Algae biofuel is a liquid fossil fuel substitute that uses algae as a source of energy-rich oils for the production of fuel. They are a viable alternative to well-known biofuels like corn, corn stover, beet, and sugarcane. Some algae species can produce up to 60% of their dry weight in the form of oil. Microalgae may produce enormous amounts of biomass and useable oil in either high rate algal ponds or photo bioreactors since the cells develop in aqueous suspension, where they have more efficient access to water, CO2, and dissolved nutrients. This oil can then be converted into biodiesel, which may subsequently be marketed for use in automobiles. Biodiesel, bio-butanol, bio-gasoline, biogas, methane, and ethanol are some types of algae biofuels. One major benefit of using algae for biofuels is that it does not need the use of cropland for food production. The global demand for algae biofuel is being strengthened by the development of innovative factors such as increased raw material development; increased final production volume of biofuels as well as other factors.
The increasing global need for greener, renewable alternatives to biofuels has generated significant interest in third-generation biofuels such as algae biofuels, as it can overcome the drawbacks of crop-based biofuels of the second generation. Algae biofuel is derived from species such as Botryococcus braunii, Chlorella species, Crypthecodinium cohnii, and Nitzschia.
Due to the breakdown of COVID-19, the automotive and transport industry along with other industrial activities has witnessed a slowdown especially in the year 2020. The automotive industry involves the application of algae biofuels to run vehicles. Thus, any impact on the automotive industry has a direct impact on the demand for algae biofuels. The global algae biofuels market has also been negatively impacted by the shutdown of various industries that use algae biofuels as a fuel in their operations.
AFTERMATH OF COVID-19 AND GOVERNMENT INITIATIVE TO BOOST THE GLOBAL ALGAE BIOFUEL MARKET
The first and foremost step that the government is planning to take towards the comeback of the algae biofuel industry on track is to make the automotive and transportation industry less dependent on fossil fuels. The government has taken various measures to maintain the demand and supply of algae biofuel. The government is supporting the local producers of algae biofuel by extending financial and procedural support to domestic companies to kick start local production. The government is considering various stimulus packages to boost the supply and demand of raw materials. Along with that to cope with the situation, the government is planning to provide some fiscal initiatives to manufacturers including tax cuts and exemptions, to recover from the disruption.
Demand for algae biofuels has increased as an alternative to fossil fuels owing to growing environmental and sustainability concerns about the excessive use of fossil fuels and related carbon emissions by these fossil fuels.
Strict government regulations relating to reducing carbon emissions by investing more in renewable energy resources have pushed manufacturing firms to use environment-friendly fuels such as algae biofuel, rather than fossil fuels. Increasing government initiatives on the introduction of renewable energy sources will drive the algae biofuel market after the COVID-19 impact globally.
The great potential of algae to replace traditional biofuel raw material sources, together with regulations imposed by the U.S. government, is predicted to create new avenues for product growth, which will be remarked and embraced by other areas throughout the globe in the coming future.
STRATEGIC DECISIONS FOR MANUFACTURERS AFTER COVID-19 TO GAIN COMPETITIVE MARKET SHARE
The breakout of coronavirus has shaken the entire industry. Due to this pandemic, most of the production got hit and has created a situation of panic in the entire world. Thus, to maintain the demand and supply various strategic decisions are taken for the manufacturers.
Increased R&D by several startup businesses, as well as different oil and gas giants, and university-led research consortiums, is predicted to accelerate the output of algae biofuel in the coming time. Continuous research and industrial efforts are being undertaken by key players in the global algae biofuel market to make algae biofuel production economically and ecologically viable.
For Instance,
- In 2016, the U.S. produced roughly 1.14 billion gallons of biofuel using a range of feedstock, including recycled seeds and animal fats
- In October 2019, U.S. biodiesel production rose to 144 million gallons from 142 million gallons a month earlier. Soybean oil remained the largest biodiesel feedstock, with 558 million lbs used in October, or about 51 percent of the total. In September 2019, soy oil used in biodiesel production was 599 million lbs
There are increasing start-up firms all around the world to meet the increasing demand for algae biofuel from transportation and other industrial sectors. In addition, to decrease their dependency on raw material suppliers, companies in the sector are integrating across the value chain. Furthermore, the manufacturers in this market are anticipated to anticipate alliances and partnerships among producers to create big volumes of the product while maintaining competitive pricing and supply.
Initiatives taken by the manufacturers to achieve the required fuel standards and positive government outlook for the industry are also likely to drive market growth after the impact of COVID-19. Technological hurdles, as well as expensive capital expenditure in algae biomass and fuel production, are likely to hinder industry expansion. However, the use of contemporary biochemical engineering techniques has also resulted in the formation of a robust technological foundation for the production of algae biofuel which will help manufacturers to gain a competitive edge in the global market. The players operating in the market have undertaken several strategies related to the market.
For Instance,
- In February 2020, Reliance Life Sciences disclosed that the company would be spearheading several algae-based projects, including turning organic waste into kerosene and aviation fuel. Reliance is also using advances in gene editing to improve the production capacity of algae significantly
- In October 2019, Exxon Mobil Corporation announced its partnership agreement with the Indian Institute of Technology. Two locations of the institute in Madras and Mumbai underwent five-year agreements with a focus on progressing research in biofuels and bio-products, gas transport and conversion, climate and environment, and low-emissions technologies for the power and industrial sectors
- In March 2019, a team of chemical engineers had developed a new jet mixer technology that precludes the need for energy-intensive drying processes. The new mixing reactor shoots jets of solvent into jets of algae in liquid suspension, creating the turbulence needed to prompt the lipids to transfer into the solvent stream. Further research in the arena for large scale usage is being developed and may provide an opportunity for the market players
- In 2022, Qatar is expected to be the largest market for the algae biofuel market as it has been investing in the research and development of biofuel in collaboration with different organizations, which may lead to extensive scale cultivation and production of algae biofuel
- In October 2017, ExxonMobil announced the expansion of its research facility in New Jersey, U.S. This facility would focus on research and development for algae biofuel and carbon capture technologies
Impact on Price
This disruption caused by COVID-19 has led to unforeseen price volatility and has also reduced negotiation potential for prospective buyers. The price of algae biofuel is continuously decreasing since the outbreak of coronavirus has incurred in the economy. This has negatively impacted the manufacturers in maintaining their profit margins and meeting their operations costs.
In addition, the need for high capital investment along with technological barriers has also impacted the price of algae biofuel worldwide.
Impact on Demand
The demand for algae biofuel has been witnessed in various regions due to weak requirements from end-users especially automotive, transport, and several other industries. Due to the economic and infrastructural slowdown, the demand for fuel especially from transportation has decreased which eventually has reduced their consumption.
Also, the decline in various industrial activities and operations where algae biofuel were used as a fuel, has negatively impacted the demand for algae biofuel. Neither the demand for end users has shown any upward trend nor the materials which are used in them. In this way, the demand of the entire materials market has been adversely impacted.
Transportation, one of the major segments using algae biofuel has faced a hit due to restriction movement and halt in logistic operations. This has largely hit the demand for algae biofuel in the market.
However, the rapid growth of the automotive sector owing to rising consumer income and technology innovations is expected to propel the demand for new sustainable fuels such as algae biofuel. In addition, the growing demand for biofuel in road transport applications including small trucks, minivans, light-duty vehicles, motorbikes, and passenger travelers is expected to compel manufacturers to invest more in R&D to develop low-cost renewable fuel resources. The aforementioned factors are expected to open new market opportunities for product growth in transportation.
Impact on Supply Chain
Due to the outbreak of Covid-19, the supply chain operations have suffered abruptly. Manufacturers have stock but they are not getting demand for it from the end--users. So, there is a situation of oversupply in the market. In this situation, both manufacturers and consumers are facing a crisis in times of COVID-19.
The restriction over the transportation and shortage of labor count is other factors that have affected the supply chain of algae biofuel. At several parts, the manufacturers are struggling for raw material reach and at the same time, some are struggling with delivering the product due to disruptions in transportation operations and fall in demand. Thus, the impact on supply is not due to one factor but is facing hit from manufacturing points as well.
Conclusion
The unfortunate event has led to a disturbance in the availability, demand, and pricing of algae biofuel. Though, the imbalance between demand and supply and its impact on pricing is considered to be short-term, as this is expected to recover with the decrease in COVID-19 restrictions and increasing demand for cleaner biofuels in the end-use industries such as transportation and others.
Algae has the potential to provide 2 to 20 times the output of conventional biofuel feedstock such as corn, corn stover, sorghum, and beet, which is anticipated to open up new pathways for industry expansion.
The growth of detergent and disinfectant market after COVID-19 in emerging economies such as China, India, France among others accompanied by increasing demand for fuel from various end-use industries, growing need for green as well as a sustainable source of energy, increasing initiatives taken by the government for the adoption of renewable energy source are likely to enhance the growth of the global after the impact of COVID-19.
In addition, the introduction of biofuel requirements around the world is likely to push manufacturers to invest more in R&D to create sustainable algae fuel production technologies to meet increasing demand shortly and recover from huge losses incurred to them during the COVID-119 crisis.
