Biofuels for transport

Tracking Clean Energy Progress

🕐 Last updated Wednesday, 23 May 2018

Not on track

Production of transport biofuels grew by just 2% in 2017. To achieve the 2030 SDS target, use of biofuels needs to triple, driven by cost reductions of advanced biofuels, widespread sustainability governance and more adoption in aviation and marine transport.


Global biofuels production

Historical and forecasts vs. SDS targets

	Historical	Forecast	SDS Targets
2010	59.33290341
2011	62.0894239
2012	64.26841502
2013	69.9448266
2014	75.88922327
2015	76.28403554
2016	79.35153339
2017	80.80395529
2018		83.34766409
2019		88.41430209
2020		92.74935512
2021		92.13456578
2022		93.59486959
2023		95.38478074
2025			200.35
2030			284.44
      
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Output of conventional transport biofuels – which include sugar- and starch-based ethanol, and oil-crop biodiesel and hydrotreated vegetable oil – grew just 2% to reach 81 Mtoe (140 billion litres) in 2017, with average production growth of around 3% a year anticipated over the next five years.

Most of the output growth is expected to come from Latin America and non-OECD Asian countries. In Brazil, the drivers for biofuel demand remain strong and the new RenovaBio policy is anticipated to facilitate investment to increase biofuel production capacity. China intends to roll out 10% ethanol blends in gasoline nationwide. This would require a six-fold increase in output to meet demand, and has led to new investment in ethanol production capacity.

The growth prospects for biofuel production in the European Union and the United States are more limited. Ethanol production in the United States is forecast to level off over the next five years as the increasing fuel efficiency of the vehicle fleet lowers demand for ethanol blended with gasoline, and the corn ethanol limit is reached in the Renewable Fuel Standard. As a consequence, investment in new production capacity has declined.

Output of conventional biofuels may fall in the European Union after 2020 because of a less favourable policy landscape, although the finer details of the updated EU Renewable Energy Directive will not be finalised until late 2018.

Demand for hydrotreated vegetable oil (HVO), also known as renewable diesel, and hydroprocessed esters and fatty acids (HEFA) biojet fuel, is expected to grow because of the “drop-in” properties of these fuels: they can potentially be used unblended without modifications to engines, maintenance regimes or fuel supply infrastructure.

Waste and residue feedstocks now account for a significant share of HVO and HEFA production, supporting deeper decarbonisation from these fuels. Consequently, output is expected to grow as new facilities come on line and investments are made to increase the capacity of existing plants. Production is primarily based in Europe, Singapore and the United States.

Production of advanced biofuels from non-food crop feedstocks is limited. Output is anticipated to remain modest in the short term, as progress is needed to improve technology readiness.

Most first-of-a-kind commercial-scale plants are working to increase utilisation rates and yields while also reducing costs for follow-on projects. Given these constraints, the investment environment is challenging, with a low share of announced projects moving into construction. Commercial-scale cellulosic ethanol plants generally exhibit mixed performance. However, facilities in Brazil and the Unites States have increased production.

Policy interest in advanced biofuels remains strong. The Biofuture Platform, a 20 member country collaboration initiated by Brazil, has advocated an increase in low-carbon biofuel consumption.

India aims to deliver twelve advanced biofuel plants, several of which are in development, and China intends to “vigorously develop” cellulosic ethanol.

EU policy support for advanced biofuels after 2020 is also expected to strengthen, building on an increasing number of quota policies announced by member states.


Biofuels consumption in 2017 vs. SDS targets

Meeting SDS goals would require greater use of biofuels in more countries and for shipping and aviation.

	Share of biofuels
US	46.72
Brazil	22.64
EU-28	13.44
China	2.98
India	0.66
RoW	13.56
    
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	Share of biofuels
US	32.96
Brazil	13.41
EU-28	13.22
China	9.49
India	4.16
RoW	15.19
Aviation and marine	11.57
    
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Tracking progress

Transport biofuel consumption needs to triple by 2030 to ensure that biofuels’ share of transport fuel demand, which was 3% in 2017, reaches 10% by 2030 as required by the SDS.

Production is not growing fast enough to meet this demand. Increasing output threefold requires sustained average annual production growth of 10% through to 2030, however only 3% annual growth is forecast over the next five years.

Furthermore, only sustainable biofuels have a place in the SDS, and therefore growth of transport biofuel production requires robust sustainability governance to ensure sustainability criteria are adhered to. (See the Global Bioenergy Partnership's sustainability indicators for more information.)

To keep pace with the SDS, transport biofuel consumption needs to increase in existing markets and new markets need to develop.

The biggest acceleration of biofuel demand in the SDS takes place in China, India and Latin America, with biofuel production expected to grow in these countries over the next five years. In countries such as Mexico and South Africa, where transport biofuels industries are at an early stage, market development and technology leapfrogging are also needed to keep on track with the SDS.

In addition, the SDS requires a significant technology shift towards advanced biofuels. By 2020, production of novel advanced biofuels could reach 1.4 Mtoe (2 billion litres). This represents just 1.3% of forecast conventional biofuels production on a volume basis. After 2020, accelerated commercialisation of advanced biofuels will be required to ensure they command a substantial share of all transport biofuels by 2030.


Novel advanced biofuels production forecast 2016-22

Production of advanced biofuels will need to scale up to meet the SDS target.

	Planned	Under construction 	Operational commercial	Operational demo
2016	0.00092	0	0.187321	0.130648125
2017	0.006518	0.005	0.3701275	0.156479089
2018	0.133971	0.034875	0.5888175	0.168106156
2019	0.452945	0.0631	0.836145	0.176924125
2020	0.891638	0.080775	0.93241	0.184952831
2021	1.33901	0.06385	1.02471	0.187908536
2022	1.626029	0.0434	1.055935	0.189558536
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Notes: The IEA defines advanced biofuels as sustainable fuels produced from non-food crop feedstocks, which are capable of delivering significant life-cycle GHG emissions savings compared with fossil fuel alternatives, and which do not directly compete with food and feed crops for agricultural land or cause adverse sustainability impacts. Examples of advanced biofuel feedstocks include agricultural and forestry residues. Novel advanced biofuels are fuels that meet the advanced biofuel definition but are not currently commercialised.

Ensuring that a high proportion of announced advanced biofuel projects enter production will require an improved policy climate, with the widespread application of measures such as advanced biofuels quotas and financial de-risking measures. Unless technology learning and production scale-up significantly reduce costs, advanced biofuels will continue to cost more than fossil fuels, requiring ongoing policy support to ensure their commercial viability.

The vast majority of biofuel use is in road transport. Consumption is minimal in the aviation and marine sectors due to the greater challenges that long-distance transportation faces in identifying economically and technically viable means of decarbonisation.

In the SDS, around 11% of the combined demand from aviation and marine transport is met by biofuels in 2030. Reaching this level of consumption requires market and policy frameworks that reflect the international nature of these sectors, as well as increased commercial production of biofuels that meet the technical and economic requirements of use in planes and ships.


Innovation

Technological innovation in the transport biofuels industry aims to reduce lifecycle GHG emissions and production costs, and maximise the value of co-products.

Development of pretreatment methods to expand the range of suitable waste and residue feedstocks can increase the decarbonisation potential of biodiesel and HVO production. Efforts are ongoing to optimise cellulosic ethanol and co-product yields from feedstock and energy inputs in order to accelerate production growth.

There is also unexploited potential to harness synergies from the integration of conventional and advanced biofuels plants, as shown by the production of cellulosic ethanol from corn fibre residues in the United States.

Policy innovation is also needed for transport biofuels to meet SDS goals. Technology-neutral policies that specify reductions in fuel life-cycle carbon intensity, such as California’s low-carbon fuel standard and Germany’s climate protection quota, create demand for fuels that offer the highest decarbonisation relative to cost. These policies have proved effective in enhancing greenhouse gas (GHG) emissions reduction from biofuels.


GHG emissions reductions from selected biofuels under Germany’s Climate Protection Quota

Technology-neutral policies have been successful in reducing greenhouse gas emissions from biofuels.

	2014	2015	2016
Biodiesel	55	65.3	71.5
Biomethane	74.7	84	86.4
Ethanol 	56.9	66.1	70
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Source: F.O. Lichts (2017), “Germany – GHG savings of biofuels continue to rise”, www.agra-net.com/agra/world-ethanol-and-biofuels-report/biofuel-news/biodiesel/germany---ghg-savings-of-biofuels-continue-torise-553313.htm.

However, for novel advanced biofuels that possess longer-term decarbonisation potential but currently entail high investment and production costs, dedicated quotas to provide guaranteed demand will be necessary to secure investment and support the market growth required to reduce costs. Corporate green flying programmes can facilitate greater uptake of aviation biofuels by covering the current cost difference between bio-based jet fuel and fossil jet kerosene.

In addition, more widespread sustainability governance based on internationally aligned criteria remains essential to ensure that scaling up biofuel production to meet SDS consumption levels in 2030 delivers tangible social, economic and environmental benefits, including the required GHG emissions reduction.

Most current biofuel consumption is in the form of blending at low percentages with fossil transport fuels. Consumption at higher blend levels increases the decarbonisation achieved by sustainable biofuels.

To facilitate the use of higher biofuel blends, a transition in vehicle fleets towards a greater proportion of suitable (e.g. flexible fuel) vehicles is necessary. Higher consumption of “drop-in” biofuels, either unblended or used at high blend levels, also maximises decarbonisation.