Biofuel Policy in Brazil, India and the United States
Executive Summary
India has proposed a Global Biofuel Alliance (GBA) aimed at supporting worldwide development and deployment of sustainable biofuels. The GBA seeks to establish a global partnership among national governments, agencies, industries, and other stakeholders to advance sustainable biofuels technology deployment and expand sustainable biofuels market penetration.
Biofuels offer significant advantages, such as avoiding nearly 2 million barrels of oil per day in the transport sector in 2022, which represents over 4% of global transport demand. They are also compatible with existing infrastructure, can be produced using waste materials, and provide economic and employment opportunities for rural communities.
However, sustainable biofuel production is not on track for a net zero trajectory. Global biofuel growth through 2028 is running at less than half the rate needed to help achieve net zero emissions by mid-century based on current policies and market trends. In the IEA’s Net Zero Emissions by 2050 (NZE) Scenario, sustainable biofuel production needs to triple by 2030 to help reduce emissions from new and existing trucks, planes, ships, and passenger vehicles that have few other mitigation options.
Over 80% of global production is concentrated in just four markets: the United States, Brazil, Europe, and Indonesia. These markets account for only half of global transport fuel demand, and this share is forecast to decline to near 40% by 2028. Expanding sustainable biofuels will thus require developing new markets and higher use in existing ones.
Brazil, India, and the United States have showcased policies that have driven considerable growth in supply. Each country has implemented policies that have sustained annual growth rates above 20% over at least a five-year period. As a result, biofuels provided 22% of Brazil’s and 7% of the United States’ transport energy in 2022. In India, ethanol’s share of energy use in gasoline vehicles reached 6% in 2022, double the 2019 levels.
Six policy pillars have supported biofuel growth:
- Long-term Strategies: Designing comprehensive plans to sustain biofuel production.
- Investment Signals: Implementing appropriate financial incentives and regulatory frameworks.
- Innovation Support: Encouraging research and development to improve biofuel technologies.
- Secure and Affordable Supplies: Ensuring stable and cost-effective feedstock availability.
- Early Sustainability Concerns Addressing: Addressing sustainability issues proactively.
- International Collaboration: Working with the international community to enhance biofuel production and use.
Key Findings
- Global Biofuel Production: Over 80% of global biofuel production is concentrated in the United States, Brazil, Europe, and Indonesia.
- Current Growth Rates: Current growth rates are insufficient to meet net zero emissions targets by 2050.
- Policy Success: Brazil, India, and the United States have sustained annual growth rates above 20% through strategic policies.
- Biofuel Contributions: Biofuels provided 22% of Brazil’s and 7% of the United States’ transport energy in 2022.
- Ethanol Share: Ethanol’s share of energy use in gasoline vehicles in India reached 6% in 2022, up from 3% in 2019.
Priority Areas for the Global Biofuel Alliance
- Develop High-Potential Markets: Identify and assist in developing markets with high potential for sustainable biofuels production.
- Accelerate Technology Deployment: Speed up the adoption and deployment of biofuel technologies.
- Consensus on Sustainability Assessments: Seek consensus on performance-based sustainability assessments and frameworks.
These findings highlight the importance of expanding sustainable biofuel production and use to support the global energy transition towards net zero emissions.
