the future of biodiesel in uncertain times: outlook on biodiesel & vegetable oils for 2010 &...

POC Conference, March 8th-10th 2009

Developed ByFrost & Sullivan Consulting Team

Frost & Sullivanwww.frost.com

The Future of Biodiesel in Uncertain TImes

Outlook Biodiesel & Vegetable Oils for 2010 & Beyond

2Confidential to Frost & Sullivan

Market will continue to look for ways to grow especially bioethanol – energy security/ politics will be a key drivers behind this

Frost & Sullivan estimates

Millions of Litres

BIOETHANOL

120

40

20

60

120

BIODIESEL

2000

2000 2010 2020

20202010


Current global situation

Frost & Sullivan estimates

20

60

120

• Rough year in US• Biodiesel at 2006 levels

• 180 plants – 15% capacity utilization• $1 Tax credit gone since end 2009

• How many of the plants are in operation in Malaysia and

Indonesia?

• Had a good 2008 (7.7 M MT) – protectionism played a role.

• 276 plants, 20 M MT capacity• Argentina produced 880 million

litres in 2010• Brazil 1.8 Mn Tonnes, 20% blend by 2015 in major cities


Current global situation – interest is waning – ethanol example

Source : Biofuels Digest

•Ethanol - down 70 percent from a high point realized in 2006, and showing a decline in 2009 despite a slight surge in the second half of the year.


Current global situation – interest is waning – biodiesel example


•Biodiesel is down nearly 80 percent since a high realized in 2005, and interest in the search term declined throughout the year.


History in perspective 2007-2008 : a confluence of several things at the same time pushed palm prices, and few had to do with palm itself

High Crude Oil Price Bad Weather

Commodity Price Shift Biofuels

Extra Demand

Subprime

HIGH PRICES!


… so what of biodiesel/ biuofuels and their role when profits are so low, with such high vegetable oil prices?

Source : FC Stone


What else have we learnt? – biofuels are a political market, and this can be both good and bad.


What else have we learnt? – biofuels are here to stay – cellulosic ethanol and biodiesel is key. When will it be commercial scale?

Biofuel Digest reports that two producers have been able to reduce the cost of production of cellulosic ethanol and algal biodiesel below USD 2.00 per gallon, or 50 cents per litre.

•Cellulosic ethanol

•In Denmark, Novozymes has announced that productivity increases with its new Cellic CTec2 enzymes have brought enzyme costs down to 50 US cents per gallon, and will enable the biofuel industry to produce cellulosic ethanol at a price below USD 2.00 per gallon for the initial commercial-scale plants that are scheduled to be in operation in 2011. This cost is on par with gasoline and conventional ethanol at the current US market prices…….


What else have we learnt? – clear interest still in biofuels as a whole

•Interest in “biofuels” peaked in the late spring of 2008 and dropped by around 70 percent by the end of 2009, but recovered with a spike in early 2010 around the time of the announcements of DOE’s Integrated Bioenergy grant recipients.



What else have we learnt? – algae is main area of interest from a feedstock point of view, jatropha still garners some attention

Source : Biofuels Digest Source : Biofuels Digest

• Interest in “Algae biofuels” peaked in the summer of 2008, but after declining almost half by the summer of 2009, experienced a surge of interest in the “Summer of algae” that brought it nearly back to pre-global financial crisis highs.

• Jatropha peaked in the summer of 2008, after steady growth 2004-2008, and has declined about 60 percent from that high point, including a steady decline throughout 2009.


Outlook : “choppy” history will repeat itself again, and prices are expected to rise esp. in 2011/2012 though watch out for Q3 2010...

High Crude Oil Price Bad Weather

Commodity Price Shift Biofuels

Extra Demand

Subprime

HIGH PRICES!


Outlook : crude oil prices starting to inch back up...


…our outlook for 2010, esp. 2011/2012

We could get to back 3500 RM quicker than we think….

Written 1 day ago….


…our outlook for 2010, and esp. 2011/2012

We will likely see super spikes again…………….

Written 1 day ago….


What we also said at the end of the POC conference, 2007… is still valid!

“We should not be debating whether the average for the year will be above or below 2100 RM, ……. it is going to much higher”.


…but more importantly what of 5, 10, 20, 50 years down the line? Can oils keep up with these requirements? Food for thought….!

Growing population

Crops Competing for Land

Energy needs

Water stress

1 2

3 4


In conclusion : Biofuels are here to stay BUT.......

1. Need consistent and co-ordinated Government support

2. Low raw material prices

3. High energy prices

4. “New” feedstocks

5. Advances in technology

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