This opinion by Crux Alliance Executive Director Joe Ryan was originally published by FORESIGHT Climate and Energy. Foresight Climate and Energy does not necessarily hold the views expressed in this piece.
While there is now global recognition that first-generation biofuels are risky, we are still seeing policies that promote these fuels or that don’t exclude them directly or through strong policies. And given our need to rapidly cut emissions, we really can’t afford this kind of ambivalence in policies.
My name is Joe Ryan, and I have been the executive director of the Crux Alliance since its founding in 2019. The Crux Alliance is a philanthropic initiative that ensures policymakers around the world have the technical assistance and cutting-edge research that they need to craft the most effective decarbonisation policies possible.
In terms of definitions, biofuels are a liquid fuel produced from biomass, mostly crops, and they fall into roughly two categories: first-generation biofuels and second-generation biofuels.
First-generation biofuels are made from crops like corn, sugarcane, palm oil, soy. Biofuels made from these crops have been the dominant type of biofuels used since the industry’s modern-day beginnings during the 1970s oil crisis. The crops are easy to convert into ethanol, and so they can be scaled pretty readily. And they’re in production around the world, with the US and Brazil being the largest producers.
That brings us to the second type of biofuels, which are known as second-generation biofuels, or sometimes they’re called advanced biofuels. These biofuels are produced from agricultural waste, like bagasse, which is that fibrous material left after a sugar cane is crushed, or like wheat straw or corn stover, which is all the stuff left over once you pull the corn out to process.
These feedstocks are generally regarded as more sustainable because they do not compete with food crops for land. Instead, they kind of take what would have otherwise been waste materials and turn them into something useful. The challenge with second-generation biofuels is that the cost to convert them to biofuels is higher, and so their scale is somewhat limited.
Demand increase
Most biofuels produced today are still first-generation, upwards of 90 percent. And they
are primarily used ethanol for cars, and that largely comes from corn or sugarcane, and then biodiesel for trucks, which is made up of palm, soy, or oil. About 90 percent of all biofuels today are used for road transport. There’s a small percentage being used for heat, industry, or power generation.
And the use of biofuels is increasing. The International Energy Agency (IEA) estimates biofuel demand is going to increase by 30 percent just over the next few years. That’ll primarily be driven by Brazil, India, and Indonesia, each of which have some pretty large production potential and are strongly promoting first-generation fuels in policies. And they’re doing it for some key reasons: they want to reduce dependence on oil imports; they want to create some new economic opportunities; and they also see this as a decarbonization strategy.
“Globally, we’re now at about a football field of tropical rainforest being cut down every six seconds and then the vast majority of that is for agriculture and biofuel.”
Several major economies are really pushing to expand first-generation biofuels. The problem is that first-generation biofuels are likely to increase greenhouse gas emissions compared to the fossil fuels that they are replacing. Because these crops that are used for biofuels will drive what is known as indirect land-use change.
Indirect land-use change is the additional deforestation or conversion of natural grasslands or peatlands to crops. The way to think about it is, if food crops are taken out of circulation for food and used for biofuels, the demand for that food doesn’t go away. Rather, those crops are then pushed into new areas. And converting new land for additional food production can cause as much as two or three times more carbon emissions than the biofuels themselves would actually save.
In Brazil, for instance, [the] expansion of soy for biodiesel displaced cattle ranching, and that indirectly then triggered additional deforestation. Right now, the world’s single largest deforestation project is happening in Indonesia, the forest area equivalent to the size of Belgium is being cleared to produce sugarcane-derived bioethanol, rice, and some other food crops. Globally, we’re now at about a football field of tropical rainforest being cut down every six seconds and then the vast majority of that is for agriculture and biofuel.
Role to play
Ironically, fuel policies intended to reduce emissions have actually contributed to deforestation and have increased emissions. A study by Transport and Environment in the European Union found that the EU’s Renewable Energy Directive, which drove up demand for cheap crop-based biodiesel from palm and soy, likely caused three times more CO2 emissions than the fossil fuels they were intended to displace.
Because of these risks and because electrification is a much more cost-effective strategy for decarbonising road transport, biofuels are likely not going to be a central player in the energy transition. They’ll be gap fillers. In the case of road transport, and this includes heavy-duty vehicles, by the way, direct electrification is going to be much more cost-effective because batteries are getting so much cheaper. The cost of batteries has fallen, on average, 90 percent since 2010, and the technology just continues to improve.
“Biofuels are likely not going to be a central player in the energy transition. They’ll be gap fillers.”
By contrast, sustainable biofuels, to be cost-competitive with fossil fuels, need to be continually subsidised. So that math is only going to get more and more favourable for electrification. That said, second-generation biofuels will likely need to play a role in decarbonising some sectors, like aviation, perhaps marine, because those sectors are actually hard to fully electrify.
But even with second-generation biofuels, those will not be produced in sufficient quantity to meet the demand. And so all the more reason to, one, make sure that those high-quality biofuels are dedicated to the sectors where there are no other options. And, two, and this is an important signal, for the countries that invest in advanced biofuels now, they are likely to enjoy a very competitive advantage when it comes to market share.
Number crunch
Determining truly low-carbon biofuels is a challenge. Many fuel policies use something called a carbon intensity metric to determine if a fuel is low-carbon. But not all of these policies incorporate indirect land-use change into their calculations. And even when they do, the results will vary greatly depending on the assumptions that the model uses. So while intensity metrics can be useful, they can’t really guarantee that the fuel we’re pursuing or that biofuel stock is truly low-carbon.
Governments are taking biofuels seriously. They continue to do so for a number of reasons. Emerging economies view biofuels as a means to reduce transportation pollution, to further develop their economies, to enhance their own domestic energy security by relying less on fuel imports, and to create jobs.
India, for example, launched the Global Biofuels Alliance during the G20 Leaders Summit in 2023 with strong support from Brazil and the US. The aim of the alliance is to boost both supply and demand for biofuels, and it now has something like 24 member countries.
“A more ambitious electrification strategy in Brazil would create twice as many automotive jobs compared to a strategy focused on ethanol blending.”
While the alliance is pursuing the development of international standards for sustainable biofuels—that’s good—and it’s emphasising the development of second-generation biofuels—also good—it still really supports biofuels as a strategy for cutting emissions from road transport, and that’s just a more expensive path.
Even India’s own official think tank for the government estimates that EVs, or electric vehicles, would reduce India’s crude import bill by about $13 billion annually by 2030. In contrast, ethanol blending, about 20 percent ethanol, would save around $3.5 billion annually. That means EVs offer India about three times more savings than ethanol blending.
The benefits are greater for jobs, too. A study by the International Council on Clean Transportation (ICCT) found that a more ambitious electrification strategy in Brazil would create twice as many automotive jobs compared to a strategy focused on ethanol blending.
Non-compete clause
In terms of ensuring biofuels don’t compete with food production, one way is to design policies that are technology-neutral. That way, the most competitive zero-emission solutions will win. And in most cases, that’s going to be electrification rather than biofuel.
We can further help prevent the demand for biofuels from driving deforestation by designing policies that limit or just outright exclude biofuels produced from food crops and focus rather incentives on advanced biofuels.
Designing policies that shift the economic incentives for landowners and small farmers away from land clearing has also proven highly effective. For instance, Costa Rica’s success at stopping deforestation came in no small part from its programme that pays farmers to conserve forests.
Next steps
When it comes to protecting the climate, no market has gotten it right on biofuels, but countries are making progress. The EU revised its Renewable Energy Directive in 2018 to cap food-based fuels in the road sector. And then it will completely phase out high-risk biofuels like palm by 2030. They did this because they realised in their initial policy design, which didn’t exclude these fuels, there was a clear indication that the policy was actually causing higher emissions.
“Designing policies that shift the economic incentives for landowners and small farmers away from land clearing has also proven highly effective.”
In Brazil, it provides carbon credits to biofuel producers. And it only certifies traceable biomass cultivated on land without direct land-use change. That’s great. The challenge is lifecycle emission estimates for the programme do not include indirect land-use change. And so it’s going to be hard to understand the full climate impact of the biofuels that the programme is incentivising, but it’s certainly a step in the right direction.
The global aviation and marine sectors have both committed now to reaching net zero by 2050 and backed with enforcement mechanisms. It’s not perfect, right? The International Civil Aviation Organisation’s programme excludes biofuel feedstocks grown on land with, quote unquote, “high carbon stocks”—that’s basically forests and peatlands. But the International Maritime Organisation’s policy doesn’t have those restrictions. And so revisions are likely going to be necessary there.
Action required
While there is now global recognition that first-generation biofuels are risky, we are still seeing policies that promote these fuels or that don’t exclude them directly or through strong policies. And given our need to rapidly cut emissions, we really can’t afford this kind of ambivalence in policies.
Given that our time to halt dangerous climate change is running out, we need to focus biofuels policies so that they do a couple of things:
One, that they do not compete with food.
Two, that biofuels do not drive land-use change.
And three, that biofuels do not try to do the job that electrification can do better.