IEA Tracking Clean Energy Progress – biofuels/bioenergy

Nov 2021

November 2021

The IEA’s Tracking Clean Energy Progress (TCEP) reports assess the status of 46 critical energy technologies and sectors and provides recommendations on how they can get ‘on track’ with the IEA Net Zero Emissions by 2050 scenario. Below a short overview of progress in bioenergy relevant fields.


Transport Biofuels – not on track

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Replacing fossil fuels with biofuels is one of the primary ways to decarbonise the transport sector. Biofuels are particularly important for trucking, shipping and aviation with few other low-carbon technology options. Biofuel consumption triples between 2019 and 2030 to 12 EJ in the scenario, equivalent to 12% of global transport fuel demand in 2030 and representing 64% of the transport sector’s renewable energy consumption in 2030.

Today, however – accounting for just 3% of transport fuel demand – biofuels are not on track to attain the Net Zero trajectory, and high commodity prices present a near-term obstacle. Biofuel demand grew 5% per year on average between 2010 and 2019, while the Net Zero Emissions by 2050 Scenario requires much higher average growth of 14% per year to 2030.

Despite challenges arising from the Covid-19 crisis and high feedstock costs, a number of new policies that could accelerate sustainable biofuel demand are implemented or being discussed in large biofuel markets.

  • Europe: Fit for 55 (with a 13% decline in the GHG intensity of transport fuels by 2030)
  • North America: the US Renewable Fuel Standard, Sustainable Aviation Fuel Challenge and Canada’s Clean Fuel Standard
  • Asia: India’s 20% ethanol blending mandate and China’s 14th Five Year Plan.
  • South America: Brazil’s RenovaBio

Waste- and residue-derived fuels deserve more policy attention. Today, used cooking oil and waste animal fats provide the majority of non-food-crop feedstocks for biofuel production. Given that these feedstocks are limited, however, new technologies will need to be commercialised to expand non-food-crop biofuel production. For instance, cellulosic ethanol and biomass-to-liquids technologies use non-food feedstocks to produce low-carbon biofuels for use in the transport sector.

Recommended actions:

Biofuel demand and production are expanding globally, but not at a pace consistent with the Net Zero Scenario. National governments can employ a combination of regulatory measures such as mandates, low-carbon fuel standards and GHG intensity targets, combined with carbon pricing and financial incentives, to help raise biofuel demand. In all cases, policies should include rigorous sustainability criteria and promote lifecycle GHG emissions reductions.

Ensure sustainability: Sustainability governance is essential to ensure that higher biofuel consumption provides tangible social, economic and environmental benefits, including lifecycle GHG emission reductions. Furthermore, governments should introduce policies that aim to reduce the lifecycle carbon intensity of fuels.

Advance beyond low biofuel blending shares: Most biofuels are currently consumed through blending at low percentages with fossil fuels (typically less than 10% by volume or unit of energy). Policymakers should therefore find ways to encourage the use of flexible-fuel vehicles and drop-in biofuels to allow higher shares of sustainable biofuels to replace gasoline or diesel.

Commercialise advanced fuels: Policies are needed to facilitate the technological learning and production scale-up necessary to reduce costs. Relevant policies include advanced biofuel quotas and financial de-risking measures. These would be particularly effective in Latin America and China as well as ASEAN countries, as these regions possess significant feedstock resources.

Aviation – not on track

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Over the next decade, a range of technical, operational and behavioural solutions can be applied to reduce aviation emissions. The main technology option is to transition from fossil-derived jet kerosene to sustainable aviation fuels (SAFs), i.e. biofuels and synthetic jet kerosene.

SAFs are a promising solution to decarbonise aviation, as their use requires only limited infrastructure and equipment modifications. However, they currently account for less than 0.1% of jet kerosene consumption, and because production levels are low, they still cost more than twice as much as conventional fuels.

Policies are needed to support SAF consumption and boost demand growth, which is required to enlarge production to the level needed to realise economies of scale. Fuel offtake agreements committing airports or airlines to purchase biojet fuels at a given price are an important tool to provide market certainty.

Both low-carbon fuel standards and blending mandates with minimum GHG emissions reduction thresholds are promising policy instruments that can provide clear long-term demand signals. Regardless of the policy approach, however, sustainability guardrails must be established and enforced to avoid other environmental or social impacts while increasing supply.

On the supply side, financial de-risking measures to enable suppliers to deliver capital-intensive commercial-scale SAF production facilities are key to mobilise investment. Funding will be needed to promote continued innovation on novel, low-carbon and sustainable production processes based on feedstocks such as agricultural waste, forestry or municipal waste, and residues.

Action from leading airlines and airports that serve as key international and domestic hubs can generate the market pull that is needed to catalyse SAF adoption. Over 20 airlines have begun to use SAFs and are announcing goals for blending shares into their overall fuel consumption. At the same time, nearly 20 airports regularly distribute biofuels and others have announced plans to do so in the future.

International shipping – not on track

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Virtually no low-carbon fuels are used in international shipping today. Biofuels are the only non-fossil fuel alternative that has been adopted to date, and they account for only 0.1% of final energy consumption. According to the current policy framework, low- and zero-carbon fuels are projected to make up roughly 2% of total energy consumption in international shipping in 2030 and 5% in 2050. However, this falls severely short of the 15% in 2030 and 83% in 2050 the Net Zero Scenario estimates to be needed.

It is therefore necessary to scale up vital technologies currently at the demonstration and prototype stages as soon as possible, and to develop supporting infrastructure.

The viability of low- and zero-carbon fuels is impaired by their high cost compared with fossil fuels. Market-based measures, such as carbon pricing, can close the price gap between fossil fuels and low-/zero-carbon fuels by causing negative externalities to be reflected in fuel prices.

District heating systems – not on track

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District heating systems are an important part of heating sector decarbonisation, as they allow for the integration of flexible and clean energy sources into the energy mix, which could be challenging at the individual building level in urban dense areas. However, although many cities are already implementing low carbon district heating solutions, around 90% of global district heat production today still relies on fossil fuels.

The primary renewable resources with potential to be employed in district heating systems are solar thermal, geothermal and bioenergy. Bioenergy currently accounts for the largest share of renewable district heat supplies.

National policies are fundamental to extend district heating system deployment and support local government actions. Policies that prompt greater district heating penetration and modernisation have been linked to: grants, subsidies and incentives for renewables (as in the European Union); fossil fuel, polluter and carbon taxes (diffused in Nordic countries and China); energy and heating plans/strategies (such as the EU Energy Roadmap 2050); the integration of district heating into energy standards for buildings (as per the zero-carbon-ready buildings concept); tariff regulation (as in Armenia and Denmark); and renewables targets (as in Finland).

Together with broader policy goals, targets related specifically to district heating (e.g. goals for district heating penetration, objectives for integrating renewable energy sources, and waste heat recovery subsidies) are important to drive the transition to efficient networks. To take full advantage of cross-sector (buildings, industry, and heat and power generation) and cross-service (heating and cooling) synergies, integrated infrastructure planning as well as interoperability need to be developed and tested.

Renewable power – more efforts needed

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Renewable power deployment as a whole still needs to expand significantly to meet the Net Zero Emissions by 2050 Scenario share of more than 60% of generation by 2030. Yearly generation must increase at an average rate of nearly 12% during 2021-2030, almost twice as much as in 2011-2020.

Increasingly competitive, renewables – especially solar PV and wind – are rapidly transforming power systems worldwide. As variable renewable energy shares increase, policies ensuring investment in all forms of flexibility become crucial.

Recent policy changes and deployment of bioenergy for power generation are not strong enough to ensure the long-term capacity and generation growth necessary to reach the higher Net Zero level. Policy actions need to reflect the multiple benefits of using bioenergy for electricity, including rural development, waste management and dispatchability.