Advanced biofuels: What holds them back?

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Advanced liquid biofuels are a key part of low-carbon transport development to meet emission-reduction targets and international climate commitments. Liquid biofuels, requiring minimal changes to fuel distribution infrastructure or the transport fleet, can be deployed rapidly to cut greenhouse gas (GHG) emissions.

This study from the International Renewable Energy Agency (IRENA) analyses current barriers to investment in advanced biofuels. Based primarily on a survey of industry executives and decision makers, the study aims to capture the perspective of project developers aiming to nurture the market and scale up actual usage in competition with fossil fuels.

Among the findings:

  • Regulatory uncertainty stands out as the most important impediment to investment in advanced biofuels.

  • Transport sector decarbonisation calls for accepting several fuel alternatives simultaneously rather than resorting to a single, all-encompassing solution.

  • Low subsidy levels, high financing costs and limited availability of finance are seen by many executives as barriers in the current market.

  • Unless regulators devise specific promotional measures, the cellulosic ethanol segment will face uneven cost competition from first-generation ethanol producers in a declining market.

  • Industry executives question the accuracy and reliability of common methods for estimating GHG emissions, land-use change and indirect land-use change.


This report was prepared by Sakari Oksanen (consultant to IRENA), Dolf Gielen, Seungwoo Kang, Rodrigo Leme

and Toshimasa Masuyama (IRENA). Valuable review and feedback were provided by Paul Komor (IRENA).

The editor of this report was Stefanie Durbin.

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