Biofuels

Electrification is at the center of the clean energy transition, but there are limits to what electrons, with current technology and infrastructure, can do. Take aviation as an example: No battery today can power transcontinental flights. Sustainable aviation fuel (SAF)—a type of biofuel—is currently the only deployable decarbonization pathway for long-haul air travel. SAF demand is projected to grow fivefold by 2030, driven in part by mandates like the European Union’s ReFuelEU and the International Civil Aviation Organization’s CORSIA. 

Heavy-duty trucking also illustrates the challenge. While electric passenger vehicles compete on cost and performance with their internal combustion engine counterparts, long-haul road transport still relies largely on diesel for range. Biofuel alternatives like renewable diesel offer a provisional way to reduce emissions until batteries, hydrogen fuel cells, or technologies now in the R&D stage can replace them. Likewise, though maritime shipping may ultimately be powered by ammonia, hydrogen, or methanol, for example, biodiesel and biomethane can substitute fossil fuels in the interim.  

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The evolution of biofuel technology is defined by the type of feedstock used. First-generation biofuels—namely ethanol and biodiesel—are derived from crops like corn, sugarcane, soy, and palm oil, and dominate the industry today. However, while cost-competitive and backed by mature supply chains, they compete with food production for feedstock and have been linked to land-use change and biodiversity degradation. 

Second-generation biofuels represent a more sustainable model. They use circular, non-food inputs for feedstock, including agricultural residues, forestry by-products, used cooking oil, animal fats, and municipal waste. This avoids land-use conflicts and reduces lifecycle emissions by more than 80 percent compared with fossil fuels. 

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Conventional biofuels (like ethanol and biodiesel) typically require blending with fossil fuels, which increases their carbon intensity. The next innovation frontier is advanced “drop-in” fuels that can be used directly in today’s engines, pipelines, and refineries. Such compatibility enables rapid deployment without parallel investment in new engines or infrastructure for faster scale and emissions reductions. 

Leading the advanced biofuels category is hydroprocessed esters and fatty acids (HEFA), though it’s constrained by limited feedstock availability. Hydrotreated vegetable oil (HVO) has emerged as an alternative drop-in option, with global production capacity expected to nearly double by 2028. Other innovations include Fischer-Tropsch and Alcohol-to-Jet production pathways, which broaden the range of usable feedstocks to include cellulosic residues and alcohols. Pyrolysis, though earlier in development, adds further feedstock flexibility. 

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Global production of biofuels is expected to expand 2.5-fold by 2050, with nearly 90 percent of that growth expected to come from advanced biofuels produced from residues, waste oils, and other low-carbon feedstocks. This transition is already evident in the United States, where renewable diesel output grew nearly 80 percent annually between 2020 and 2024, even as conventional biodiesel production declined due to refinery conversions and repurposing of existing plants. 

Yet across all categories, feedstock volatility remains a key constraint. Unlike fossil fuels, whose costs are shaped by extraction and geopolitics, biofuel prices are tied to agricultural markets that fluctuate with weather, land management, and policies.

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