Economic Growth Will Drive Biofuel Industry

Global demand for food and alternative fuel source - particularly in Asia - will stimulate new era say experts.

Mike Wilson

Growing demand for food to feed a more prosperous world population, and the quest for alternative fuel sources to supply expanding energy needs, will fuel the development of a new era in bioenergy, say experts gathered in St. Louis this week to discuss renewable fuels. And the key area to watch is Asia. Patricia Woertz, CEO, Archer Daniels Midland “Economic growth is driving these developments,” notes Patricia Woertz, CEO of Archer Daniels Midland, a leading supplier of ethanol. “Global real GDP growth is expected to average 3.8% annually through 2030. But it is economic growth in Asia projected to average 5.5% per year that is shaping world scenarios - in particular China, with a 6% GDP followed by India at 5.4%.” Woertz and other blue-ribbon speakers addressed an audience of 1,300 at the Advancing Renewable Energy Conference, jointly sponsored by U.S. Department of Energy and U.S. Department of Agriculture. She says incomes are rising in Asia and societal change is following a familiar path: people migrating from rural to urban areas and improving their diets along with incomes. And energy consumption is rising. “China is already the second largest oil importer in the world and represents over 30% of the annual increase in oil consumption,” she says. “Most of the growth is happening in the transportation sector. With car sales topping 5 million last year, China is already the world’s third largest car market after the U.S. and japan, and some auto industry analysts expect China to surpass Japan in the next two or three years.” Long term projections While these trends could be upset by geopolitical turmoil or economic recession, there’s no doubt long-term growth in Asia will reverberate elsewhere. “By the middle of this century demand for food will double,” says Woertz. “Also by mid-century, energy from traditional sources will be insufficient to meet projected global demand. Traditional refining capacity, in both the U.S. and globally, will also be insufficient to meet motor fuel demand.” To meet projected demand for fuel through 2015, the world would have to add capacity of 9.5 million barrels a day - the equivalent of four new refineries as I as the largest refineries in the world - every year for nine years. However, the United States has not built one new refinery in the last 30 years. That’s why alternative fuels are needed. But how big should that market become? “The answer to that question will be significantly influenced by the desire for energy security, for strong ag economies and for environmental improvement,” says Woertz. “These desires are already shaping world energy policies and driving market growth.” Woertz cautions anyone who may discount the potential expansion opportunities for ethanol or biodiesel based on current technologies. Those will change and get better, she predicts. She compares biofuels to the automotive industry at the start of the 20th century, or the microchip industry in the 1980s. “They were budding industries with enormous potential over an undetermined timeframe,” she concludes. “And within these industries, technological innovation drove change and with this change came significant improvements in product quality, in cost to consumers, and in the quality of life.”