Fuel Additives Market Trends

Growth Drivers

• 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.
• Budding automotive industry
  The automotive industry accounts for a major share of the overall 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.

Challenges

• Coronavirus Pandemic
  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.