Europe biofuel market is expected to rise at a CAGR of more than 4% during 2020 - 2025. Factors such as concerns about the environment, peak oil, energy security, fuel diversity, and sustainability are likely to drive the biofuel market in the region. Moreover, in 2019, the European Union (EU) and Climate Change Package (CCP) with Fuel Quality Directive (FQD) announced the mandatory goals for 2020 is a 20% binding target for renewable energy in the overall energy mix of the EU and a ten percent renewable energy blending target (energy basis) for the transport sector. This, in turn, the above factors are likely to propel the European biofuel market during the forecast period. However, the initial cost of providing energy through biofuel is much higher than fossil fuels, which may act as a restraint on the market.
- Biodiesel is likely to dominate the European biofuel market owing to the massive production of biodiesel in the region. Biodiesel is also the essential biofuel in the EU and, on an energy basis, represents about 75% of the total transport biofuels market.
- In 2019, the European Union (EU) announced the mandatory goal for group countries is a ten percent renewable energy blending target for the transport sector. The region is witnessing significant growth in the investment for the infrastructure of biofuels and related markets. This, in turn, the above factors are likely to provide ample opportunity for the Biofuel market in the coming future.
- Germany is expected to be the largest market for the biofuel market for the last three years, and it is the largest consumer of biofuel in the EU.
Key Market Trends
Biodiesel Is Likely To Dominate The Market
- Europe is the most significant consumer of biofuels in the form of biodiesels and ethanol. In 2019, total biofuels blending with fossil fuels were reached 7.3 percent. In Europe, biodiesel is used with mixing 20% of total fossil fuel
- Moreover, due to limited fuel switching, biodiesel continues to be the primary fuels for heavy-duty vehicles used on the road, in agriculture, construction, and mining, and by other heavy industries with improving engine efficiency, offsetting increased demand tied to economic growth.
- In the Netherlands, consumption of biofuels increases with higher mandates, but the leading share of the combined mandate (biodiesel and bioethanol) is filled with double-counting, waste-based biodiesel.
- Besides, the United Kingdom witness gradual reduction of the cap on crop-based biofuels, which means that waste biodiesel is likely preferred above domestically produced wheat and sugar beet ethanol or any other biofuels.
- Furthermore, According to European Biodiesel Board (EBB), EU biodiesel consumption is expected to increase3 percent as a result of mandate increases in several MSs (Croatia, Finland, Hungary, Ireland, Italy, the Netherlands, Poland, Slovakia, and the United Kingdom) and a rebound in the Czech Republic.
- Therefore, with the increase in the demand for biodiesels, the market of biofuels is expected to propel during the forecast period 2019-2025.
Germany to Dominate the Market
- Germany is the largest consumer of ethanol and the second largest of biodiesels. In 2018, German consumption increased by three percent, mostly as a result of higher bioethanol blending, while ETBE use was lower. Germany is also an exporter of biodiesels but an importer of ethanol, mainly from Argentina and Indonesia.
- In 2018, German bioethanol production decreased by nine percent and amounted to 776 million liters. The German Bioethanol Industry Association attributes the decline to the drought in 2018, which increased feedstock costs substantially. Therefore, the government of Germany invested extra funds for the ethanol industry to overcome the situation.
- Moreover, the country is the third-largest producer of wood pellets in Europe. As the Germany government does not support wood pellets used in the generation of electricity, it can be used to produce biofuels in the country.
- This, in turn, factor mention above, is likely to boost the biofuel market in the country, which is expected to support the growth of the European biofuels market during the forecast period.
The Europe biofuel market is fragmented. Some of the key players in this market include, UPM-Kymmene Oyj, Green Fuel Nordic Oy, Svenska Cellulosa AB, Preem AB, SunPine AB, Galp Energia, SGPS, S.A., Biomethanol Chemie Nederland B.V., Beta Renewables S.p.A., Borregaard ASA and others.
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