Growth in North American Biofuels Market Due to Policy Initiatives

Frost & Sullivan's bio-fuels Financial Benchmarking and Analysis (FBA) service presents a financial outlook of the North American market of bio-fuels, highlighting major market and financial trends in select growth segments. The FBA focuses on two segments of the Europe bio-fuels market namely bio-diesel and bio-ethanol. This study presents a holistic view of the attractiveness of European bio-fuels market to the investment community by identifying the broad market growth and identifies the fundamentals behind the growth.

Market Overview

Energy policies aimed at reducing the dependency on oil are likely to be the key drivers for the North American biofuels market. On 18 December, 2007, U.S. President, George W. Bush, signed the Energy Independence and Security Act of 2007, which mandates an increase in the consumption of biofuels and improvement in vehicle fuel economy. Furthermore, in January of the same year, President Bush announced his ambitious 'twenty in ten' plan. This plan targets that by 2017, 20 percent of the energy consumed should be from renewable sources.

The other big advantages of biofuels are environmental support, agricultural support, and geopolitical support. The transport sector accounts for approximately 67 percent of all U.S. oil consumption. It also contributed to nearly one-third of the entire air pollution levels in 2006. "The Energy Information Administration estimates that imports account for more than 65 percent of crude oil supplies in the country, and oil imports are the largest constituent of the increasing trade deficit," notes the analyst of this research service. "The Renewable Fuels Association opines that bioethanol reduced oil imports by 228.2 million barrels of oil, valued at $16.50 billion in 2007."

Accelerated Research on Second-generation Biofuels

Second-generation biofuels are garnering much attention as they are expected to be more efficient, using algae, waste, straw, wood, and other forest-based inputs that can be found in abundance in the United States. Research on second (next)-generation biofuels is expected to accelerate because of increasing feedstock costs, resulting in pressure on the margins of the first-generation biofuel producers. Industry experts expect an improvement in feedstock technologies, because 80 percent of the cost is feedstock-related. They opine that jatropha and canola are promising feedstock in the short term, while algae to oil and cellulosic ethanol could be interesting feedstock in the long term. Advanced biofuel technologies could also provide a stepping stone to other areas such as renewably-produced hydrogen.

Overall, the North American biofuels market is fast-growing, with an expected compound annual growth rate (CAGR) of 13.2 percent from 2007 to 2012. "Among the market segments, the biodiesel segment was worth $1,050.0 million in 2007 and is expected to record a CAGR of 29.3 percent from 2007 to 2012," says the analyst. "On the other hand, the North American bioethanol market is expected to achieve a CAGR of 10.5 percent from 2007 to 2012."

TheBioenergySite News Desk

Sign up for our
regular news updates

Latest Bioenergy Industry News

•   Cooperation Agreements for Brazil and Canada
•   NTR in Algae Joint Venture
•   Symposium on Future of Biodiesel
•   Consumers Energy Wind Farm Plan
•   Commissioner at International Conference on Biofuels
•   Daewoo Logistics Biofuel Project for Madagascar
•   Biodiesel from Urban Waste
•   Wind Farm Plan for Brazil
•   Egypt Wants Brazilian know-how in Biofuels
•   Inland Empire Oilseeds Starts Biodiesel Production