Biofuels fall 12% globally, first drop in two decades - urgent action required to build back better
The IEA’s Renewables 2020 report published this week shows a promising outlook for renewable electricity, whilst the biofuel sector declines for the first time in two decades
Multilateral Biofuture Platform calls for urgent policy development and funding as the IEA recognizes biofuels as both essential to efforts to reduce carbon emissions and a cost-effective way to create employment in a green recovery.
November 16, 2020: The Biofuture Platform, a multi-stakeholder initiative facilitated by the International Energy Agency (IEA) and designed to take action on climate change by promoting international coordination on the sustainable low-carbon bioeconomy, has responded to the almost 12% drop in biofuel output in 2020 announced in the IEA’s Renewables 2020 report.
The Platform which is leading the call for urgent collaboration from policymakers and the private sector to reverse the drop has labelled this as a potentially critical setback which could act as a barrier to green recovery and have long-term negative impacts on the de-carbonisation of the transport sector.
The shrinking demand confirmed by the IEA earlier this week comes as a result of the Covid-19 pandemic. This is the first time the sector has declined in over two decades. Global biofuels production reached record levels in 2019, and before the crisis, biofuels were predicted to grow by 3% this year. Production of fuel ethanol has been particularly adversely affected by the Covid-19 pandemic with the sector facing a 14.5% contraction this year and a return to 2015 levels. 80% of this fall is found in the key markets of Brazil and the United States. By contrast, ethanol production is expected to remain stable in China.
A fall in crude oil prices at the start of the pandemic made biofuels less competitive than traditional fossil fuels, exacerbating the situation for renewable alternatives. Although the IEA warned of negative impacts from the pandemic for the entire renewables sector in its update in May of this year, much of the renewable power industry has adapted quickly to the challenges of the Covid-19 crisis. This has led to a revised projected increase of 7% in renewable electricity and to a new world record in renewable capacity additions in 2020. This is in stark contrast with the significant drop in renewable transport, and to a lesser extent in renewable heating & cooling. Therefore, the Platform is calling for immediate action to catch up, so as to match record renewable power growth.
Despite the contraction in 2020, the IEA’s report projects that transport biofuels could again reach 2019 levels in 2021 if supported by consistent policy initiatives and a rebound in global fuel demands. In line with these assumptions and if the pandemic begins to subside, output in 2022 could increase to 4% year on year, strengthened by keystone biofuel policies in Asian and South American countries. However, with the new waves of pandemics it is likely that demand for transport fuels will continue to be affected in the first half of 2021 too. There is a consequent risk for a further delay in a biofuels rebound, if urgent action is not taken.
Long described by the IEA as an ‘overlooked giant of renewables’ bioenergy has a number of uses in the real economy, in transport and for heat production in industry and buildings. The IEA had previously highlighted that annual consumption of transport biofuels needs to triple by 2030 (to 324 Mtoe) to be on track with the Sustainable Development Scenario (SDS). The Biofuture Platform is due to release its Policy Blueprint in 2021, but this week’s figures have led members to call for efforts to urgently accelerate policy action.
The Platform urges countries, governments and corporations to implement its Five Principles for Post-COVID Bioeconomy Recovery, which would not only accelerate the decarbonisation of the energy sector but also create jobs. The IEA Sustainable Recovery Plan shows that biofuels could be a very cost-effective way to create employment in the energy sector, as they have the second-largest number of jobs (15-30) created per million dollars of spending.
Dr Paolo Frankl, Head of the Renewable Energy Division at the International Energy Agency, said: “Biofuels are critical to achieving successful global clean energy transitions. Decarbonising aviation and shipping – sectors that are particularly hard-to-abate – as we recover from the global pandemic will be key to ensuring that countries meet their net-zero targets in the decades to come. With the hope that the pandemic will subside at some point, 2021 is the time for decisive action to be taken.
Ahead of COP26 next year, the IEA strongly encourages governments to devote greater attention to tackling emissions from hard-to-abate sectors, ensuring policies are in place and funding is accessible. Following the European Union and some European countries, the recently announced net-zero emissions pledges in China, Japan and South Korea – and the climate ambitions of the next US administration –provide new grounds for optimism. Transport biofuels and the bioeconomy can and must be part of this stepping up of efforts to address climate change.”
About the Biofuture Platform
The Biofuture Platform is a government-led, multi-stakeholder initiative designed to take action on climate change and support the Sustainable Development Goals by promoting international coordination on the sustainable low-carbon bioeconomy. It was launched in Marrakesh at the COP 22 climate talks in November 2016. Since February, 1, 2019, the International Energy Agency (IEA) has been the Facilitator (Secretariat) of the initiative. The Biofuture Platform has twenty member countries: Argentina, Brazil, Canada, China, Denmark, Egypt, Finland, France, India, Indonesia, Italy, Morocco, Mozambique, the Netherlands, Paraguay, the Philippines, Sweden, United Kingdom, the United States of America and Uruguay. As a multi-stakeholder initiative, a number of international organizations, academia, and private sector associations are also involved and engaged as official partners. For more information visit: www.biofutureplatform.org.
The Platform’s Five Principles for Post-COVID Bioeconomy Recovery are:
1) Do not backtrack: Ensure continuity and long-term predictability of bioenergy, biofuels, and bio-based material targets and existing policy mechanisms that have proved successful;
2) Consider short-term COVID support for producers: Where appropriate, address short-term challenges for bioenergy and bio-based materials industries in the context of relief packages related to COVID-driven economic losses;
3) Reassess fossil fuel subsidies: Take advantage of a low oil price environment to reassess fossil fuel subsidies for a fairer playing field;
4) Build Back Better with Bio: Where appropriate, integrate the bioeconomy sector as part of broader recovery programmes, e.g. by requiring bioeconomy investments/targets as part of aid and recovery packages for specific sectors such as transport and chemicals; and
5) Reward sustainability: Integrate sustainability rewarding mechanisms into policy frameworks, promoting positive externalities in the production and use of bio-based fuels, chemicals and materials.
About the IEA
The International Energy Agency (IEA) is at the heart of global dialogue on energy, providing authoritative analysis, data, policy recommendations, and real-world solutions to help countries provide secure and sustainable energy for all. Taking an all-fuels, all-technologies approach, the IEA advocates policies that enhance the reliability, affordability and sustainability of energy. The IEA is supporting clean energy transitions all over the world in order to help achieve global sustainability goals. For more information visit: www.iea.org.