Title: Biofuels: Current Markets, Policies and the Future

Biography:

Dr. Timilsina is a Senior Research Economist at the Development Research Group of the World Bank, Washington, DC. He has more than 20 years’ experience across a board range of energy and climate change economics and policies at the international level. His key expertise includes biofuels, climate change policies, electricity economics and energy sector as well as general equilibrium modeling for policy analysis. Prior to joining the Bank, Dr. Timilsina was a Senior Research Director at the Canadian Energy Research Institute, Calgary, Canada. At present, he is leading a number of studies including the economics of renewable energy including biofuels, carbon pricing, and infrastructure and economic growth.

Abstract

During the second half of 2000, the market of liquid biofuels (ethanol and biodiesel) increased rapidly due to policy drives (Figure 1). The production of ethanol increased by 2.6 times during that period, whereas the production of biodiesel increased by 4.5 times. This rapid increase, however, paused in the next two years due to the controversy created by a suspicion that biofuels might have fueled the 2007-08 global food crisis. The growth of biofuels started again in 2013 but at a slower rate. It is still growing, it grew by 7% in 2018. The revival biofuels growth occurred despite the several adverse factors such as fuel vs. food controversy, indirect land-use change debate, drops in oil prices.
Government policies are the major drivers for the continuous growth of biofuels. Policy instruments include blending mandates, tax exemption or rebate, direct investment grants. More than 56 countries around the world have introduced explicit blending mandates for biofuels (existing or planned). Some countries (e.g. Costa Rica, Brazil, India, Indonesia, Paraguay and Zimbabwe) have mandates to blend biofuels more than 20% by volume.
Despite many obstacles and food vs. fuel controversy, the production of biofuels has increased over time. The aviation sector is also looking for using biofuels. Although the recent production growth (after 2010) is not as high as that of the early 2000s, the growth is expected to be maintained in the future due to continued use in the existing mode of transportation (i.e., road transportation) and emerging applications in the aviation sector.
This presentation will present the evolution of global biofuels and bioenergy (biomass for heat and electricity production) markets. It will discuss the drivers of the global growth of biofuels and bioenergy production and key challenge faced by the markets around the world. It will then highlight policy instruments and market conditions for further expansion of biofuels and bioenergy.