Europe Biofuel Market - Growth, Trends, Covid-19 Impact, and Forecasts (2023 - 2028)

Europe Biofuel Market - Growth, Trends, Covid-19 Impact, and Forecasts (2023 - 2028)

The Europe biofuel market is expected to register a CAGR of more than 5.5% during the forecast period of 2022-2027. The COVID-19 pandemic negatively affected the growth of Europe's biofuel market. The sharp decline in the price of ethanol reduced ethanol producers' profit margin in 2020. Moreover, reductions in economic activities resulting from social distancing adversely affected the demand for methanol, butanol, and gasoline in European countries. 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. However, the initial cost of providing energy through biofuel is much higher than fossil fuels, which may act as a restraint for the market.

Biodiesel is likely to dominate the Europe biofuel market due 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.

Countries such as Germany, United Kingdom, the Netherlands, and Sweden are encouraging biodiesel blending to obtain pure biodiesel, which can be used as a source of fuel in diesel engines. This is likely to provide ample opportunities for the biofuel market in the coming future.

Germany has been the largest market for biofuel for the last three years, and it is the largest consumer of biofuel in the EU.

Biodiesel is a clean-burning alternative fuel produced from domestic and renewable resources. This biofuel is made from vegetable oils, animal fats, or recycled greases. Biodiesel is non-toxic and can be the source of fuel for diesel-powered vehicles.

Europe is the most significant producer of biofuels in the form of biodiesel and ethanol. In 2020, the region produced 295 million barrels (mbbl) of biofuel, which was higher compared to 260 mbbl of biofuel in 2015.

Moreover, due to limited fuel switching, biodiesel is the primary fuel used in heavy-duty vehicles, agriculture, construction, and mining, and other heavy industries, with improving engine efficiency, offsetting the increased demand tied to economic growth.

In September 2021, Royal Dutch Shell announced a final investment decision (FID) to build an 820,000-ton/year biofuel facility at the Shell Energy and Chemicals Park in Rotterdam, Netherlands. The facility is expected to start production in 2024 and will be among Europe's biggest in producing sustainable aviation fuel (SAF) and renewable diesel made from waste.

Therefore, with such developments, biodiesel is expected to propel the market during the forecast period.

Germany is one of the largest producers of biofuel across the world. The country is encouraging the usage of biofuel in the road transportation sector to reduce greenhouse gas emissions.

In 2020, the country produced 146.3 petajoules of biofuel, which is equivalent to 4% of the world's biofuel production.

Germany's Union for the Promotion of Oil and Protein Plants (UFOP) estimated German consumption of biodiesel and hydrotreated vegetable oil (HVO) to be 780.5 million gallons for 2020, an increase of approximately 90 million gallons over 2019. Moreover, in 2020, the country consumed 63 mbbl of biofuel, which is higher compared to the consumption of 52 mbbl in 2019.

In the first half of 2021, Germany exported around 933,117 ton of biodiesel. The main consumers of German biodiesel were EU countries (88%), headed by the Netherlands, Poland, and Belgium.

In May 2021, the German government introduced a new biofuel law. As per the new law, obligated oil companies will have to significantly increase the use of biodiesel, bioethanol, and biomethane in the transportation sector to reduce carbon emissions.

This is likely to boost the biofuel market in the country, which is expected to support the growth of the Europe biofuel 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 SA, Biomethanol Chemie Nederland BV, Beta Renewables SpA, Borregaard ASA, and others.

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