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Sunday, June 08, 2008

North American Biofuels Market Faces Best and Worst of Times

North American Biofuels Market Faces Best and Worst of Times


PALO ALTO, Calif.---Biofuels enjoy many inherent advantages such as regulatory, infrastructural, environmental, geopolitical, and agricultural support. However, their negative association with escalating food prices remains a major concern. To overcome this challenge, the North American market has adopted strategies such as improving yield, tie-ups with the developing world, and focus on alternative feedstock. Moreover, given the high feedstock prices for first-generation biofuels, next-generation biofuels have garnered increased attention and will likely be commercialized after 2012.


New analysis from Frost & Sullivan (http://www.financialservices.frost.com), North American Biofuels Market: Investment Analysis, reveals that the market earned revenues of $9.98 billion in 2007 and expects this to reach $18.52 billion in 2012.
If you are interested in a virtual brochure, which provides manufacturers, end users, and other industry participants with an overview of the investment analysis and growth opportunities in the North American Biofuels Market, then send an e-mail to Johanna Haynes, Corporate Communications, at johanna.haynes@frost.com, with your full name, company name, title, telephone number, company e-mail address, company website, city, state, and country. Upon receipt of the above information, an overview will be sent to you by e-mail.
“Regulatory support coupled with the need to address the geopolitical risk posed by relying on the turbulent Middle East and Venezuela is driving the growth of the North American biofuels market,” notes Frost & Sullivan Research Analyst Shrikanth S. “Furthermore, there is a strong venture capital investment climate in the next-generation biofuels, which are expected to be more efficient, using algae, waste, straw, wood, and other forest-based inputs that can be found in abundance in the United States.”
The expanded Renewable Fuel Standard, Volumetric 'Blender' Tax Credit, Small Agri-biodiesel Producer Tax Credit, and Alternative Fuel Refueling Infrastructure Tax Credit provide the necessary regulatory support for the North American biofuels industry. Currently, the dependence on foreign oil continues to increase, and costs approximately $1 billion per day. Oil from Venezuela and the Persian Gulf accounted for 26.3 percent of the total imports in 2007. By 2012, biofuels are expected to account for 15.20 billion gallons of the total fuel source in the United States, up from the estimated 9.00 billion gallons in 2008.
However, the debate on food versus fuel remains a major challenge for the biofuel industry. Many respected organizations and media outlets believe that the focus on biofuels increases food prices, especially that of corn and soybean. The volatility of feedstock prices and their unpredictable profit margins has diminished the attractiveness for the market participants and the institutional investors for the first-generation biofuels.
“In the period between September 2006 and February 2008, corn prices rose by 83.6 percent and the soybean oil prices increased by 135.0 percent,” says Shrikanth. “It has been noted that economically disadvantaged people spend approximately 50 percent to 70 percent of their income on food, compared to 1 percent to 10 percent on energy.”
In the short term, only a significant improvement in the average yield of feedstock, such as corn and soybean oils, will mitigate this problem. While alternative feedstock such as jatropha is expected to help in the medium term, the next-generation biofuels will play a vital role in addressing the challenge by 2012-2013.
North American Biofuels Market: Investment Analysis is part of the Financial Benchmarking in the Chemical Industry program, which also includes research services in the following markets: Europe and U.S. Food Additives and Ingredients Market: Investment Opportunities, North American Paints and Coatings Market: Investment Opportunities, North American Electronic Chemicals and Materials Market: Investment Opportunities, Asia Pacific Paints and Coatings: Investment Opportunities, Asia Pacific Electronic Chemicals and Materials: Investment Opportunities, European Biofuels Market: Investment Opportunities, World Orthopedics Market: Investment Opportunities, and North American Electronic Access Control Market: Investment Opportunities. All research services included in subscriptions provide detailed market opportunities and industry trends that have been evaluated following extensive interviews with market participants. Interviews with the press are available.
Frost & Sullivan's Business and Financial Services group serves clients around the world in all aspects of financial analysis, market research and monitoring, due diligence, idea generation, opportunity analysis, investment valuation, and other proprietary research.
Frost & Sullivan, the Growth Partnership Company, partners with clients to accelerate their growth. The company's TEAM Research, Growth Consulting and Growth Team Membership empower clients to create a growth-focused culture that generates, evaluates and implements effective growth strategies. Frost & Sullivan employs over 45 years of experience in partnering with Global 1000 companies, emerging businesses and the investment community from more than 30 offices on six continents. For more information about Frost & Sullivan’s Growth Partnerships, visit http://www.frost.com.
North American Biofuels Market: Investment Analysis
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Contacts Frost & SullivanCorporate Communications – North AmericaJohanna Haynes, 210-247-3870Fax: 210-348-1003johanna.haynes@frost.com

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