IEA: biofuel feedstock supply crunch within five years
In its main case, demand for vegetable oil, waste and residue oils and fats increases 56% to 79 million tonnes over the forecast period.
Fuels made from wastes and residues are in particularly high demand because they satisfy GHG and feedstock policy objectives in the United States and Europe, the agency said. In fact, wastes and residues are expected to be used for 13% of biofuel production in 2027, up from 9% in 2021.
However, demand is approaching the supply limits of the most-used wastes and residues in its latest analysis.
Nevertheless, markets are dynamic, it added. High prices are a signal to seek out new supplies, which is prompting the development of government programmes and industry innovation to help avoid the crunch.
Compared with wastes and residues, the sugars and starches used to produce ethanol are under less pressure.
Although biofuel demand for these feedstocks is growing, sugar cane and maize production expands as well, keep the share dedicated to biofuel production nearly flat over the forecast.
Consumption of vegetable oil for biofuel production is expected to increase 46% to 54 million tonnes over 2022-2027, raising the share of vegetable oil production directed to meeting growing biofuel demand from 17% to 23%. In the US, this increase in demand is already reducing soybean oil export estimates and supporting higher prices.
Used cooking oil and animal fats are unlikely to provide relief, as they are in even higher demand because they offer lower GHG emissions intensity and meet EU feedstock requirements.
In fact, the use of used cooking oil and animal fats nearly exhausts 100% of estimated supplies over the forecast period. Even when a broader range of wastes (such as palm oil mill effluent, tall oil and other agribusiness waste oils) is considered, demand still swells to nearly 65% of global supply.