China, India Lead in Asia's Emerging Alternative Fuels Landscape

Lux Research

Government support drives dominance, but aggressive targets, such as China’s 10% ethanol in 2020 and India’s 20% biofuels in 2017, likely won't be met

BOSTON, MA – June 4, 2014 – Driven by aggressive mandates, government support and cost advantages, China and India – the world’s two most populous countries – dominate Asia’s alternative fuels landscape, according to Lux Research. However, even strong growth will leave these nations short of their self-imposed targets.

Ethanol is booming in China, thanks to the nation’s 10% blend mandate, equivalent to 3.3 billion gallons per year for 2020, but as total fuel demand explodes as well, ethanol will creep up to only 4% of gasoline in 2017, placing that target in doubt. India is betting on risky jatropha for biodiesel as it races to meet an aggressive 20% biofuels mandate for 2017, but biofuels will account for under 0.6% of its diesel fuel and 0.3% of its gasoline in 2017.

“Both countries have huge populations and huge fuel demands, and both governments extend support for ethanol and biodiesel,” said Nancy Wu, Lux Research Analyst and an author of the report titled, “Planning for the Long-Term in Asia Pacific Alternative Fuel Markets.” “However, challenges with cost, feedstock availability, and infrastructure will still hold them back from ambitious targets,” she added.

Lux Research analysts evaluated ethanol and biodiesel, as well as natural gas vehicles (NGVs) – in 10 of the largest markets in the Asia Pacific. Among their findings:

  • India will outpace Asia's growth in biodiesel. Indonesia, China and Malaysia are the three dominant nations in biodiesel, each driven by challenging mandates. Indonesia is targeting 20% adoption by 2025 while Malaysia positions itself to be a dominant exporter with 143 MGY in 2015. India's growth, however, at an impressive 18.5% compound annual growth rate (CAGR) through 2017, will outpace the rest of the region, which will post a 3.9% CAGR through 2017.

  • Cost, pollution are catalysts for NGVs. NGVs in China and India are driven by their lower cost – nearly half that of gasoline – and the need to cut air pollution. With a fleet of 1.5 million, India already has the sixth most NGVs in the world, mostly in public transportation. Its government-supported expansion of infrastructure aims to unlock further market share in the nation’s booming auto sector.

  • Japan and Korea rely heavily on advanced fuel imports. Japan continues to import biofuels, such as ETBE, to meet its 10% blend target by 2030. Similarly, demand for imported biofuel feedstock, such as soy and palm oil, remains strong in Korea. As a result, these nations focus research efforts on new types of feedstocks, like municipal solid waste (MSW) in Japan and seaweed in Korea.


The report, titled “Planning for the Long-Term in Asia Pacific Alternative Fuel Markets,” is part of the Lux Research 
Alternative Fuels Intelligence service.