New IEA Bioenergy report underscores potential for advanced biofuels cost reduction

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A new report published by IEA Bioenergy has examined how the gap between the cost of advanced biofuels and current fuel prices can be reduced, to enable the wider uptake of cleaner burning fuels.

The ‘Advanced Biofuels – Potential for Cost Reduction’ report is part of IEA Bioenergy’s Task 41 project, which is funded by the European Commission with support from Germany, the Netherlands and Sweden.

The gap between the cost of advanced biofuels and current fuel prices can be reduced in the medium term, the report argues, through process improvements in designing, building and operating plants, financing costs reduction, as well as technology learning.

Moreover, policy support will continue to be essential to enable these technologies to mature, either in terms of added value for low-carbon fuels, or carbon costs applied to fossil fuels.

Although currently several technologies to produce bio-based transport fuels are being developed and commercialised, their production has so far only reached a limited scale; a massive roll out of these technologies would be needed to fulfil their potential role in low-carbon transport scenarios.

The costs of these advanced biofuels are currently higher than those of the fossil fuels they are aiming to displace, as well as being more expensive than conventional biofuels, such as ethanol from sugar or corn, or biodiesel. The report notes, therefore, that it is important to consider what scope there is to reduce the production costs of a range of advanced biofuels, and to identify under what conditions they could become affordable.

Researchers on the new report used a 2017 study on the costs of advanced biofuels carried out within the programme work of the Sub-Group on Advanced Biofuels (SGAB), part of the European Commission’s Sustainable Transport Forum (STF), as their starting point for the study.

The new report: updates and extends the 2017 study to provide estimates of the current costs of producing a selection of advanced biofuels; identifies the scope for cost reduction for these fuels’ compares the costs and cost trajectories with likely trends in fossil fuel process, and those of conventional biofuels; and examines the impact of policy measures such as carbon pricing on the economic competitiveness of advanced biofuels.

Extensive deployment of technologies, in line with patterns required to meet the ambitions for advanced biofuels within low-carbon scenarios, could lead to additional significant cost reductions through technology learning, the report concludes. Policy support, however, will continue to be needed to enable these technologies to mature.

In the longer term, the effective cost of using fossil fuels may increase due to a combination of higher prices and/or more extensive carbon pricing. If there is a considerable increase in the production capacity of advanced biofuels at the scale envisaged with low-carbon scenarios, it is possible that these new technologies will become cost-effective in the context of anticipated fossil and carbon prices.

The full IEA Bioenergy report can be found online.