Global biofuels market to hit $247 billion by 2020

The switch from traditional fossil fuels to greener biofuels is well underway and gathering steam, according to green and clean tech consultancy Pike Research. What's more, Pike anticipates that the global biofuels market will triple from $76 billion today to nearly a quarter trillion dollars in 2020.

That's an astonishing growth rate in a short time frame but Pike lays out in a report that a convergence of technology maturation and market demand that will take biofuels into the mainstream.

In particular, a troika of biofuel technologies are set to storm the market. Biofuels derived from waste grease collected at restaurants and boiled down from animal wastes, among other places, are set to start hitting the market in 2010. Biofuels extracted from jatropha, a prolific weed that has far better production economics than sugar cane or corn (the two prevalent fuel stocks for ethanol at present), will enter the market in 2014. But the biggest part of the tsunami could come from the entry of algae-based biofuels, which can closely mimic traditional petroleum products.

A number of heavy hitters are betting on these technologies, including genetics genius Craig Venter and oil giants Exxon Mobil (XOM) and Royal Dutch Shell (RDS.A). All three technologies have key political and economic advantages. None of them competes for resources with humans seeking food, as is the case with corn-based ethanol. Use of corn to make biofuels has become highly controversial. During the 2008 oil spike, corn was at or near historic high prices in part due to U.S. government subsidies for ethanol production. This lead food activists to blame ethanol for food shortages.

In contrast, humans don't eat jatropha or waste oil or algae. The lack of human consumption also removes some concerns about using genetic manipulation to augment yields from algae and jatropha. Lastly, ethanol is a notably corrosive substance. Many engineers and mechanics have worried that long-term use of ethanol could have seriously deleterious effects on pipelines, car engines and other metal products. Lastly, because all three of these new sources could produce oil-based biofuels rather than starch-based ethanol, these fuels could more easily be integrated into existing petroleum production and refining infrastructure.

Not that you'll be able to harvest your own biofuels from your backyard fish pond or recycle your bacon grease, but on a larger scale, that does seem to be the way biofuels are going. Politically, every government that is not a major oil-producing country is desperate to create alternative fuel sources to diminish its reliance on foreign nations for critical products. The folks at Pike believe this will be enough impetus to encourage continued government support from some of these alternative biofuels programs.

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