Governments around the world have embraced biofuels – bio-based alternatives to fossil fuels for the transport sector – as a means to achieve policy goals in the areas of climate, agriculture, industry and trade. In response to various policy instruments such as quotas, tax exemptions or mandates for fuel blending, there has been a rapid increase in biofuel production and consumptionThis trend is expected to continue in the coming years. On the international stage, the Global Biofuels Alliance (GBA), initiated by the Government of India, was launched in 2023 to support this goal.

Although the GBA and most governments nominally agree that biofuels should be sustainable, the market remains heavily dominated by first generation biofuels (1G)These fuels are made from food crops rich in starch, sugar or oil, such as corn, sugarcane or soybeans.

Massive land demands and carbon costs

The production of these biofuels has direct and indirect environmental impacts. It is estimated that in 2023, around 9 leading countries (including the US, Brazil and the EU+UK) 32 million hectares (Mha) of land dedicated to the production of feedstock for biofuels. This net land requirement is comparable to the total area of Italy or the arable land of France.

This extensive land use brings with it "carbon opportunity cost" (carbon opportunity cost). If this area were allowed to return to a more natural state (such as forest or scrub), it could serve as carbon sink of 428 MtCO₂e/yearThis is significantly higher than the 233 MtCO₂e/year that would be saved by replacing fossil fuels with biofuels (excluding emissions from land-use change). Moreover, in many cases, land restoration offers greater carbon benefits than growing biofuel feedstocks.

Food market pressure and ILUC emissions

Around 90% of global biofuel production is derived from food commodities. Although the processing of feedstocks (such as corn or rapeseed) returns by-products (such as distillers grains) to the market, which partially mitigate the impact, do not remove the fundamental tension between biofuel demand and food availabilityStudies have shown that demand for biofuels played a significant role in past food crises (2007–08, 2010–12, 2020–23) and led to long-term increases in food prices.

The most serious climate impact is associated with indirect land use change (ILUC)ILUC occurs when demand for biofuel crops leads farmers to intensify production or expand cropland at the expense of non-agricultural habitats, causing vegetation loss and releasing GHG emissions. The highest ILUC emissions are associated with palm oil and soybean oil.

Based on planned policy intentions, it is assumed that the consumption of first-generation biofuels in the nine monitored countries (USA, Brazil, EU+UK, Indonesia, China, India, Argentina, Canada and Thailand) will increase from 104 Mtoe in 2023 to 150 Mtoe in 2030Due to the limited availability of waste and residual raw materials (such as fats and used cooking oil – UCO), it is estimated that 92 % of this demand in 2030 will come from food raw materials.

Expected expansion and emissions by 2030

Increased demand will result in an increase in agricultural land of 20 Mha (63 %) in total 52 Mha in 2030This increase in consumption is associated with a projected expansion of ILUC emissions between 2023 and 2030, which could release up to 149 MtCO₂e.

The most significant increases in emissions are expected in the US, Indonesia, India and Argentina, mainly due to increased consumption of palm and soybean oil-based biofuels with high ILUC factors. The analysis predicts that The US will be the main global driver of emissions growth related to biofuels, with a net increase in emissions of 34.4 MtCO₂e/year by 2030. In contrast, the EU+UK, China and Canada are moving towards a more neutral or even positive climate impact, mainly due to phasing out palm oil with high ILUC risk and the increasing use of waste lipids and cellulosic biofuels.

Overall, the expansion of biofuels is estimated to result in a substantial increase in net annual emissions by 2030: almost 34 MtCO₂e/yearOvercoming these challenges requires a focus on advanced biofuels from cellulose, which have potentially lower environmental impacts, and to develop truly stringent and effective minimum environmental standards for the global biofuels industry. JRi

New  report Cerulogy issued on behalf of T&E.