Biofuels have emerged as a critical medium-term solution for decarbonising supply chains, offering a pathway to reduce greenhouse gas emissions. As sectors start to adopt more greener, sustainable practices, biofuels—mainly biodiesel and ethanol—are starting to pick up momentum. In addition to helping the world meet its climate change goals, biofuel consumption is on track for explosive growth by 2030. Yet, great challenges await us that we need to address.
As a result the International Energy Agency (IEA) expects biofuel consumption to grow forcefully during the next ten years. This increase is driven by the urgency to find alternatives to fossil fuels and the push for greener energy solutions. As various sectors, especially transport and logistics, strive to meet carbon reduction targets, biofuels are likely to play a pivotal role in achieving these goals.
Types of Biofuels and Their Impact
Biodiesel and ethanol are the two most common types of biofuels in use today. Freight and transportation operators have naturally been the warmest audience to biodiesel. Produced from vegetable oils or animal fats, it enables companies to significantly reduce their carbon footprint. Ethanol, primarily made from corn or sugarcane, is an important additive to gasoline that helps boost the renewable fuel share.
Biofuels are going to be an incredibly important part of our future. Yet, their expansion will soon find themselves in a groggy uphill battle after 2030 as more Americans adopt hybrid and electric vehicles. As these new technologies become more widely adopted, our demand for biofuels should plateau. This change is likely to make it harder to accelerate biodiesel consumption as electric vehicles take over the market. This transition highlights the need for ongoing innovation within the biofuel industry to stay competitive as the transportation landscape inevitably evolves.
Concerns Over Sustainability
In an announcement in February 2025, Hapag-Lloyd raised the alarm that biofuels were unsustainable. The company called on the UN International Maritime Organization (IMO) to remove readily unsustainable biofuels from its list of green alternatives to fossil fuels. This call to action perfectly frames the current discussion surrounding the environmental effects of multiple different biofuel production practices. Though biofuels as a category are greener substitutes, not every biofuel is made sustainably, negating their emissions-reducing potential.
The scrutiny surrounding biofuels emphasizes the need for rigorous standards and certifications to ensure that only sustainable options contribute to decarbonisation efforts. Profound challenges have converged upon every industry at this moment in time. Stakeholders need to be willing to enter into good faith conversations on sustainability measures and how these might shape future biofuel policy.
Future of Biofuels
Looking ahead, biofuels will likely remain a significant component of the energy mix as industries work towards reducing carbon emissions. The landscape is evolving rapidly. With rapidly advancing technology in electric vehicles and renewable energy sources, biofuels will face strong headwinds.
