The Biofuel Boom Needs Greater Oversight

There is great optimism around the future of biofuels, which may offer a low-carbon alternative to several widely used fossil fuels if given the necessary government support to help develop an international biofuels industry within the coming years. Biofuels are liquid fuels made from biomass materials, such as organic waste from plant materials to animal waste, known as feedstocks. They can be used to fuel transportation, as well as for heating and electricity generation. Depending on the use, ‘bio’ is often added to the type of fuel, for example, biodiesel or biojet, to suggest that the fuel was produced using biomass. In addition, some clean, green, low-carbon, renewable, or sustainable fuels are also produced using bio feedstocks, such as sustainable aviation fuel.  There are several government incentives in place in the U.S. to encourage the use of biofuels rather than fossil fuel alternatives, such as the $1 per gallon scheme for biodiesel. The U.S. produced 17.5 billion gallons of biofuels last year and consumed 16.8 billion gallons, with ethanol being the most common. The three most-used biofuels in the U.S. are ethanol, biodiesel, and renewable diesel, with several others also gaining in prominence inducing renewable heating oil, renewable jet fuel, renewable naphtha, renewable gasoline, and other emerging biofuels.

The production of biofuels worldwide is expected to increase significantly in the coming years as governments put pressure on energy companies and industry to transition away from fossil fuels to renewable alternatives. According to the International Energy Agency (IEA), global demand for biofuels is expected to increase by 41 billion litres, or 28 percent, between 2021 and 2026. Asian biofuel production is set to overtake European output thanks to optimistic blending targets for biodiesel in Indonesia and Malaysia and ethanol policies in India.  Meanwhile, government policies in the U.S. and Europe supporting biodiesel production mean that demand for the fuel will likely triple. Governments can support greater biofuel production by making feedstocks more readily available and reducing the price of biomass. 

One of the most sought-after types of biofuel is sustainable aviation fuel (SAF), which could help to significantly decarbonise flights, in line with Paris Agreement and COP26 targets. SAF is similar to conventional jet fuel but is produced in a greener way, aimed at reducing greenhouse gas emissions. There is huge potential for SAF production, with around one billion dry tonnes of biomass collected in the U.S. each year, which could be used to produce between 50 and 60 billion gallons of biofuels. Potential feedstocks include corn grain, oil seeds, algae, fats, oils, greases, agricultural residues, forestry residues, wood mill waster, municipal solid waste streams and alcohol.

Alcohol to Jet (ATJ) is one of the main production methods of SAF, using alcohols such as Ethanol, Propanol, and Butanol. However, there are several obstacles to greater uptake of SAF, including the time and expense required to establish an adequate biofuel industry to meet the growing global demand. The need for new production facilities, as well as supporting government policy for greater feedstocks provision, will take a significant time and greater investment to ensure enough SAF is produced to support the transition of the aviation industry away from fossil fuels. In addition, at present, SAF costs around three times as much as conventional jet fuel, making it less attractive. 

The International Air Transport Association (IATA) estimates that SAF output will need to increase from 20.5 million litres today to around 449 billion litres annually by 2050 for the aviation industry to achieve its aim of net-zero goal carbon emissions. However, few airlines are willing to commit to long-term biofuel contracts due to the high cost and uncertainty around future policies and regulations for SAF. However, new legislation, such as the U.S. Inflation Reduction Act, is expected to encourage greater research and production in SAF and other biofuels. 

Biofuel is also expected to play a vital role in the future of shipping. In recent years, there has been greater interest in establishing a fleet of commercially viable deep-sea zero-emission vessels that will be powered by zero-emissions fuels to support a future of clean shipping. Compared to other nascent low-carbon options, biofuels are the most ‘technologically ready’, with many, such as HVO (hydrotreated vegetable oil), already being used as drop-in fuels. 

However, to establish a resilient biofuels market, governments must work together to establish a framework of common standards for the biofuels industry that encourage environmental protection and a positive social impact, creating clear certification schemes and regulatory bodies to manage the sector effectively.  

Some energy companies are already making clear aims for their biofuel industries, viewing them as a key component of a low-carbon future. For example, TotalEnergies, which has been producing biofuels and bioplastics for the past two decades, hopes to use its knowledge and experience in the industry to become a leader in biofuels and innovative bioplastics over the next decades. At present, TotalEnergies is Europe’s biggest biofuel retailer, producing ethyl tert-butyl ether (ETBE), a gasoline additive, and hydrotreated vegetable oil (HVO) for diesel. 

There is great optimism around the future of biofuels, offering the potential for net-zero carbon emissions across several highly polluting industries, such as aviation and shipping. However, to encourage the development of an international biofuels market, governments must establish standards across the industry, supported by national policies and regulatory bodies that can certify different biofuels for use across a variety of industries.