- Removing subsidies for conventional fuels and providing incentives for biofuels will bolster market growth

SINGAPORE, Sept. 19, 2012 /PRNewswire/ -- Sourced from agricultural products such as plant-based oils, animal fats and ethanol from naturally occurring sugar sources, biofuels are renewable chemicals and an environment-friendly alternative to crude oil-based fuels. Biodiesels emit fewer pollutants such as particulate matter, nitrogen oxide, carbon monoxide, and hydrocarbons, which conventional fuels such as petrol and diesel release in large quantities due to incomplete combustion of the fuel inside the combustion engine.

New analysis from Frost & Sullivan (http://www.chemicals.frost.com), Strategic Analysis of Southeast Asian Automotive Biofuels Market, finds that the market earned revenues of more than $1.78 billion in 2011 and estimates this to reach $ 4.3 billion in 2017.

Following the signing of the Kyoto Protocol, Southeast Asian governments introduced different blending mandates for biofuels to curb emissions, boost agriculture and protect against fluctuations in the crude oil market.

"Importantly, most Southeast Asian countries are importers of crude oil," said Frost & Sullivan Research Analyst Shree Vidhyaa Karunanidhi. "To reduce their dependence on imports and still meet energy requirements, governments in the region are actively promoting biofuels as a healthy and potentially more sustainable alternative to petroleum-based oils."

Southeast Asia's rich agricultural resources have ensured easy availability of raw materials; however, the rising demand for first-generation feedstock from the food industry has affected the cost to biofuel companies. The market has also been pegged back by government subsidies for petroleum-based fuels, which restrains the consumption of blended fuels.

"The governments can aid the market by enforcing blending legislation, removing subsides for petroleum-based fuels and providing incentives for consumers and tax breaks for biofuel companies," noted Karunanidhi. "Meanwhile, biofuel companies should work on improving extraction efficiency and securing raw materials either by backward integration or signing deals with farmers and distributors."

The current biofuel penetration rate in Southeast Asia is about 1.8 percent of the total automotive liquid fuels market and is forecast to grow to 3.3 percent by 2017. Among all the markets, Thailand is relatively mature and is the hub of biofuel production and consumption.

The Malaysian biodiesel market is currently frozen as many plants have stopped operations due to the government's unfavourable pricing mechanisms. This, coupled with raw material- crude palm oil (CPO) price hike and sustainability issues, has hindered exports to the EU.

On the other hand, Indonesia is looking to enhance the production of biodiesel, even though its ethanol market is still rudimentary. The Philippines has experienced significant consumption of both biodiesel and ethanol, which is mostly imported. Lastly, Vietnam is expected to bring in blending mandates in 2013 and produce biofuels - primarily biodiesel from catfish oil and ethanol from cassava.

All these initiatives on part of the industry and the government will go a long way in bolstering the market.

If you are interested in more information on this research, please send an email to Jessie Loh, Corporate Communications, at jessie.loh@frost.com, with your full name, company name, title, telephone number, company email address, company Web site, city, state and country.

Strategic Analysis of Southeast Asian Automotive Biofuels Market is part of the Chemicals & Materials Growth Partnership Services program, which also includes research in the following markets: Southeast Asia Bioethanol Market, Southeast Asian Green Feedstock Market and Strategic Analysis of Asia Pacific Biodiesel Industry. All research services included in subscriptions provide detailed market opportunities and industry trends that have been evaluated following extensive interviews with market participants.

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Contact:
Donna Jeremiah
Corporate Communications – Asia Pacific
P: +61-02-8247-8927
F: +61-02-9252-8066
E: djeremiah@frost.com

Jessie Loh
Corporate Communications – Asia Pacific
P: +65-6890-0942
F: +65-6890-0988
E: jessie.loh@frost.com

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SOURCE Frost & Sullivan