Biofuels in emerging markets of Africa and Asia – An overview of costs and greenhouse gas savings

Oct 2024
Publications

This policy brief highlights the critical potential of biofuels in reducing greenhouse gas (GHG) emissions in the transportation sector in emerging markets of Africa and Asia. A previous report by IEA Bioenergy Task 39 (Transport Biofuels) discussed the potential of biofuels in emerging markets of Latin America. This report expands the study to countries of Africa and Asia: China, Ethiopia, India, Indonesia, Malaysia, South Africa, and Thailand.

Emerging markets are countries experiencing fast social and economic development, and their contribution to global GHG emissions is expected to rise fast. If this selected group of emerging markets were to have the same per capita CO2 emissions in the transportation sector as OECD countries, global emissions of this sector would increase by 102%. This policy brief discusses three aspects of biofuel use in these countries as a tool to curb GHG emissions:

  1. the potential GHG savings of sustainably produced biofuels,
  2. the impact of biofuel on the final cost at the fuel pump,
  3. the capacity of biofuel production considering land use demand.

The report was launched at the BBEST – IEA Bioenergy conference in São Paulo (22-24 October 2024).

The full report is available here: Emerging Markets Policy Brief

Factsheet delivered to G20: Biofuels in Emerging Markets Factsheet

Main conclusions:

  • Substantial reductions in GHG emissions compared to conventional fuels can be achieved for biofuels produced in Africa and Asia — up to 78% for biodiesel and 81% for ethanol. These values are similar to those previously reported for biofuels produced in Latin America. Notably, sugarcane ethanol in South Africa achieves an impressive 87% GHG emission reduction because of the high GHG emission intensity of fossil fuels used in the South African market (which uses synthetic fuels produced via coal gasification). Replacing fossil fuels with biofuels is a key strategy to reduce GHG emissions, particularly in circumstances and applications where electrification is difficult or only a longer-term option.
  • To make sure that GHG savings are not partly or fully counteracted by direct or indirect land use change effects, countries should create and enforce policies to avoid that any agricultural activity (including bioenergy crops) are expanded into high carbon stock areas.
  • Shifting from fossil to biofuels also has its challenges; however, implementing flex-fuel technology to allow users to seamlessly shift from fossil to biofuels is a reliable alternative to ease the energy transition in least developed countries where the installation of charging infrastructure for battery electric vehicles might be challenging. Without flex-fuel technology, when used in blends with fossil fuels, reductions of 10–15% in GHG emissions from the transportation sector are possible without engine modifications in the existing vehicle fleet.
  • Biofuels will not increase the energy cost for end consumers in most studied countries. Exceptions are China (where cropland availability is limited and competition with food production may occur) and Malaysia (where fossil fuel prices are subsidized to control inflation). Despite this, biofuels could still find a place through strategic imports (trade agreements) or biofuel blending mandates.
  • India, Indonesia, and South Africa emerge as key beneficiaries, given the low carbon intensity of their biofuels (when they don’t incur negative land use change), sulfur-related concerns for fossil diesel in Indonesia and the high carbon intensity of coal derived fossil fuels in South Africa.
  • Land demand for biofuel production is low compared to each country’s total land area and, in most cases, the agricultural area. However, it might pose pressure on cropland for food and feed purposes (in the case of China) or pastureland (almost inexistent in Malaysia). In this case, countries could rely on partnerships with other countries with more land availability – such as Brazil or the United States – so that they can implement their biofuel programs, with the condition that agriculture does not expand over areas of high carbon stock. Therefore, these partnerships should include international certification schemes.

Key recommendations:

  • Create global restrictions on coal use. This should include ammonia production (used for fertilizer) and synthetic fuel production via Fischer-Tropsch synthesis in South Africa. Despite the aspect of security of the energy supply that coal represents for South Africa, the production of synthetic fuels from coal has very high GHG emissions, and the country has great potential to produce biofuels.
  • Facilitate international trade of biofuels from countries with high domestic production potential to other countries. Domestic supply of biofuels is not always feasible, and imported biofuels still present considerably lower global warming potential than fossil fuels – which are imported as well by many countries.
  • Country-specific comparison between vehicles running on biofuels and battery electric vehicles is necessary for emerging markets considering their potential to produce biofuels and the forecasted growth of renewable electricity. Among the seven countries analyzed in this study, six have electricity with carbon intensity beyond 500 gCO2e/kWh. Consequently, a shift from internal combustion engines to electric vehicles in these markets is hardly beneficial in the short to mid-term. Moreover, the current vehicle fleet will stay in use for years to come. Thus, the carbon intensity of the diesel and gasoline fuel pools should be decreased by adding biofuels while the global fleet renews.
  • Establish policy schemes to promote and reward low carbon intensity biofuel production. Examples include the Renewable Fuel Standard in the United States and the RenovaBio program in Brazil. These policies should include transparent and auditable certification of sustainability criteria to increase financial rewards to the most sustainable biofuel production pathways, incentives for the use of abandoned and degraded areas, and restrictions on the expansion of bioenergy crops over high carbon stock areas.
  • In the short term, promote solutions with high technology readiness level and compatibility with current infrastructure. In parallel, stimulate research to incentivize the maturation of biofuel processes using lignocellulosic feedstock as well, which is a strategy that has potential to produce biofuels with even lower GHG emissions and increase the yield of biofuel by cultivated area.