Global Biofuels Output Slows on Less Brazilian Ethanol, IEA Says

World production of biofuels will increase at a slower pace than previously forecast in the next five years as Brazil’s ethanol output declines and the U.S. market becomes saturated, the International Energy Agency said.

Global growth is estimated at 400,000 barrels a day from 2010 until 2016, compared with the earlier forecast of 500,0000 barrels a day, the Paris-based agency said today in its monthly Oil Market Report.

Brazilian ethanol production in 2011 is set to drop by 75,000 barrels a day to 375,000 barrels a day on a “poor sugar cane harvest and high sugar prices” and will reach 530,000 barrels a day in 2016, according to the IEA.

In the U.S., the expiry of a 45 cent-per-gallon blenders’ tax credit at year-end is expected to sap distillery investment as the market gets more saturated, the agency said.