18 Nov 2022

Explainer series | Biofuels 101

Posted in: Reducing emissions

Explainer series: Biofuels 101

Biofuels can play a key role to wean us off fossil fuels, but the concept of using farmland to produce fuel instead of food has attracted controversy and scrutiny. A proposed mandate here in Aotearoa New Zealand aims to utilise this opportunity while sidestepping negative unintended consequences.

Types of biofuels and their uses

The term ‘biofuels’ refers to any fuel that is derived from plant or animal matter, in contrast to traditional fuels formed by geological processes commonly known as fossil fuels. Broadly, biofuels can exist in solid, liquid, or gaseous forms, just like fossil fuels. These biofuels are then categorised as first, second, third or fourth generation based on their feedstock (i.e. the raw material used to fuel the process). International food shortages, tensions around best land use and food security issues have seen the use of first and second generation biofuels vigorously debated.

An outline of the generational differences of biofuels

Figure 2: an outline of the generational differences of biofuels. Source: Toitū (2022)

Many biofuels are blended with conventional fuels when used. How much biofuel is blended depends on the type of biofuel being used and the impact on the engine - oil companies and automobile manufacturers have provided input to regulate blending limits due to the potential for corrosion of equipment at higher blends (Karatzos et al., 2014). Using higher blends requires more frequent replacement of engine components, such as fuel lines. For aviation and marine fuels, performance at different temperatures is also a factor. Blending limits begin at about 5-7% for biodiesel, and around 10% for bioethanol. For marine biofuels, blending limits also sit at around 7%.

Drop-in biofuels refer to biofuels that may be used ‘neat’ without need for blending. These advanced biofuels should be distinguished on their direct use with existing infrastructure, removing the need for additional distribution channels required for bioethanol and biodiesel. Third generation drop-in biofuels are the strongest contender for a fossil fuel substitute – they may be produced from agricultural or forest resides, energy crops or municipal solid waste and algae. Routes to manufacturing these advanced biofuels are still to be commercially proven (Scion, 2018).

Figure 2: Life cycle diagram for biofuels. Source: Dunn et al. (2017)

The importance of life-cycle measurement

Life cycle measurement takes a cradle-to-grave approach to estimate impacts from a product or service. It’s important we understand the full picture of our decisions, not simply what is occurring when a product or service reaches our sphere of influence. Life Cycle Assessment (LCA) has been particularly useful to understand both the production and combustion impacts of biofuels (see Figure 3). This helps develop a full picture of the life cycle emissions and to understand where ‘burden shifting’ might occur (i.e. the creation of one environmental burden by attempts at solving another). Some biofuels have significant upstream production impacts due to land use impacts associated with growth of biofuel feedstocks. Production impacts include use of nitrogen fertilisers, which contribute to nitrous oxide (N2O) emissions, a potent and long-lived greenhouse gas.

Note: The light and dark purple bars show estimates without LUC impacts, whereas the light and dark gold bars add incremental LUC impacts. The darker purple and gold colours add an upper bound for estimates without and with LUC impacts respectively. The shading of colours simply aims to show the variability of estimates from different sources.   The estimates are for biofuels consumed in Europe, except for liquid fuels from pyrolysis which are based on US numbers.  The vertical red line shows the fossil diesel comparator on an LCA basis as used in the EU RED (94 gCO2e/MJ).

Figure 3: Emissions associated with different types of biofuels. Source: Comendant and Stevenson, 2021

LCAs can also provide an understanding of the impact of blending on biofuel’s potential for carbon reductions. Essentially, the blending of biofuels at low rates of 5-10%, yields minimal benefit in terms of greenhouse gas emissions. Additional impacts may occur outside climate change. Impacts to biodiversity, water resources, and competition for food must all be considered. LCA studies therefore conclude that advanced biofuels from forestry residues and energy crops (within the ‘second generation’ category) are the most beneficial, as they have low land-use impacts and can be incorporated at higher blends (Comendant and Stevenson, 2021). By contrast, those produced from vegetable oils are associated with the highest emissions. Biofuels sourced from vegetable oils have, in some studies, turned out to have higher emissions than fossil fuels across the life cycle (Comendant and Stevenson, 2021)!

NZ’s roadmap for biofuels

Advantages of using biofuels in New Zealand have long been discussed, and since have matured into a mandate proposal. A Scion ‘Roadmap for Biofuels’ in 2018 provided some key insights, suggesting use of biofuels only where there were few decarbonisation options, with a preference towards drop in fuels for heavy transport, marine oil and aviation. The electric revolution for passenger cars was expected to remove the need for biofuels to replace fossil fuels for personal transport by New Zealanders.

Scion also identified an opportunity to reduce future market risks by focusing on feedstocks grown on non-arable land, such as plantation-forest – imported biofuels were excluded from the roadmap to sidestep the potential issue of conversion of rainforest to palm oil production. Both mandated biofuels at the pump and subsidies have been utilised abroad to deploy large-scale biofuel production, and “leapfrog” the upfront capital cost and higher price tag of biofuels in comparison to fossil fuels. Critics of biofuels mandates argue that without appropriate regulation, lower grade biofuels may be incentivised, or that mandates might drive land use change in vulnerable areas such as Indonesia or Malaysia – this has occurred already as a result of European biofuel policy.

Since the roadmap, the biofuels discussion has evolved into New Zealand’s Sustainable Biofuels Mandate proposal, which requires:

  • Fuel suppliers to reduce the GHG emissions (i.e. not just increase biofuel use) from transport fuels by a defined percentage each year.
  • Application to all transport fuels, with a separate mandate for domestic aviation fuel
  • Biofuels to meet sustainability criteria to certify that they do not impact on food production or indigenous biodiversity.
  • Fuel suppliers to prepare annual reports to demonstrate compliance. There will be penalties for non-compliance, although there is some flexibility for fuel suppliers, including the ability to trade emissions reductions with each other, and to defer for two years. This mandate is due for launch 1st April 2023.

These criteria are designed to mitigate the concerns regarding the unintended, life cycle consequences of large-scale biofuels procurement.


Biofuels offer both potential rewards and risks when it comes to tackling climate change. Any solution must consider the whole value chain and its impact on other value chains, as decisions made now have major long-term impacts. Liquid biofuels from vegetable oils can have higher life cycle emissions than fossil fuels, although there can be exceptions on a case-by-case basis where net land use change impacts are minimal. Bioethanols yield lower emissions however blend walls significantly reduce the potential for emissions reductions. Advanced biofuels from waste oils and biomass residues have the highest emissions reduction potential, both due to the higher blend wall and lower land use change emissions. However, advanced biofuels are not available at commercial scale yet. Biofuel advocates suggest using government intervention to supercharge uptake. This government intervention must be expertly crafted to avoid unintended consequences particularly around indirect land use change, the likes of which have been experienced abroad.


BiofuelFuel that is derived from plant or animal matter
Blended biofuelsBiofuels that are designed to be mixed with conventional fuels before use
Blending limitThe amount of biofuel that should be mixed in with conventional fuel
Cradle-to-graveLife Cycle Assessment scope of study – refers to all stages in the life cycle from raw material extraction to final use and end-of-life
Drop-in biofuelsBiofuels that are designed to be used as a direct replacement (or at very high blends) for conventional fuels
FeedstockRaw material used to fuel a process
Land Use Change (LUC)Impacts arising from the conversion of land from one land use to another
Life Cycle Analysis (LCA)Method of environmental impact measurement – tends to follow a ‘cradle-to-grave’ approach across multiple indicators