Battered by virus and oil slump, biofuels fall out of favour

Hit by the coronavirus pandemic and asharp drop in oil prices, biofuel demand has declined for the first time intwo decades and may struggle to recover, according to experts, reports AFP.

“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 decline11.6 percent on 2019 levels, the first fall in 20 years, according to theInternational Energy Agency’s (IEA) annual report, published in earlyNovember.

Of all renewable energy sources, biofuel usage has decreased the most dueto the coronavirus outbreak, the group said.

While the cost of the equivalent of a barrel of biodiesel has remained ataround $70 throughout the pandemic, the price of crude oil plunged at thebeginning 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 since2018.

The plant-based substitutes for petrol and diesel still hold someadvantages, particularly in terms of the environment, as they emit 50 percentfewer greenhouse gas emissions than their fossil fuel equivalents.

“Biofuels have their place, they are part of the environmental solution,”said Jean-PhillipePuig, chief executive of the Avril group, which derivesnearly a third of its turnover from biofuels.

However, in addition to the damaging oil prices, the industry is stillreliant on politicians and whether they decide to raise the proportion ofbiofuel that can be mixed with conventional fuels and sold at the pump.

Another issue is that the first generation of biofuels made from sugarbeet, wheat and corn are taking large quantities of staples out of the foodsystems of many countries.

The industry is also threatened by the development of the electric car, andin the longer term hydrogen engines.

Guy Maisonnier, an expert from the French Institute of Petroleum (IFPEnergies nouvelles) research group, has said the industry should focus onaviation because it “doesn’t have as many alternative solutions” as roadtransport.

Sustainable biofuels “constitute a strategic lever for the short andmedium-term reduction of net emissions from the aviation sector, which hasfew energy alternatives,” according to the French Ministry of Ecology.

But France’s ambitions, despite being the world’s fourth-largest biofuelproducer, remain modest, with an aim to substitute 2.0 percent of aviationfossil fuel kerosene by 2025 and 5.0 percent by 2030.

Biofuels represented only 0.01 percent of the fuels consumed by the sectorin 2019, despite being identified as a priority by airlines in their long-term objectives.

Oil majors are also tackling the subject, with a consortium includingFrench giant Total launching the BioTfueL project aimed at producing usable“biokerosene” from agricultural waste by 2025.