Production of biofuels for transportation will fall for first time in two decades

Incentives to drive a rapid recovery by the sector, one of the hardest hit by the COVID-19 pandemic, will contribute to a resumption of world economic growth, save or create millions of jobs, and contain global emissions of carbon dioxide, experts say.

By Elton Alisson  |  Agência FAPESP – World production of biofuels for transportation, such as biodiesel, cellulosic ethanol and hydrotreated vegetable oil (HVO), will fall this year for the first time in two decades owing to the impact of the COVID-19 pandemic on economic activity, mobility and oil prices.

Incentives to drive a rapid recovery and acceleration by the sector, which has been one of the hardest hit by the crisis, will contribute to a resumption of world economic growth, create millions of jobs, and contain global emissions of carbon dioxide (CO₂).

These are the main findings of a sustainable recovery plan published in June by the International Energy Agency (IEA) in partnership with the International Monetary Fund (IMF).

Some of the projections in the plan were presented by Paolo Frankl, Head of the IEA’s Renewable Energy Division, during an online event held on October 15 by the Biofuture Platform, launched in 2016 by 20 countries including Brazil to promote international coordination on the bioeconomy and low-carbon transportation solutions. 

The webinar was supported by the FAPESP Bioenergy Research Program (BIOEN) and was part of the 2020 Brazilian Bioenergy Science and Technology Conference (BBEST 2020).

“We forecast a double-digit decrease – the first in two decades – in world production of biofuels for transportation this year,” Frankl said.

According to the IEA’s data, global production of biofuels for transportation totaled a record 162 billion liters, or 2.8 million barrels per day, in 2019 and is expected to fall by 20 billion liters (13%) in 2020, returning to the level seen in 2017.

Before the COVID-19 pandemic, biofuel production was expected to rise by more than 5 billion liters, or 3%, this year. The economic contraction has strongly affected the transportation sector, resulting in a drop in demand and consequently in diesel and oil prices.

“The oil price drop due to oversupply as demand plunges has undermined the competitiveness of biofuels,” Frankl said.

Implementation of the sustainable recovery plan would boost annual global economic growth by an estimated 1.1 percentage points on average, he continued, and save or create some 9 million jobs per year.

“Bioenergy is one of the most labor-intensive energy industries, employing around 3 million people worldwide,” Frankl said. “In addition, it ranks second in terms of the number of jobs created per million dollars spent, especially in emerging economies, which have been most adversely affected by the crisis due to the pandemic.”

Climate goals

If biofuel production for transportation recovers, the global greenhouse gas emissions peak reached in 2019 will not be surpassed, he added.

According to an IEA report published in February, global CO₂ emissions totaled some 33.3 billion tons in 2019, for no change compared with the previous year.

“Just decarbonizing the power sector isn’t sufficient to achieve climate goals because it only leads to one-third of what needs to be done to reach net-zero CO₂ emissions by mid-century or a little later, but certainly by 2070,” Frankl said. 

There is no single “magical” solution to the challenge of decarbonizing the power sector, he continued. A large portfolio of clean energy technologies is needed, and the use of modern bioenergy must be tripled, both directly replacing fossil fuels and via carbon capture and storage. This alone will reduce annual carbon emissions by 20%.

“We need to ramp up the use of biofuels and biogas quickly. In the transportation sector, growth in the use of liquid biofuels has been phenomenal, but it’s still necessary to at least quadruple their share of total fuel consumption not just in road transportation but also in shipping and aviation,” Frankl said.

The IEA projects that biofuels, hydrogen and hydrogen-based synthetic fuels can meet up to 20% of global final energy demand by 2070, particularly in areas where direct electrification is difficult.

Principles for Recovery

Frankl concluded his presentation by stressing the Five Principles for Post-COVID Bioeconomy Recovery and Acceleration, adopted by the 20 member countries of the Biofuture Platform. One principle is “Do not backtrack”, so as to assure continuity of the bioenergy projects, policy mechanisms and goals established before the pandemic. Another is “Reassess fossil fuel subsidies”.

“With oil prices so low, now is the ideal time to implement reforms and phase out fossil fuel subsidies,” Frankl said.

The principles are voluntary and non-prescriptive. Biofuture Platform’s member countries are encouraged to implement them in accordance with broader sustainability initiatives and economic recovery programs. 

“The principles are non-binding, meaning they aren’t formal treaties and their application isn’t mandatory. The intention is to guide policy, to provide a direction for things that countries should avoid and should pursue to try to mitigate the negative effects of the COVID-19 pandemic, especially in the bioenergy sector, and to try to make the best of a difficult situation,” said Renato Godinho, Head of the Energy Division at the Brazilian Ministry for Foreign Affairs and Chair of the Biofuture Platform.

Several countries have implemented new policies aligned with the principles, or are thinking of doing so. They include Brazil, with a program called RenovaBio, and Canada, with a Clean Fuel Standard.

“The government of Canada considers bioenergy a key component of its plan to meet its 2030 climate goals and achieve net-zero CO₂ emissions by 2050, but we still have a lot of work to do,” said Devin O’Grady, Manager of the Clean Fuels Branch at the Department of Natural Resources Canada.

“Bioenergy and other low-carbon fuels currently account for less than 5% of Canada’s energy consumption. We believe they could power 60% of our economy.”

India has also set itself ambitious goals. It plans to increase the use of bioenergy, not least by blending 10% ethanol with gasoline by 2022 and 20% by 2030.

“Demand for energy is rising strongly in India in step with the growth in transportation and petrochemicals, but we are committed to growing through clean energy. We want to reduce imports of coal by replacing this fossil fuel with renewables,” said K. K. Jain, Executive Director of the Center for High Technology at India’s Ministry of Petroleum and Natural Gas.

France has announced a financial support package for the aviation sector in exchange for the achievement of sustainable fuel targets. “The purpose of the pact is to support research and innovation by the aerospace industry so that France can continue to be one of the leaders in ‘green’ aeronautical technology,” said Robert Mauri, Deputy Director for Sustainable Air Transport at France’s Ministry for Ecological Transition.

Latin America and Africa also have major opportunities for expanding bioenergy production, as shown by a global assessment of bioenergy sustainability conducted by researchers affiliated with BIOEN in cooperation with the Scientific Committee on Problems of the Environment (SCOPE), an intergovernmental agency associated with UNESCO, said Glaucia Mendes Souza, a professor at the University of São Paulo’s Institute of Chemistry (IQ-USP) and coordinator of BIOEN.

“Latin America and Africa can benefit significantly from bioenergy, and could become a supplier of biofuels and other renewable energy options,” she said.

Ilkka Räsänen, VP of Public Affairs for Finnish fuel company Neste, stressed the importance of integrating sustainability-rewarding mechanisms into policy frameworks to incentivize production and use of bio-based fuels, chemicals, and materials, in accordance with the fifth principle. 

Germany and Sweden have set greenhouse gas reduction quotas, for example. Finland has a lower tax rate for waste- and residue-based biofuels.

“In Finland, the excise tax regime rewards biofuels made from waste, residues, and lignocellulosic biomass,” Räsänen said.