Materials such as sustainable aviation fuels (SAF) present some of the most achievable pathways to reducing the carbon dioxide (CO2) footprint of sectors that are difficult to decarbonise, like aviation, while materials such as bionaphtha have potential for the petrochemicals sector as well as transportation.

Limited time remains for governments to shift course on energy, production and economic growth to meet the net-zero targets policymakers have set for the coming decades.

 A factor that could stand to drive wider deployment of biofuels could be its relative maturity compared to other emissions-reduction technologies, particularly for heavy industry, with around half of the innovations that are likely to contribute to those goals currently not yet in existence or in the development phase, according to the International Energy Agency (IEA).

 Many biofuels production technologies are much more established, and some feedstocks such as waste cooking oil already have international trade networks with material from China, Argentina and Brazil flowing into Europe.

The choice of technology, as much as the choice of biofuel, is likely to be a significant determinant of success. Some forms, such as SAF and biodiesel, can be synthesised using a wide variety of technologies, from isomerisation to pyrolysis, while others such as biogasoline, have a much more limited range of technological options at present.

The sector remains policy-driven, although consumer interest in alternative-fuel transportation is growing and that balance may shift over the next decade. In the shortterm, the momentum of the space is also dependent on government targets, meaning that some momentum has been lost during the pandemic.

Demand and growth

Biofuels demand dropped 8 percent in 2020 year on year to 150bn litres, according to the IEA, with Brazilian and the US ethanol production experiencing the most significant contraction. However, this was slightly less than the overall drop in gasoline and diesel consumption at almost 9 percent.

The coronavirus pandemic has sharpened government attention on more immediate issues than transport sector reform, with Indonesia and Malaysia pushing back biodiesel blending mandates temporarily and Thailand postponing its ethanol-blending mandate indefinitely.

 Output is expected to return to 2019 levels at least this year, the agency added, but the rebound will be uneven, with biodiesel and hydrogenated vegetable oil (HVO) fuels coming back strongly but US and Brazil ethanol sectors remaining subdued.

A factor in this is that ethanol and biodiesel are constrained by total demand (which remains subdued) due to blending limits, while HVO is a substitute for fossil diesel.

HVO could be a significant driver in biofuels becoming more mainstream, according to Michael Connolly, senior analyst on the ICIS global refining team. “I think the big change in the market is HVO, because all these other fuels to date are limited by the blending percentage that can go into the finished product, whereas HVO can be 100 percent of the product. And so that opens up room for biofuels to expand,” he said. “That, in combination with all the regulations/ incentives, we’re seeing encouraging biofuels is really what’s driving a big change in the market.”

Scaling A key issue determining the winning technologies is that of which feedstocks can best scale to mature-scale market conditions. While the conventional oil and gas sector was always characterised by a near-endless pool of resources, continued discovery and exploitation remain the key technological challenge.

 The biofuels market is currently growing, and an increasing number of idled or unprofitable refineries are being retrofitted to produce more material, but these new capacities will need to be fed.

 Total’s La Mede, France, facility is producing up to 500,000 tonnes of biofuel per year, utilising animal fats, used cooking oil and vegetable oils. The company’s Grandpuits refinery is expected to produce up to 170,000 tonnes/year of SAF, 120,000 tonnes/ year of renewable diesel and 50,000 tonnes/year of bionaphtha for plastics, also based on used cooking and vegetable oil.

 As these feedstocks are often themselves by-products, either from the service sector, food production or agriculture, they are dependent on factors such as consumer demand, yields and weather.

The coronavirus pandemic saw a sharp drop in restaurant demand, meaning that waste oil from that sector became harder to find. Players in the space are largely dealing with this by having supply contracts locked down ahead of time, according to Connolly.

 As the sector continues to expand in order to meet projected demand, sourcing sufficient feedstocks and successfully hedging against volatility, which is likely to remain more intrinsic to the supply side of the sector than with conventional fuels, will become a greater challenge. This, however, is expected to be mitigated with innovation and the growing maturity of supply chains across the globe.

Renewable/biodiesel

Renewable diesel and biodiesel are transportation fuels that can differ in many key aspects, from the chemical processes used to produce them, the technologies employed, to the complexities of blending with conventional fuels. They are produced in standalone plants, which include their own dedicated hydrotreating equipment and produce biodiesel that can subsequently be blended with conventional diesel from oil refineries, or in co-processing facilities. Co-processing plants use the hydrotreating capacity of existing conventional oil refineries, and produce a single, blended diesel output. This reduces the capital costs of the hydrogenation plant, but also reduces the refinery’s output of petroleum-based diesel.

Market drivers

Production costs are dominated by feedstocks costs. Hydrogenation potentially enables greater feedstock flexibility and lower production cost than transesterification. Cheaper feedstocks include crude palm oils (CPO), palm fatty acid distillates (PFAD) or animal fat rich in free fatty acids (FFA). In terms of maturity, hydrogenation is at the demonstration stage. Key development areas for improvement include the understanding of catalysts for hydrogenation. Future generations of biofuels, such as oils produced from algae, are at the applied research and development stage, and require considerable development before becoming competitive.

 Economics

Fossil oil refineries in Europe are facing overcapacity and liquidity issues which limit the profitability of the plants. Conversion to biorefineries allows the use of existing infrastructure for new revenue sources. Hydrogenation requires integration with an oil refinery to avoid building a dedicated hydrogen production unit. The deployment of renewables or biodiesel depends on the interest of oil companies and refineries. For hydrogenation, there has been reticence due to potential technical risks associated with hydrogenation catalysts degrading.

 Biojet

Most of the biorefineries today are oriented towards renewable diesel production, targeted for road transportation. Nonetheless, many of the existing biorefineries and planned projects have the capacity to produce a mix of SAF and renewable diesel. As demand for SAF grows, driven by regulatory support as well as the industry’s desire to decarbonise, producers are likely to optimise their facilities for higher SAF production. To date, the ASTM International has approved seven alternative jet fuels for blending, with conventional fossil jet fuel up to a certain limit under their standard D7655. The production pathways of these approved jet fuels could be broadly categorised into i) oil-to-jet; ii) alcohol-to-jet; iii) gas-to-jet; and iv) sugar-to-jet.

 Oil-to-jet

The HEFA pathway is technologically mature and is already used on a commercial scale. It is currently the dominant production pathway, accounting for more than 80 percent of existing and planned SAF capacities, according to the ICIS Supply and Demand Database. The key producers include Neste and World Energy. The primary feedstocks for this conversion pathway today are waste fats, oil and greases (FOGs) such as used cooking oil (UCO). Other suitable feedstocks include vegetable oil and algal oil. Catalytic hydrothermolysis (CH), also named hydrothermal liquefaction, converts plant or algal oil into biocrude, which can then be hydroprocessed, as with conventional crude, to produce dropin fuels including gasoline, diesel and jet fuel. CH is not a mature technology and is yet to be deployed at a commercial scale.

 Alcohol-to-jet

Alcohol-to-jet synthetic paraffinic kerosene (ATJ-SPK) The alcohol is converted to hydrocarbon through a three-step process - namely dehydration, oligomerisation, and hydrogenation. Currently, only aviation fuels produced from ethanol and butanol are approved by ASTM International. While alcohols can come from any source, in order to be sustainable, they should be waste-based or derived from non-food/feed sources. As such, feedstocks used in this process include lignocellulosic biomass (e.g. agricultural and forestry residues, and purposegrown energy crops), municipal and industrial waste stream, and industrial flue gas from steel mills or other heavy industries. The alcohol-to-jet production pathway is in the early stage of commercialisation. One of the leading players of this technology is LanzaTech, which in June 2020 launched a new company LanzaJet with contributions from multiple investors including Suncor, Mitsui, ANA, British Airways and Shell, to commercialise its alcohol-to-jet process.

Gas-to-jet

 Fischer-Tropsch synthetic paraffinic kerosene (FT-SPK); FT-SPK with aromatics (FT-SPK/A) Biomass is gasified to produce syngas, which is a mixture of hydrogen, carbon monoxide and carbon dioxide. The syngas then goes through the Fischer-Tropsch (FT) synthesis process to form liquid hydrocarbons, including jet fuel. Feedstocks used in this process include municipal solid waste, agricultural wastes and forestry residues, wood and energy crops. INSIGHT Gasification of biomass is still in the early stage of commercialisation, though the FT synthesis is a wellestablished technology and has been deployed for decades to produce liquid fuels from coal and natural gas. By 2025, only about 700,000 tonnes/year of SAF capacity via this pathway is planned for startup. Key producers include Fulcrum BioEnergy and Velocys. Syngas can also be produced using carbon dioxide as a feedstock. The process involves electrolysis using renewable electricity and combining hydrogen with carbon.

Sugar-to-jet

Hydroprocessed fermented sugars to synthetic isoparaffins (HFS-SIP) Sugar undergoes a microbecatalysed fermentation to convert into farnesene, before undergoing hydrogenation to produce farnesane, which is a jet fuel blendstock. Deployment of this pathway is limited. There is only one commercial plant, with a capacity of 40,000 tonnes/year of farnesene in Brotas, Brazil.

BioLPG

BioLPG, also called biopropane and renewable propane, is produced as a by-product from the renewable diesel (HVO) production process BioLPG is chemically identical to LPG, but with a lower carbon footprint, meaning it can function as a drop-in fuel. It is more expensive than conventional LPG, but the gap is not as wide between new and traditional fuels, as can be the case with other bio-based alternatives.

Production, market drivers

 Material is produced through hydrogenolysis as a co-product in the production of biodiesel, usually from a mix of vegetable oils and waste residues. The recent issuance of Renewable Transport Fuel Certificates (RTFCs) in the UK and market expectations of other governments taking similar steps, are significant drivers for market growth, although the space remains relatively niche at present. LPG blended with renewable dimethyl ether (DME) is another option for reducing carbon footprint. Europe is overwhelmingly the largest producer and market for bioLPG at present, followed by North America, with little change to that status quo expected in the near future.

Bionaphtha/biogasoline

Bionaphtha is co-produced during the production of renewable diesel and SAF through hydroprocessing, co-processing or gasification/ FT processes. It is essentially an identical replacement for fossil naphtha and thus can be used as a feedstock for the production of gasoline or a petrochemical feedstock for steam cracking (ethylene/propylene production) and benzene, toluene, xylene (BTX) production. Bionaphtha is also a co-product of thermo-chemical bio-pathways, such as lipids hydrogenation (producing renewable diesel, HVO), that transform biomass via a breakdown and/or reconstruction/ reconfiguration in hydrocarbons. Bionaphtha as a feed to gasoline presents a lower CO2 alternative to traditional gasoline. However, it still requires further processing in a refinery and blending with other components to make a finished specification product.

 As a feedstock to petrochemicals, it represents the ideal building block on the way to a more circular economy, as an immediate drop in to feedstock to produce a renewable petrochemical. If that product can be ultimately coupled with recycling of the finished plastic, the environmental impact becomes a fraction of fossil-based production. Production globally is estimated to be less than 500,000 tonnes/ year, with Neste producing bionaphtha from its Singapore refinery since 2012, while UPM and World Energy are also leading marketers. However, the swathe of new renewable diesel and jet fuel projects at a large scale are likely to bring a significantly higher amount of product to the market, potentially tripling supply in the next five years, although this is still less than 1% of the global naphtha market, according to the ICIS Supply and Demand database.