Analysis: Biomass set for 'stellar' rise on MTBE demise

23 May 2001 18:22  [Source: ICIS news]

HOUSTON (CNI)--Biomass-based fuels like ethanol stand poised for "stellar growth" of 50% annually in the US through 2005 driven by several factors including a phase out of MTBE, the Freedonia Group predicted Wednesday.

In a report on "Biomass Energy," the Cleveland, Ohio consultancy predicts a total US biomass energy market worth $2.8bn (Euro3.3bn) by 2005 and then $5.8bn by 2010.

During those time periods, Freedonia expects biomass energy demand to grow annually at 8.5% through 2005 and then at a higher rate of 12.2% until 2010. The $5bn market in 2010 would represent a total growth of 168% from the $1.9bn market recorded for last year, according to Freedonia.

Among the different categories of total biomass energy demand, grid-connected electric power will rank as the largest with a 58% share and a market worth $2.9bn.

But transportation fuels will exhibit the most dramatic growth rate of 50.4% through 2005 and 27.4% from 2005 to 2010, Freedonia predicts. At that point transportation fuels will claim a 31% share of the biomass energy market and constitute a business worth $1.6bn, Freedonia said.

The analysts said: "Biomass ethanol will be the lead product, as federal grants to reduce production costs bear fruit and volatile US corn prices make non-corn feedstocks economically viable."

Freedonia believes biomass ethanol also will gain from the implementation of tax subsidies and the planned phase out of methyl tertiary butyl ether (MTBE) as a gasoline additive.

For the biomass energy market in general, Freedonia expects the strongest gains the northwest, west and southern US regions, largely because of those areas' electric power needs.

By: Gary Taylor
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