Tracking Progress: Transport biofuels
Global biofuel production increased to around 137 billion L (3.3 EJ) in 2016. Conventional biofuels are on course to meet 2DS targets for 2025; however, accelerated production of advanced biofuels is necessary to meet 2DS needs for transport sector decarbonisation.
In 2016, conventional biofuels accounted for around 4% of world road transport fuel. Double-digit global production growth pre-2010 slowed to a modest 2% y-o-y, due to structural challenges and policy uncertainty in key markets.
In the United States, ethanol output is anticipated to stabilise due to lower investment in new capacity and reaching the corn ethanol limit within the Renewable Fuel Standard. Meeting Brazil’s 2030 commitment to reach an 18% share of sustainable biofuels in its energy mix would equate to over 50 billion L of fuel ethanol demand, but accelerated production growth will be required if this goal is to be met. Biodiesel policy support remains robust in both countries, with production growth expected.
In the European Union, proposals for the revised Renewable Energy Directive (RED) covering 2020-30 include a scale-down of the cap on food crop-based biofuels from 7% to 3.8% (by energy) of the 2030 renewable energy target. Conversely, in Asia many petroleum product-importing countries have enhanced policy support for domestically produced biofuels, boosting markets for ethanol (e.g. India and Thailand) and biodiesel (e.g. Indonesia and Malaysia).
Advanced biofuel projects have been announced in a growing number of countries, including China, India and Thailand. Evidence also exists of strengthening advanced biofuel policy support, particularly in Europe where the aforementioned proposals for a revised RED specify an increase in the advanced biofuel share of transport energy demand from 0.5% in 2021 to 3.6% by 2030. In addition, with a growing number of commercial flights and fuel off-take agreements, aviation biofuels are poised to play a central role in the aviation industry’s long-term decarbonisation plans.
Conventional biofuels are on track to meet volumes required by the 2DS for 2025. For advanced biofuels, full delivery of the project pipeline, combined with a scale-up in output towards rated capacity at commissioned plants, could deliver around 2.3 billion L (0.6 EJ) in 2020, although this level would be less than 1.5% (by volume) of total forecast biofuels production. Consequently, a twenty-five-fold scale-up in production would be necessary over 2020-25 to achieve the 57 billion L (1.6 EJ) advanced biofuels contribution to the 2DS in 2025. This projection highlights that significantly accelerated commercialisation is needed to keep pace with 2DS requirements.
Stable and long-term policy frameworks can facilitate expansion of the advanced biofuels industry and enable capital and production cost reduction potential. Ambitious national transport sector targets for emissions reduction, shares of renewable energy or, as in Sweden, phasing out fossil fuels provide a favourable investment climate. These frameworks can include sub-targets for the road freight, marine and aviation sectors, which are more difficult to decarbonise.
More widespread advanced biofuel mandates will be essential to accelerating uptake. Alternatively, legislation to stipulate defined reductions in the life-cycle carbon intensity (CI) of transportation fuels (e.g. as established in California and Germany) stimulates demand for biofuels with the highest emissions reduction potential.
These policies can be complemented by financial de-risking measures to support investment while costs remain high, tax incentives, and financial mechanisms to facilitate technological innovation and commercialisation. Policies to expand flexible-fuel vehicle fleets and biofuel distribution infrastructure will also support market growth. For aviation biofuels, supply chain development and measures to reduce cost premiums over fossil jet fuels are needed.
The recent launches of the Biofuture Platform and Below50 initiative are anticipated to facilitate an enabling environment for sustainable biofuels through enhanced international collaboration. Biofuels market expansion must respect environmental, social and economic sustainability considerations via industry benchmarking against recognised sustainability indicators and through the presence of strong governance frameworks.
Published: 16 May 2017Download Full Report