Annual biofuels capacity worldwide will increase to 61 billion gallons (231 billion litres) in 2018 from 55.1 billion gallons last year, with novel fuels and novel feedstocks growing at double-digit rates, Lux Research said on Tuesday.
According to the research firm, ethanol and biodiesel will keep their dominant position, accounting for 96% of capacity in 2018, but will remain flattish with a compound annual growth rate (CAGR) of 2%. Ethanol capacity will grow to 40 billion gallons in 2018, and biodiesel capacity will reach 19 billion gallons. 
Novel fuels and novel feedstocks, meanwhile, will see a CAGR of 27% and 16%, respectively. Biodiesel made from novel feedstock, specifically waste oils, will have a 52% share in novel fuels capacity in 2018, followed by cellulosic ethanol with 19% and renewable diesel with 18%.
Victor Oh, lead author of the report, says that limits on ethanol and biodiesel growth mean that novel fuels are crucial to the future of the industry. "Producers also need to tap into novel feedstocks like waste oils, non-edible biomass, and municipal solid waste to push the industry beyond food-vs.-fuels competition," Oh added.
Lux Research said that the Americas, led by the US and Brazil, are the dominant region with 64% of global capacity. According to report, the biggest emerging producers are China, Indonesia, Thailand, Colombia, Argentina, Portugal, Poland and France.