (BSS/AFP) – Hit by the coronavirus pandemic and a
sharp drop in oil prices, biofuel demand has declined for the first time in
two decades and may struggle to recover, according to experts.
“The collapse of oil prices has had a very negative impact on biofuels,”
rendering them uncompetitive, Olivier Lemesle, director of studies at Xerfi,
told AFP.
The production of biofuels for transport in 2020 is expected to decline
11.6 percent on 2019 levels, the first fall in 20 years, according to the
International Energy Agency’s (IEA) annual report, published in early
November.
Of all renewable energy sources, biofuel usage has decreased the most due
to the coronavirus outbreak, the group said.
While the cost of the equivalent of a barrel of biodiesel has remained at
around $70 throughout the pandemic, the price of crude oil plunged at the
beginning of the year when drastic coronavirus lockdown measures cut demand.
The price of a Brent oil barrel has since recovered but has remained below
$50 since March 6, when it fell below the threshold for the first time since
2018.
– Environmental solution –
The plant-based substitutes for petrol and diesel still hold some
advantages, particularly in terms of the environment, as they emit 50 percent
fewer greenhouse gas emissions than their fossil fuel equivalents.
“Biofuels have their place, they are part of the environmental solution,”
said Jean-Phillipe Puig, chief executive of the Avril group, which derives
nearly a third of its turnover from biofuels.
However, in addition to the damaging oil prices, the industry is still
reliant on politicians and whether they decide to raise the proportion of
biofuel that can be mixed with conventional fuels and sold at the pump.
Another issue is that the first generation of biofuels made from sugar
beet, wheat and corn are taking large quantities of staples out of the food
systems of many countries.
The industry is also threatened by the development of the electric car, and
in the longer term hydrogen engines.
– High hopes –
Guy Maisonnier, an expert from the French Institute of Petroleum (IFP
Energies nouvelles) research group, has said the industry should focus on
aviation because it “doesn’t have as many alternative solutions” as road
transport.
Sustainable biofuels “constitute a strategic lever for the short and
medium-term reduction of net emissions from the aviation sector, which has
few energy alternatives,” according to the French Ministry of Ecology.
But France’s ambitions, despite being the world’s fourth-largest biofuel
producer, remain modest, with an aim to substitute 2.0 percent of aviation
fossil fuel kerosene by 2025 and 5.0 percent by 2030.
Biofuels represented only 0.01 percent of the fuels consumed by the sector
in 2019, despite being identified as a priority by airlines in their long-
term objectives.
Oil majors are also tackling the subject, with a consortium including
French giant Total launching the BioTfueL project aimed at producing usable
“biokerosene” from agricultural waste by 2025.