The firm’s “Strategic Analysis of the Global Automotive Biofuels Market” report says that enforcement of higher biofuel percentage blend mandates will spur use of solutions higher than the standard E10 ethanol blend, adding to biofuel demand.

The report finds that the market generated revenues of $94.61bn in 2013 and estimates this to reach $149.25bn in 2018. The study covers automotive biodiesel and ethanol.

Frost & Sullivan adds that the United States remains the primary producer and consumer of automotive ethanol, followed byBrazil and China. However, higher vehicle fuel efficiency has reduced gasoline consumption inthe United States and created an ethanol blend wall, restraining the market from reaching its potential. Nevertheless, the country will provide ample growth opportunities for cellulosic ethanol manufacturers.

‘The biodiesel industry is likely to stay strong in North America as well as in Latin America, although Europe will continue to be the primary consumer and producer of biodiesel,’ said Frost & Sullivan chemicals, materials and food research analyst Shray Sharma. ‘Asia-Pacific will be the fastest-growing market for both automotive ethanol and biodiesel.’

Access to competitively priced feedstock will be crucial for biofuel manufacturers to sustain profits across regions in the midst of raw material price fluctuations. Hence, they need to scout for backward integration opportunities. Biodiesel producers must also look for low-cost feedstock options such as animal fat and recycled oil to fight rising production costs.

Another challenge for vendors is the lack of awareness among end users, many of whom are concerned that biofuels may damage vehicle engines. It is estimated that fewer than 10 percent of the total 10.6 million flex-fuel vehicles on the road inthe United States use the higher E85 ethanol blend. Price subsidies for fossil fuels too remove the financial incentive for a consumer to use biofuels.

‘Manufacturers must expand end-user awareness through branding and marketing campaigns for improved blended fuels,’ suggested Sharma. ‘Ensuring proximity to customers and establishing partnerships with efficient distribution and retail networks will also be competitive factors for companies seeking to expand export portfolios in the global automotive biofuels market.’

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