Tax Credits, Government-Mandated Blend Levels to Support Rise in US Biofuel Demand

Recovery from depressed pandemic levels in 2020 to account for majority of gains

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Sep 29, 2021, 13:49 ET

CLEVELAND, Sept. 29, 2021 /PRNewswire/ -- US demand for motor vehicle biofuels is forecast to increase 3.4% yearly in volume terms through 2025, according to Motor Vehicle Biofuels: United States, a report recently released by Freedonia Focus Reports. Gains will reflect recovery from a 2020 base depressed by the COVID-19 pandemic. For comparison, demand is expected to see annual gains of less than 1.0% between 2019 and 2025. Apart from recovering from the pandemic, advances will stem from growth in the biodiesel and other biofuels segments, spurred by tax credits and government-mandated blend levels for advanced fuels in the US fuel supply. Nonetheless, increases will be limited by some of the segments reaching the 'blendwall', a percentage of biofuels inside fuel that cannot be exceeded due to motor vehicle specifications and refiner/blender unwillingness to mix proportions of biofuels above the Renewable Fuel Standard (RFS) mandate into their fuel supplies. In 2021, demand for motor vehicle biofuels is expected to rise 7.9% above 2020 levels. As vehicle miles traveled and freight volumes recover from 2020 lows, more fuel will be consumed. Faster gains will be curtailed by increasing penetration of alternative fuel vehicles.

US production of motor vehicle biofuels in volume terms is forecast to see annual increases of 3.5% through 2025. This trend will reflect moderate growth in domestic demand for biofuel, largely in response to government mandates for higher biofuel volumes and a strengthening export market. While the US will remain a leading supplier of biofuel to the world market – supported by well-developed production capacity and abundant, inexpensive feedstock – faster production gains will be restrained by moderated growth in demand.

These and other key insights are featured in Motor Vehicle Biofuels: United States. This report forecasts to 2021 and 2025 US motor vehicle biofuels demand and production in gallons. Total demand and production are segmented by product in terms of:

fuel ethanol
biodiesel
other biofuels, such as renewable diesel

To illustrate historical trends, total demand, total production, and the various segments are provided in annual series from 2010 to 2020.

This report focuses on biofuels used in the motor vehicle market. With the exception of renewable jet fuel – a small amount of which is included in the Other Biofuels aggregate – biofuels for other markets, such as heating, are excluded. Biogas – a methane-rich fuel derived from the breakdown of organic matter – is also excluded. Figures exclude the fossil fuel portion of blended fuels.

In this report, the term "fuel ethanol" denotes ethanol produced from biological raw materials (i.e., biomass). Synthetic ethanol, such as that derived from the direct hydration of ethane, is excluded from the scope of this report. Other common fuels and chemicals bear the "bio-" prefix when derived from biomass and used either directly or as components of motor vehicle fuel.

More information about the report is available at:
https://www.freedoniafocusreports.com/Motor-Vehicle-Biofuels-United-States-FF45035/?progid=91541

About Freedonia Focus Reports
Each month, The Freedonia Group – a division of MarketResearch.com – publishes over 20 new or updated Freedonia Focus Reports, providing fresh, unbiased analysis on a wide variety of markets and industries. Published in 20-30 pages, Focus Report coverage ranges from raw materials to finished manufactured goods and related services such as freight and construction. Additional Energy & Resources reports can be purchased at Freedonia Focus Reports or MarketResearch.com.

Analysis is intended to guide the busy reader through pertinent topics in rapid succession, including: