Biofuels are fuels that are produced from combustion or from the processing of biomass – a renewable energy source. These generate a lower carbon footprint across their lifecycle when compared with petroleum fuels. Their emission footprint can be significantly further reduced by capturing CO₂ during their production. Hence biofuels, such as ethanol, biodiesel, renewable diesel and sustainable aviation fuel (SAF), are considered alternatives to fossil fuels in decarbonising industries.
Renewable fuels produced using advanced biomass, such as wastes from agriculture, forestry, food processing and non-edible crops, are rapidly gaining popularity among refiners globally. The use of advanced feedstock, as opposed to edible biomass, eases food security concerns that have aggravated globally in recent years.
Global renewable refinery capacity is anticipated to more than double by 2027
Source: Global Data Thematic Research, Biofuels. Credit: GlobalData.
The biofuel industry could benefit from feedstock diversification to prevent the scarcity of any one particular source. Advanced biofuels address these concerns, besides tackling challengers over land availability, biodiversity loss and price volatility due to crop failure. Nevertheless, there is further potential for technology development in the processing of advanced biomass to boost renewable fuel production. The scaling up of renewable refinery capacities is also essential to lower production costs in the long term, making these fuels competitive enough to replace petroleum fuels.
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A number of countries have introduced mandates for blending biofuels with gasoline, diesel and jet fuel to reduce emissions from the transportation sector. The shipping regulator, the International Maritime Organisation (IMO), is also encouraging the adoption of biofuels in the marine industry. Such regulatory support is driving the adoption of biofuels globally. Neste, Valero, Marathon Petroleum and many others are setting up renewable diesel and SAF plants to reap from the regulatory push.
A detailed analysis of renewable fuels in the oil and gas industry is provided in GlobalData’s new theme report, Biofuels.