Understand your biofuel emissions

Part of our High-Carbon Commodities series

Biofuels have become a major talking point in our global conversation about sustainable transport, electricity and heat. 

Promoted as a low-carbon alternative to fossil fuels, the demand for biofuels reached an all-time high of 4.3 exajoules (EJ) in 2022 –  that’s 170,000 million liters. With the development of new biomass-conversion technologies along with infrastructure adaptations, it’s getting easier and easier to accommodate a wider range of liquid fuels, like biofuels, into our transportation systems.  

Yet, not all biofuels are created equally. 

In some cases, they’re no less carbon intensive than fossil fuels (we’ll come back to this below).

So how can energy traders and producers – who are aiming to decarbonize their portfolios and products by shifting to biofuels – ensure they’re really taking the lower-carbon route? 

Here’s how to navigate the complex environmental impact of biofuels, and start quantifying their carbon footprint with accuracy. 

What are biofuels?

Biofuels are renewable fuels made from organic materials known as biomass. They come in several forms, each suitable for different types of energy needs. 

Bioethanol

Ethanol made from the fermentation of sugars from crops like corn or sugar beet, used primarily as a ‘drop-in’ (partial) substitute for gasoline.

Biodiesel

A drop in substitute for diesel made from the esterification of vegetable or animal fats.

Renewable Diesel (Hydrotreated Vegetable Oil  — HVO)

A full diesel substitute made by the hydrotreatment of vegetable or animal fats. 

Sustainable Aviation Fuel (SAF)

Similar in production to HVO but further distilled to meet the stringent requirements for aviation/jet fuel.  

Biofuels and net-zero goals

The International Energy Association (IEA) recognizes the key role of biofuels in decarbonizing the transport sector, and more than 60 countries have launched biofuel programs and set targets for blending biofuels into their fuel pools. 

Today’s supply isn’t enough. According to the IEA, to get on track with their Net-Zero 2050 model for global energy supply, 10 EJ annually are required by 2030 – that’s an average growth in production of around 11% per year. In addition, biofuels in air travel must increase from near-zero in 2022 to account for 10% of all aviation fuel demand in 2030. 

However, for biofuels to be part of the solution in reducing global greenhouse gas (GHG) emissions, it’s crucial that their carbon footprints are measured and managed accurately and transparently while their production ramps up. 

What’s the carbon footprint of biofuels?

Biofuels are generally considered less carbon-intensive than fossil fuels, but their actual impact depends on everything from how the biomass is grown to how the fuels are produced and used. Accurately measuring this impact requires looking at the entire lifecycle of the biofuel, which can reveal significant variations in carbon intensity. 

Depending on the biofuel and the methodology used to measure it, the carbon intensity – grams of carbon dioxide equivalent (gCO₂e per megajoule (MJ) – can range hugely. As shown in the diagram below, studies like this one by Jeswani et al. report enormous ranges – palm oil being anywhere from close to 0gCO2e/MJ to higher than 250 gCO2e/MJ (far higher than fossil diesel average – which has a much lower uncertainty range than biofuels).

That means there are cases where wheat-derived biofuels are more carbon-intensive than fossil diesel fuels. However, every biofuel listed can be significantly lower in carbon than fossil diesel. That’s why high quality carbon accounting, using detailed supply chain information and clear assumptions, is critical to make the right decisions and interventions into the carbon footprint of the biofuels produced and sold.

This means the only useful approach to understanding and calculating your biofuel product emissions is a granular analysis of your specific supply chains. It’s only meaningful if you know all of the factors that influence emissions (see below) to understand your complete carbon footprint.

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What causes emissions in the biofuel lifecycle?

The lifecycle of a biofuel involves many stages that contribute to its overall carbon footprint.

Feedstock emissions 

The energy consumption in farming and the type of crops grown can significantly impact biofuel emissions. The geographical differences in farming practices add another layer of complexity to accurately measuring emissions.

One crucial but overlooked factor is land use change (LUC). This can be direct — by clearing land for new crops — or indirect, when the demand for biofuel crops pushes other farming activities to new areas. While direct changes are easier to measure, the impacts of indirect changes are complex and harder to predict. 

Organizations like the World Resource Institute have noted that these impacts may be underestimated by current policies like the US Renewable Fuel Standard (RFS), potentially skewing the true environmental impacts.

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• Direct Land Use Change (DLUC): DLUC happens when land, like forests or grasslands, is converted into agricultural land specifically for biofuel crops. For example, converting rainforests into palm oil plantations is a high DLUC activity that is contentious due to environmental concerns. DLUC is relatively easier to calculate and has established norms for inclusion in biofuel inventories, the lack of traceability to specific farms adds a layer of uncertainty.

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• Indirect Land Use Change (ILUC): ILUC happens when the demand for biofuel feedstock pushes the production of food and feed crops to new areas, previously uncultivated. The challenge here is in estimating these changes, which often involve complex counterfactual scenarios projected up to 20 years into the future. Quantifying indirect land use change remains controversial and it is not always included in a product carbon footprint. Care should be taken when comparing relative product intensities for this reason.

Production emissions 

The technologies used to produce biofuels differ in their energy efficiency and carbon emissions. For example, Hydrotreated Vegetable Oil (HVO) production is more energy-intensive than biodiesel production via trans-esterification. Some biodiesel by trans-esterification is fossil-fuel-free, but some isn't; there may be methanol included upstream, which can come from fossil fuels, resulting in fossil carbon embedded into the product.

Recycling and waste use 

The biofuel industry is increasingly turning to waste materials like used cooking oil and agricultural by-products such as corn husks. By recycling these, the industry avoids additional emissions since these materials are recovered and repurposed instead of discarded – all upstream emissions to produce the feedstock are only allocated to the first consumer’s cooking oil that would otherwise be disposed of in landfill, rather than to this biofuel’s production process. 

By allocating the original emissions to the first consumer’s cooking oil, the overall environmental impact of the biofuel is effectively reduced. The same is true of the use of the farmer’s corn hulk, even though, unlike cooking oil, it would otherwise be waste with no other economic value or use. 

However, this process must be carefully managed. There’s a risk that instead of genuinely reducing cross-industry emissions, it simply shifts the accounting of emissions from one process to another – and can even incentivize increased production of by-products. 

Emissions allocation remains a complex issue, with varying approaches across national biofuel programs.

Regulating biofuel emissions

Navigating the fast-changing biofuel sector is challenging. The focus is on accurately tracking where biofuels come from and making sure carbon emissions are properly counted. 

The EU's RED II initiative sets strict rules to incorporate low-carbon biofuels into Europe's energy mix, requiring detailed tracking of different materials and their environmental impacts. Additionally, the Union Database for Biofuels aims to ensure better tracking and reduce fraud. 

In the U.S., the Renewable Fuel Standard program issues biofuel producers with traceable Renewable Identification Numbers (effectively credits representing renewable fuel), which fossil fuel companies then purchase in proportion to a percentage of their petroleum product sales. This is designed to encourage more biofuels in the energy mix. California has its own approach, the Low Carbon Fuel Standard, to push for cleaner fuels at the state level.

Are biofuels renewable?

The answer to this question depends on the definition of renewable taken. A renewable fuel is a fuel that comes from a renewable resource, like plants or animals or natural forces. Renewable fuels can be replenished and don't run out. This is not true for all biofuels especially where farming practices are not sustainable. It is debatable if the crop is truly infinitely regenerative in these cases. In these cases some argue the label renewable is not applicable.  Broadly, this term will include biofuels when used in the literature, but the context and details matter to avoid any hints of greenwashing.

Decarbonization through biofuels: Achieving targets with carbon footprinting

Effective decarbonization using biofuels hinges on accurate carbon accounting. Without the numbers, making and demonstrating meaningful change becomes limited – since the same commodity could have vastly different carbon footprints. A high-quality product carbon footprint or corporate carbon footprint will inform your customers and stakeholders, and your own decision-making about procurement and production. 

Boost your biofuel strategy with CarbonChain

CarbonChain supports biofuel and other energy traders, producers and wholesalers in understanding their supply chain hotspots. We provide the quality carbon accounting aligned with the Greenhouse Gas Protocol Product Standard needed to ensure a well-intended portfolio shift in bio-products is truly representing relative decarbonization and supports your organisation’s decarbonization ambitions.

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