WASHINGTON, June 7, 2023
/PRNewswire/ -- Animal fats and used cooking oil are increasingly
joining the likes of lithium, cobalt and copper as energy
transitional materials where supply constraints are of growing
concern, according to a new analysis of trade flows by S&P
Global Commodity Insights Agribusiness Consulting group.
The analysis, entitled Biofuel Feedstock Trade Flows: First
Come, First Served? says that ambitious policies in
North America and Europe for the development of renewable diesel
production have led to a surge in international trade of these
low-carbon biofuel feedstocks—favored for their lower carbon
intensity and their non-competing use with arable lands.
World biofuel use of all feedstocks increased by 100% between
2015 and 2022 while production increased by only 25%. This pattern
is more acute for low-carbon feedstocks, the analysis says.
Low-carbon biofuel feedstocks accounted for 20% of global
feedstock (vegetable oils and low carbon feedstocks) trade flows in
2022, up from barely 10% in 2015. In less than 5 years, the
biofuels industry overtook the feed industry to become the dominant
user of these materials in the United
States, Canada and
Europe. The United States began importing significant
volumes of used cooking oil from China for the first time in December 2022. China exported 130 thousand metric tons to
the United States in the first
quarter of 2023, making it the top exporter to the country so far
"Biofuel feedstocks have emerged as major global
commodities and the race to secure ample supply is a key
concern of biofuels producers," said Juan
Sacoto, Executive Director – Agribusiness Consulting,
S&P Global Commodity Insights. "Animal fats and used
cooking oil are to them what lithium, cobalt and copper are to
Low-carbon biofuel feedstocks are waste products, meaning that
the production potential is limited with a low elasticity to
growing biofuel demand. As a result, the biofuel industry has
started turning to the feedstock import market to make up for the
shortage of domestic supply.
Latin America and Southeast Asia, where meat and vegetable oil
consumption are expected to grow at a robust pace for decades, are
poised to emerge as strategic suppliers. The collection of animal
fats and used cooking oil in these regions will be critical to
serve North American and European countries where the production of
these feedstocks has plateaued, the analysis says.
The analysis expects that efforts to bolster international trade
will continue to intensify in the coming years as renewable diesel
production is expected to boom by 2030. Somewhat later, the
expected growth of sustainable aviation fuel—crucial to
decarbonization of that sector—will bring additional pressure to
feedstock procurement and reallocation.
"The current tightening of feedstock markets could be just a
prelude as increased use of sustainable aviation fuel that is
expected post-2030 ushers in the biofuel industry's '3rd wave,'"
said Jean-Benoît Deloron, Senior Consultant – Agribusiness
Consulting, S&P Global Commodity Insights.
"Airline companies are actively developing their procurement
strategies, realizing that much of their long-term carbon reduction
strategies hinge on ample supply of low-carbon feedstocks. The
chase is on, and it is here to stay."
As the race to secure feedstocks gathers speed, energy companies
in North America and Europe are securing feedstocks through
integration and joint ventures with domestic agricultural
companies. International vertical integration is likely to come
next, the analysis says.
Elsewhere, integration is developing between the seed industry
and biofuel producers with innovative partnerships based on the
development of new "energy" crops that feature high oilseed yield
or oil content, low carbon intensity, the ability to grow between
two other crops rotation, and that are not considered food
"Demand for low-carbon feedstocks has never been this high, with
major implications for road transportation as well as shipping and
aviation sectors," Deloron said. "The impacts—not only to
agriculture and biofuel markets, but also the food, animal feed and
oleochemical industries—are only beginning to be understood."
Jeff Marn +1-202-463-8213,
Global/EMEA: Paul Sandell + 44 (0)7816 180039,
Americas: Kathleen Tanzy + 1
Asia: Melissa Tan
+ 65-6597-6241, email@example.com
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