Advanced biofuels in the EU: the race between electrons and molecules

The race to net-zero by 2050 and reducing transport emissions by 90% by 2050 is complex and multi-layered, with both electrons (electrification) and molecules (biofuels) playing crucial roles. Despite an extensive focus on electrification for road transport and an interest in hydrogen as a sustainable solution, advanced biofuels are equally important in the race for green transportation.

While the finish line may favour one over the other, a collaborative and innovative approach is paramount for the EU to achieve its ambitious climate goals.

Biofuels come in many forms and shapes and their exact role within the decarbonisation of the transport sector remains a topic of debate among policymakers. As the EU is ready to enter a new legislative cycle (2024-2025) and set new strategic priorities for the upcoming five years, it is a perfect opportunity to put biofuels under the magnifier for a detailed analysis of the current legislative landscape, the future of EU biofuel policies and its impact on businesses.

Unpacking the concept of biofuels

The common use of fuels heavily relies on fossil fuels, which have dominated the transportation sector for centuries. As the world is increasingly recognising the limitations of this resource and its contribution to increasing emissions and climate change, there is an increasing interest in cleaner, alternative ‘fuels’. These alternative fuels are called biofuels.

The biofuel playing field is composed of the following categories of fuels:

• Biofuels: Include bioethanol (petrol substitute) and biodiesel (diesel substitute). Biofuels are derived from plants, animal fats, and used cooking oil. They are sometimes blended with regular fuels, to decrease regular fuels’ emissions.
• Advanced biofuels: Derived from waste materials (manure, crop waste), advanced biofuels ensure even lower greenhouse gas emissions. Chemically similar to natural gas, it becomes biomethane and can be used for heating, transportation (in the form of bio-CNG/LNG), and even power generation. In this article, we mainly focus on this type of biofuel.
• Hydrogenated Vegetable Oil (HVO): HVO is made from plant oils or animal fats but is processed differently from other biofuels, through a hydrotreatment process, which removes oxygen and causes it to chemically imitate conventional diesel fuel composition. HVO can be used in higher concentrations without engine issues.

The advantage of biofuels is their strong resemblance to fossil fuels at the composition level, allowing them to blend with fossil fuels or replace them, without major changes to the transportation’s modus operandi.

Unlike fossil fuels, biofuels emit little greenhouse gases, which makes them attractive candidates for the greening of the transport sector. For instance, biomethane results in the least amount of CO2 emissions per kilometre (and even negative emissions) if counting the transport fuels’ emissions from the moment of producing the fuel/energy carrier (well-to-wheel).

However, biofuel emissions do not amount to the EU’s ambitioned net zero, something the EU has grappled with for two decades. As biofuels are combusted, they do produce a certain number of emissions. Further, their sustainability depends on the type of biomass they derive from (agricultural residues, municipal waste, sewage sludge).

This highlights the limitations of biofuels within the current legislative framework, where policymakers prioritised (new) technologies with the potential for complete elimination of emissions, like electric vehicles powered by renewable energy sources. Moving forward, research into advanced biofuel production methods and a focus on sewage sustainable biomass sources will be crucial to unlocking the full potential of biofuels as a tool for decarbonisation.

 

What are biofuels used for?

The usage of biofuels is especially important for hard-to-abate sectors – those industries like aviation, maritime shipping, building heating, and heavy-duty trucks that are crucial for the modern world but struggle to transition away from fossil fuels. These sectors rely heavily on existing infrastructure designed for traditional fuels and completely overhauling this infrastructure for electricity might be impractical or take an unreasonably long time. Biofuels offer a promising solution because they can be used in existing engines with little to no modification.

However, there’s a hurdle. Currently, advanced biofuels are often more expensive than their conventional counterparts. To bridge this gap and truly unlock their potential, technological advancements are needed to improve efficiency and reduce production costs. Additionally, larger production volumes would help drive down prices through economies of scale. By overcoming these challenges, advanced biofuels can play a vital role in helping hard-to-abate sectors decarbonise and contribute to a smoother energy transition.

The current EU policy landscape

While the outlook for biofuels in the EU is currently unclear, recent initiatives like the Net-Zero Industry Act and REPowerEU offer a glimpse of direction. These initiatives focus on research and development, as well as scaling up sustainable biofuel production, which could put the EU back on track to achieve its ambitious climate targets.

 

Uncertainties amidst EU policy evolution

The EU’s biofuel policy has been a work in progress, reflecting the technology’s inherent complexities. Last year, the European Court of Auditors (ECA) lamented the fact that EU policymakers seem to be making policy decisions without a long-term plan. The report concludes that the lack of a long-term vision undermines investment security, further hindering the deployment of biofuels.

Additionally, sustainability concerns, competition for biomass resources, and high production costs create further constraints. This uncertainty discourages investors and makes it difficult to scale up production, especially for advanced biofuels that could be crucial.

Notably, they addressed the slow progress on the deployment of advanced biofuels, which is concerning, especially considering the EU’s targets for renewable energy in transport. Moreover, inconsistencies in categorising feedstocks for advanced biofuels across Member States create an uneven playing field. Therefore, ECA asks for clearer guidelines.

 

Renewable Energy Directive

Policy-wise, the EU Renewable Energy Directive is the prime piece of legislation regulating the use of biofuels, providing the eligible list of sustainable feedstocks that can be used.

The updated EU’s Renewable Energy Directive (RED III) mandates a minimum share of advanced biofuels in the fuel mix, signalling the EU’s commitment to this technology. EU Member States need to take an ambitious approach to implementing the Renewable Energy Directive. Until May 2025 the Directive has to be transposed into national law.

 

FuelEU Maritime and ReFuelEU Aviation

While FuelEU Maritime and ReFuelEU Aviation set ambitious targets for advanced biofuels in shipping and aviation, this promising push for renewable and low-carbon fuels presents a potential challenge. Competition for these resources could arise between different end-use sectors.

 

Net Zero Industry Act

The Net-Zero Industry Act (NZIA) aims to support European green technologies, potentially boosting biofuel research and development. The EU has set a goal of reaching a production capacity of zero-emission technologies needed to meet at least 40 percent of the EU’s annual needs by 2030 and 15 percent of global production by 2040. The regulation should support net-zero technologies that contribute significantly to decarbonisation, with specific focus on eight strategic net-zero technologies that will receive additional support such as renewable biogas and biomethane.

While certificates for electricity are readily traded across Europe, biomethane certificates remain primarily within national registries. The Net Zero Industry Act aims to boost clean tech and renewable energy production within the EU. This act also presents an opportunity to see how these policy changes will influence the development of energy certificate markets.

 

REPowerEU

The war in Ukraine exposed the vulnerability of relying on external fossil fuel suppliers. Advanced biofuels, produced domestically from various sustainable sources offer the EU more control over its energy needs.

The RePowerEU initiative focuses on scaling up biomethane production to 35 billion cubic meters annually by 2030, primarily through anaerobic digestion of organic waste. Overall, the EU sees advanced biofuels as a strategic weapon in the fight against the energy crisis and dependence on external suppliers. The RePowerEU initiative, with its focus on biomethane, is a concrete example of how the EU is putting this vision into action. However, overcoming challenges related to sustainability and cost competitiveness is essential for widespread adoption.

 

Striking a balance between economic growth and environmental protection

While readily available feedstocks like used cooking oil offer a practical starting point, next-generation biofuels hold the true promise of significantly reducing emissions. Focusing solely on these readily available options could hinder the development of even more advanced technologies with broader biomass conversion capabilities.

Gasification, for example, has the potential to unlock a wider range of sustainable feedstocks. Additionally, research on utilising cellulose, the abundant building block of plant cell walls, holds immense potential for biofuel production.  Furthermore, exploring alternative feedstocks and developing valuable co-products like bio-based fertilisers could create a more sustainable and economically viable biofuel sector.

In conclusion, research in advanced biofuels is ongoing, with the potential to make significant contributions to a greener energy mix by 2050. Continued research, investment, and robust sustainability practices will be essential to determine if advanced biofuels can truly power a greener European future. A more objective and data-driven approach to biofuel policy, as advocated by stakeholders, can create a win-win situation. By supporting the development of this sector, the EU can create new markets for crops and residues while accelerating the transition to a low-carbon economy.

Advanced biofuels and electrification: complementary paths to EU’s clean transport future

Electrification and biofuels are complementary in the EU’s journey towards a clean transportation future. Continued research, innovation, and robust sustainability practices will determine if advanced biofuels can truly fill the tank for a greener Europe. By fostering collaboration between policymakers, researchers, and industry stakeholders, the EU can leverage the strengths of both electrons and molecules to achieve its ambitious climate goals.

Advanced biofuels have the potential to play a significant role in the EU’s green transition. However, addressing the issues raised in the ECA report is crucial for maximising their effectiveness. By implementing a long-term strategy, ensuring sustainable biomass management, and improving data transparency, the EU can create a more stable and efficient biofuels sector that contributes meaningfully to its climate goals.

A consistent and well-designed EU biofuel policy can play a key role in supporting the agricultural sector and accelerating the transition to a low-carbon economy. By embracing a mix of technologies, fostering innovation, and engaging in open dialogue, the EU can harness the potential of biofuels for a sustainable future.

What does this mean for your business?

With competitiveness being a major theme and questions arising over which sectors should contribute to the Green Deal, players in the advanced biofuels sector should seize the momentum in the new mandate to intensify advocacy activities and advocate for policies that support both climate neutrality goals and the interests of the industry.

 

A new era of low-carbon fuels is dawning

The EU is committed to a sustainable future, and its legislative framework is constantly evolving to reflect this. This includes the development of a Single Market focused on strategic areas and a New European Competitiveness Deal that could provide financial support for strategic industries. Businesses should be aware of these upcoming changes, particularly those related to advanced biofuels. The upcoming discussions on the next Multiannual Financial Framework will also be crucial in shaping future support.

The robust implementation of the Renewable Energy Directive III (RED III) will play a key role in achieving climate goals. While electric heavy-duty vehicles are gaining traction, policymakers acknowledge the importance of technological neutrality. This means supporting the development of advanced combustion engine technology alongside alternative solutions.

This could involve the continued development of advanced combustion engine technology alongside a new strategy for low-carbon fuels. This strategy would likely complement the existing EU hydrogen strategy and potentially include subsidies and funding for low-carbon fuels, with a particular focus on making advanced biofuel technologies more cost-effective. Frontloading funding in programs like Horizon Europe could be an option to stimulate the uptake of these technologies.

 

Your voice matters

In light of these potential changes, it is important for businesses to understand how the evolving EU legislative framework on advanced biofuels can provide a significant advantage in navigating the upcoming years.

Therefore, businesses should voice their needs on policies in the next few years.