Biofuels expansion stalls on output drop

“Slower growth could relieve pressures on food prices.”

The Financial Times reports,

The growth of the biofuel industry has come to an abrupt halt with annual output last year falling for the first time in a decade owing to poor margins in Brazil and the US, the world’s biggest suppliers.

Global biofuel production dropped to 1.819m barrels a day, from 1.822m b/d in 2010. The drop ends a decade of steady growth in biofuel production, according to data from the International Energy Agency…

Although the drop in production is likely to be reversed this year, industry executives and analysts expect supply growth will be significantly slower over the next five years than in the past. While output grew by 1m b/d between 2006 and 2010, the IEA forecast an increase of just 0.4m b/d between 2011 and 2015.

The slowdown comes as US and Brazilian biofuel companies suffer from poor margins owing to costlier corn and sugarcane as well as under-investment. China, which was developing large domestic industry, has scaled back its original ambitions because of concerns over higher food prices.

Biofuels are Richard Branson’s fantasy.