IEA: Uneven biofuels recovery as high prices and lower GDP undermine growth prospects

news item image
Biofuel demand recovered in 2021 from Covid lows, to near 2019 levels, a new International Energy Agency (IEA) report revealed.
However, this year the IEA expect higher prices for oil and biofuels, combined with lower GDP expectations, to slow demand growth by 20% compared to our previous forecast. It said growth in transportation fuels, albeit at more modest levels, and strengthening biofuel policies still drive year-on-year biofuel demand higher by 5% in 2022 and 3% in 2023.
Biofuel demand in 2021 reached 155,400 million litres, returning to near 2019 levels. Demand rose 8,700 million litres year-on-year, which is similar to the organisation’s Renewables 2021 estimate from December 2021. The recovery across fuel types was uneven, however.
Ethanol demand rose 6% year-on-year in 2021 but remained 7% below 2019 levels. By contrast, renewable diesel use expanded by around 70% from 2019 and biodiesel demand rose 0.2% from 2019.
The IEA said Russia’s invasion of Ukraine was sending shocks through energy and agriculture markets, worsening already high prices.
As a result, biofuel demand growth is now forecast to slow by 20% in 2022, equivalent to 2,200 million litres, compared with our previous forecast of a higher increase of 11,000 million litres.
To read the full report go to iea.org/reports/renewable-energy-market-update-may-2022