Fuel Additives Market Overview
Many expert auto repair specialists often categorize fuel additives as “mechanic in a can” solutions to numerous fuel delivery problems and it can also prevent or cure many fuel delivery system complications. Fuel additives are compounds that are prepared to boost the quality and efficiency of fuels utilized in motor vehicles. Emissions produced by fuel are very damaging to human health and the environment. These fuel additives assist in enhancing the efficiency of fuels and increasing their characteristics such as improvement in octane number, reduced emissions, improved cetane number, and others.
Market Size and Forecast
The fuel additives market is expected to observe an attainable high CAGR during the forecast period, i.e., 2020-2028. The market is segmented by type, application, and region. Among product applications, the diesel additives segment is expected to account for the major share of the overall fuel additives market. This dominance is attributed to the high consumption of diesel and the heavy dose of additives in diesel to deliver more efficiency and power. Based on type, the deposit control additives segment accounted for the major share in the fuel additives market. The power of deposit control additives is mainly attributed to its high usage in preventing the deposit formation in the injector nozzle of engines. The utilization of deposit control additives also improves combustion and fuel economy and, therefore, is broadly used in various fuels.
Rising demand for ultra-low sulfur diesel (ULSD)
The growing consumption of low sulfur content fuels is expected to drive the growth of newer emissions control technologies such as adding fuel additives. The use of fuel additives significantly lowers emissions of particulate matter from diesel engines. This was first announced in the EU and later in North America.
Ultra-low-sulfur diesel (ULSD) comprising 15 ppm of sulfur was introduced for highway diesel fuel in the U.S. ULSD is also projected to be used in nonhighway diesel fuel. Owing to the introduction in non-highway fuel, the demand for fuel additives is likely to expand across the globe. Diesel engines that are equipped with cutting-edge emission control devices utilize the highway ULSD fuel, which assists in decreasing emissions.CLICK TO DOWNLOAD SAMPLE REPORT
Budding automotive industry
The automotive industry accounts for a major share of the overall fuel additives market. The growing automotive industry significantly drives the demand for fuel additives. The making of passenger cars, light commercial vehicles, and heavy commercial vehicles have observed substantial growth across the globe.
The biggest growth in auto sales has been in Asia-Pacific, specifically in India and China. China has become the largest car market in the region. North America and Europe as well, is a huge market for automobiles. The upsurge in automotive sales is stimulating the demand for gasoline and diesel and, subsequently, driving the demand for fuel additives.
The outbreak of the new coronavirus (COVID-19) has added a major layer of uncertainty to the fuel additives market. Containment preventions imposed in North America, Europe, and in other regions are anticipated to have a lesser impact on oil demand than those in China. Though, demand from the aviation sector will continue to suffer from the shrinkage in global air travel.
According to IEA, for 2020 as a whole, the magnitude of the drop in the first half has led to a decline in worldwide oil demand of around 90,000 barrels a day compared to 2019.
Transition to clean energy
Global attention is progressively concentrated on the need to accelerate clean energy transitions to mitigate the risks of climate change. With its major emissions footprint, the energy sector comprising the oil and gas industry is at the heart of the matter, which directly affects the fuel additives market.
As per International Energy Agency, demand progression for gasoline and diesel between 2019 and 2025 is set to deteriorate as nations around the world implement policies to increase efficiency and cut carbon dioxide (CO2) emissions, and as electric vehicles grow in popularity.
Massive investment in R&D
Fuel additives are added in small proportion to fuel and to be effective, the engineering needs to be completed at the atomic level. The R&D cost in terms of man-hours, materials, and technology is enormously high. There are only limited elements that can be used in the production of additives, and the resultant mixture has to guarantee minimum features under different circumstances to be considered for testing. The product once acknowledged for testing, has to provide fuel efficiency that not only has long term benefits, but also noticeable short term benefits. Not every market player has access to such technology, capital, and human expertise to create an environmentally-friendly, efficient, and effective additive at a competitive price. This need for high R&D venture and technological proficiency is a major restraining factor towards the growth of the fuel additives market.
Our in-depth analysis of the fuel additives market includes the following segments:
Geographically, the fuel additives market is segmented into five major regions including North America, Europe, Asia Pacific, Latin America, and the Middle East & Africa region.
The fuel additives market is estimated to stand predominant in North America over the forecast period on account of the expansion of fuel additives production companies, growing clean energy demand, and rising carbon emission reduction measures. The North American market is extremely regulated with the Environment Protection Agency (EPA) playing a vital role in the monitoring and commercialization of fuel additives products.
According to IEA, Oil demand in 2018 rose progressively. The top base of consumption growth was not China or India, but rather it was the United States. The foremost upsurges in oil product demand came from gasoline and diesel sectors.
In 2019, the US Gulf Coast became the leading seaborne crude oil export center outside the Middle East, supplying 2.6 million barrels per day to world markets.
The European aviation biofuels market is expected to be the second dominant region over the forecast period on account of the severe rules and regulations concerning carbon emission. Several policy instruments related to biofuel have also been employed by the EU. As the Renewable Energy Directive (RED) has established as an objective of accomplishing 20% gross energy consumption from renewable resources by 2020.
Fuel additives demand is distinctly evident in the Asia Pacific region, where increasing economic prosperity is hosting new travel opportunities and tremendous opportunities are coming up in the distribution of the fuel additives market. Owing to all these factors Asia-Pacific is expected to witness the fastest growth in the forecast period.
According to Internation Energy Agency (IEA), China, India, and Indonesia contribute 40% (15 billion liters) of biofuel production growth as per the report of 2019. China already outshined the United States as the leading crude oil importer in 2017, India’s oil demand is set to rise by 25% by 2024.
The fuel additives market is further classified based on region as follows:
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