Why biofuels are back

Most biofuels consumed globally come from food crops such as corn, palm oil, rapeseed, and sugar. These food-based biofuels boomed after the Kyoto Protocol, alongside a push in Europe and the US to expand their use in transportation. But their growth has stalled over the past 15 years, mainly because of high costs and growing questions over their climate impact, and amid a boom in EVs and renewable energy.

At last year’s COP30 climate summit, major producers sought to reignite the sector, announcing the Belém 4x Pledge to increase bioenergy and biofuel use fourfold over the next decade. About two dozen countries joined the initiative, while other nations are expanding biofuel production: Indonesia is planning to build a 560,000-hectare bioethanol estate in a forested region of Papua, while Malaysia is considering increasing its domestic fuel mandate to mix 30% of palm-oil-based biofuels with gasoline. California, too, is converting oil refineries to process imported biofuels as part of its Low Carbon Fuel Standard.

Biofuels are also increasingly being used to power heavy transport, including aviation, which consumes about 8% of oil globally and where electrification remains a distant dream, while a push is underway to expand biofuel usage in shipping, responsible for about 7% of global oil consumption.

This is where Big Oil is investing heavily. Companies such as BP, Chevron, ExxonMobil, Shell, TotalEnergies, and ENI, are leading this push, cumulatively investing in 43 biofuels production and processing plants aimed to be operational by 2030. The vast majority are not for biodiesel or ethanol — the fuel mixed with petroleum for use in cars in parts of the United States, Europe, and Southeast Asia. Instead they are “low-carbon drop-in fuels that can be swiftly integrated into existing aviation, heavy transport, and marine fuel systems,” said Lars Klesse, bioenergy research analyst at Rystad Energy.

For countries like Brazil, Indonesia, and Malaysia, energy security concerns sparked by the Iran war are also playing a major role. A key tenet of biofuel expansion in these countries is to replace costly imported petroleum or natural gas. “Recent developments in oil markets are incentivizing countries to accelerate the transition away from fossil fuels,” said Gerard Ostheimer, the head of the secretariat at the Biofuture Industry Council.

Both of the main arguments in favor of biofuels — that they strengthen energy security and are climate friendly — are dubious.

For one, they are typically costlier than refined products derived from fossil fuels, and so “shifting to a more expensive alternative has a somewhat limited benefit,” said Chris Malins, the executive director of UK-based energy consultancy Cerulogy.

And while producers insist they can cut carbon emissions, the science shows a different picture, according to Cian Delaney, an analyst at the Brussels-based think tank Transport & Environment. “There are emissions concerns from land-use change, biodiversity issues, concerns about freshwater impacts, and it’s inefficient,” he said. “You need a lot of land if you are going to convert those crops into energy to drive our cars, boats, and planes.”

Countries are already looking to expand the land dedicated to biofuel crops. For Brazil, this means expanding sugarcane into the Cerrado, the world’s largest grasslands and home to many endemic and threatened species. Indonesia is growing palm and sugarcane plantations in Papua, which “contains some of Indonesia’s last intact primary forest ecosystems and globally significant biodiversity,” said Tommy Pratama, executive director of the Jakarta-based nonprofit Traction Energy Asia. “Even when biofuels reduce tailpipe emissions, clearing primary forest or peatland releases carbon stored over centuries, destroys irreplaceable biodiversity-rich ecosystems, and creates long-term climate ecological liabilities,” he added.

Ostheimer of the Biofuture Industry Council argues that biofuels can be produced sustainably, and that certification and verification is improving. “Data will continue to validate the benefits of producing and using sustainable biofuels,” he said. Others point to next-generation, non-food based biofuels, using feedstocks like algae, which doesn’t require land to grow. But despite huge investment over decades, none of these technologies have proven to be financially viable or scalable.