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About ASEAN Region:

  • ASEAN is a strong community like the European Union (EU) that has emerged consisting of ten member countries: Brunei Darussalam, Cambodia, Indonesia, Lao, Malaysia, Myanmar, Philippines, Singapore, Thailand and Vietnam; and known as the Association of Southeast Asian Nations (ASEAN).
  • The establishment of the ASEAN Economic Community (AEC) in 2015 is a major milestone in the regional economic integration agenda in ASEAN, offering opportunities in the form of a huge market of US$ 2.6 trillion and over 622 million people.
  • Most countries of this region are among the top producers of agricultural products such as rice, sugar, cane, palm oil, coconut and rubber.

Biofuel Market Overview:

  • Biofuel is an important source of energy in these countries and its use is still increasing. Most of the rural population of this region and small industries use it as their energy source.
  • ASEAN countries exhibit production growth, which, if sustained, would deliver the 2030 biofuel volumes required by the SDS (Sustained Development Scenario). It is estimated that production levels have to grow @10%/Annum to meet the SDS Demand by 2030.
  • Countries that are currently using notable amounts of biodiesel are Malaysia, Thailand and Viet Nam. Several ASEAN countries have biofuel blending mandates and produce modest quantities of biofuels.
    • Given the rapidly increasing transport fuel demand, policy support for transport biofuels in ASEAN countries is robust because domestic biofuel consumption is a means to raise energy security while ensuring demand for strategically important agricultural commodities.
    • In recent years, a few ASEAN countries have established mandates or targets for biofuel use, as well as corresponding promotion policies. These targets have ranged from modest to ambitious.
    • Bioethanol and biodiesel in the ASEAN region are supplied to its domestic and regional market as well as exported to other countries in Asia and Europe.

Biofuel Market Outlook:

  • The ASEAN demand for biofuel is growing rapidly, but at the same time demand outlook differs widely by country.
    • Bioethanol demand was topped by Indonesia from the early 2020s, followed by Thailand and Philippines. Similarly, biodiesel was also topped by Indonesia after early 2020s, followed by Thailand and Malaysia. The ambitious demand outlook is foreseen in ASEAN countries, especially in Indonesia.
  • ASEAN countries varies widely in biofuel feedstock resources and biofuel market size. For example, Indonesia and Malaysia, as the world’s largest palm oil producers (from which biodiesel can be produced), have huge potential for biodiesel production. However, bioethanol production in these two countries is relatively small.
    • On the other hand, Thailand has abundant bioethanol production potential and a relatively large domestic market, but the country’s potential for biodiesel production is limited (only a limited area in south Thailand has palm plantation).
    • Indonesia and Malaysia (biodiesel) are producing a significant quantity of biofuels. Other countries such as the Philippines (biodiesel), Thailand, and Vietnam (ethanol) also have been increasing their biofuel production, although the scale remains modest.
  •  Most countries have found it very difficult to meet their targets due to difficulties in expanding production as, most of the land is already being used, or is a forest, or may not be very productive.
  • By 2030, it is projected that both feedstock production and the share of biofuel in gasoline and diesel will increase, because of increased productivity and stronger biofuel mandates.
    • From 2020, Indonesia has rolled out a B30 biodiesel mandate, which requires diesel to contain 30% palm-based biofuel, up from 20%.
    • Malaysia’s biofuel mandate was also increased to 20%, from 10% previously. The implementation of the B30 in Indonesia and the B20 in Malaysia will translate to a 25% and 15% increase in biofuel demand, respectively, analysts said.

Biofuel Market Growth Drivers and Trends:

Most primary factors driving the global biofuels market are;

  • Sustainability (Reduction of fossil fuel consumption and CO2 emissions).
  • Demand Projection- Growing Biofuel demand in final energy consumption of the ASEAN region.
  • Supportive policies of ASEAN Countries to facilitate the technology learning and production scale-up to reduce costs.
  • Relevant policies include advanced biofuel quotas and financial de-risking measures, e.g. loan guarantees from development banks. These would be particularly effective in ASEAN countries, as they possess significant feedstock resources.

The huge scale of this potential growth in biofuel demand has, understandably, drawn a lot of attention. Biofuel producers and users worldwide are looking keenly on ASEAN countries and wish to understand how the growing market may impact on existing global trade flows.

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Challenges disrupting the market:

Though the ASEAN biofuel & biodiesel market has numerous growth drivers, market growth is curtailed by certain challenges;

  • Volatility in oil prices, barriers in retailing & distribution, development of biofuels, stringent rules and regulations & rise in competition among key players.
  •  Key factors like Political risk, logistics, sustainability, bankability and feedstock supply risk should be given due consideration by companies operating in this market.
  •  Another major challenge in the market is the higher production cost of biofuels as compared to conventional fuels-Needs of next-generation technologies.

However, the point remains that biofuels are a consistent alternative energy resource. With the availability of technology, disadvantages will be decreased, and the market very evidently has potential.

Biofuel Market Players Perspective:

Some of the key players operating in the biofuel market profiled in this AGR Knowledge report are   Bangchak Biofuel Co. Ltd, BH Petrol, CAROTECH BHD, Chevron, Patum Vegetable Oil Co. Ltd, PETRONAS, PETRON, Vance Bioenergy Sdn. Bhd.

Although the market has fewer or no innovations, the players in the market are actively involved to ply their hands-on others production processes and product portfolios.

To do so, they are participating with each other in various ways, like a new product launch, mergers, and tie-ups

  • BHPetrol has developed the revolutionary advanced fuel (Infiniti) to deliver maximum fuel performance with increased power and fuel economy.
  • In compliance with B10 blend mandate, Petron started offering B10 diesel at their service stations since February 2019. To meet the biodiesel required, Petron acquired Palm Oil Methyl Ester plant with 60,000 metric tonnes annual capacity in Lumut, Perak in March 2019.
  • Bangchack is developing B20 biodiesel for its logistics and transportation business customers, both in delivery trucks and passenger boat.
  • Chevron Thailand is in discussion with Energy Ministry to launch B20.

Biofuel Market Research Scope:

  • The base year of the study is 2019, with forecast done up to 2030. The study presents a thorough analysis of the competitive landscape, considering the market shares of the leading companies. These provide the key market participants with the necessary business intelligence and help them understand the future of the biofuel market.
  • The assessment includes the forecast, an overview of the competitive structure, market trends, market demands, market drivers, market challenges, and product analysis.

The market drivers and restraints have been evaluated to gauge their impact over the forecast period. The report further identifies the key opportunities for growth, while also detailing the key challenges and possible threats, and focus includes opportunity areas for biofuel market. 

Author – S Ashok
Associate Director Operations
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