Anticipating Asia

Asian biofuels consumption expected to grow substantially
By Kris Bevill | May 10, 2012

Conditions are ripe for biofuels demand and production to boom in Asia over the next few years, as steady growth in countries such as China, India and Japan will prompt an “astronomical” rise in fuel demand, says Tammy Klein, assistant vice president of global consulting firm Hart Energy.  Ethanol and biodiesel demand in Asia for 2011 totaled 1.6 billion gallons, but by 2015, Hart Energy analysts expect that number to increase to nearly 2.6 billion gallons. Ethanol demand alone is expected to increase by 500 million gallons during that time frame.

For U.S. technology developers, the region offers an abundance of feedstocks such as agricultural wastes and sugarcane, but those seeking to prove their technologies will also need to confront a host of issues that could complicate the process. Many countries in Asia are still developing, and governments change hands every few years, so long-term regulatory support is hard to come by, according to Huiming Li, Asia director at Hart Energy, who also points out that there are no policies yet that compare to the U.S. renewable fuel standard. Policies that are in place are often created to benefit local producers, so U.S. companies would be well-served to form joint ventures with companies in targeted countries.

Lack of infrastructure is another major issue that needs to be taken into consideration. “It is a major, major issue that I do not think anybody in this space has paid due attention to, whether they be developing next-generation biofuels projects or first-generation biofuels projects,” Klein says. Unlike the U.S., where consumer access to fuels is the largest infrastructure issue, developers looking to Asia may also have to factor in such basic issues as adequate roads and electricity availability at the plant site. Still, the benefits of developing a project in Asia could outweigh the disadvantages if the economics of the overall project are solid, Li says.

Like other regions of the world, countries in Asia are eager to advance next-generation biofuels production. China and Japan have the largest gasoline consumption in the region and are leading the push for cellulosic ethanol, but companies there are facing the same technological issues with scale-up as elsewhere and are looking to the U.S. for any available guidance, Li says. Because China is one of the largest agricultural countries in the world, agricultural wastes are particularly attractive potential feedstocks. “They are already using biomass for other applications like biogas combustion purposes, but they are also hoping to make use of the resources to produce cellulosic ethanol,” she says. Li expects China, India and Southeast Asia to be the main investment areas in the region because of the availability of agricultural waste and other energy crops.

Hart Energy plans to release updated biofuels demand numbers for Asia in July. For now, ethanol development in that region is anybody’s game, Li says. Klein agrees and says that despite its challenges, Asia offers a lot of potential for expansion. “Conditions are ripe to do projects there,” she says. —Kris Bevill