Renewable energy met around 3.7% of transport fuel demand in 2018, with around 4 exajoules (EJ) of consumption. Biofuels provided 93% of all renewable energy, the remainder being renewable electricity.

Biofuel output expands 24% (0.9 EJ) over the forecast period (2019‑24), while renewable electricity in transport is anticipated to increase 70% (0.2 EJ) with greater use of electrified rail as well as electric vehicles, combined with higher shares of renewables in electricity generation. The biofuel share of renewable energy in transport in 2024 decreases slightly to 90%.

By 2024, the renewable energy share of transport demand increases only marginally to 4.6% (5.1 EJ). This increase is relatively small because transport fossil fuel demand also climbs 3% (3 EJ). In addition, most biofuel mandates require blending levels of only 10% or less, although policies in Brazil, Indonesia and Thailand are notable exceptions.

Vehicle testing, greater use of “drop-in” fuels (that is, fuels that are suitable for use at high blend shares, or unblended without technical modifications to engines or to fuelling infrastructure), and frameworks that ensure biofuel sustainability are required to encourage higher levels of fossil fuel substitution by biofuels.

Global biofuel production increased 10 billion litres (L) in 2018 to reach a record 154 billion L. Double the growth of 2017, this 7% year-on year (y-o-y) increase was the highest in five years. The United States and Brazil were the largest biofuel producers.

Biofuel output is anticipated to increase 25% during 2019-24, to reach 190 billion L. The biofuel forecast is revised upwards from last year owing to better market prospects in Brazil, the United States and especially China.

Asia accounts for half of growth, as the promise of using biofuels to diversify transport fuel supplies and boost demand for agricultural commodities has resulted in ambitious support policies. The United States and Brazil account for 40% of biofuel output growth over 2019-24, and still provide two-thirds of production by the end of the forecast.

China boasts the largest increase in forecast biofuel production of any country. This is principally because ethanol output is anticipated to more than triple as concrete measures are taken to raise ethanol consumption from around 2% to the target of 10% of national gasoline demand. Ethanol blending programmes are expanding to more provinces, and production capacity is set to increase almost 50% by 2021 alone. Domestic output, however, is still expected to fall short of the ambitious target by 2024.

The accelerated case demonstrates that biofuel output could increase a further 20% to 225 billion L by 2024 with more favourable market conditions and policies. Ethanol output could be 25 billion L higher than in the main case, while biodiesel and HVO output could rise a further 12.5 billion L.

Hydrotreated vegetable oil (HVO) production is set to more than double from around 5.5 billion L in 2018 to 13 billion L in 2024. EU and US policy-driven demand spurs investments of USD 5 billion in new projects. As a result, HVO accounts for one-fifth of forecast biofuel output growth, although still less than 10% of cumulative production in 2024.

Most facilities plan to utilise waste and residue feedstocks, meaning that HVO is also the largest source of advanced biofuel output growth over the forecast period. A number of plants will also produce aviation biofuels.

Additional projects are included in the accelerated case, but they are at an early stage of development. Their delivery would boost HVO production to around 17 billion L by 2024.

Several factors drive HVO production growth:

• It is technically a “drop-in” fuel and less constrained by blend limits than biodiesel offering higher flexibility for blenders.
• It has good cold-start properties.
• Its low aromatic content means it emits lower levels of air pollutants than fossil diesel when used in vehicles with older, less sophisticated engines and exhaust after treatment.

The high value of co-products from a HVO plant’s product slate also explain its growing market share. These include renewable propane, naphtha and chemicals.

Around 9% of biofuels produced in 2018 were advanced, with 13.5 billion L made from non-crop-based waste and residue feedstocks – mostly biodiesel and HVO made from waste fats, oils and grease (FOG).

The production of these fuels is technically mature, and they emit far less GHG emissions than fossil diesel. Most of the biodiesel and HVO produced from FOG resources came from the European Union and the United States because they have policies that place a premium on feedstocks that deliver biofuels with very low lifecycle CO2 emissions.

If FOG supply chains can be mobilised there is sufficient feedstock availability to scale up production. However, these feedstocks are ultimately finite and therefore there is ongoing interest in novel advanced biofuel technologies that use lower-cost, higher-availability feedstocks such as municipal solid waste and residues from forestry and agriculture.

Novel advanced biofuel production doubles from 1.4 billion L in 2018 to 2.8 billion L in 2024 in the forecast. As these fuels require ongoing support to overcome financial, technical and market barriers, the supportive policy frameworks established in the European Union, India and the United States, means these countries account for most production.

In the accelerated case, novel advanced biofuel output reaches 4.2 billion L by 2024, on the assumption of efficient and reliable performance of the first commercial plants to reduce investment risks for replication projects, as well as operational learning and improved pre-treatment processes to scale up output more quickly.

Even considering the accelerated case production level, novel advanced biofuels would only account for 2% of total biofuel production in 2024, as the high risk of investing in commercial-scale refineries using first-of-a-kind technologies, in addition to currently high production costs, hampers growth.

Renewable electricity in transport increased 11% y-o-y in 2018 to reach just under 0.3 EJ. By the end of the forecast, consumption reaches 0.5 EJ with electromobility providing 10% of renewable energy in transport. This reflects 29% of electricity used for transport coming from renewable sources.

China accounts for over 60% of renewable electricity used for transportation, shared roughly equally by road and rail. By 2024, road transport consumes more renewable electricity than rail in the United States, but still less than rail in Brazil, India, Japan and the European Union.

Therefore, rail is anticipated to be responsible for just under two-thirds of transport sector renewable electricity demand globally in 2024, even though the global electric car fleet expands from 5 million in 2018 to around 40 million by the end of the forecast period.