Policy Solutions

Low-Carbon Fuels

Clean Fuels for Longer Hauls

In long-haul transportation sectors such as aviation and maritime travel, the distance between refueling opportunities makes today’s batteries impractical. In these cases, low-carbon liquid fuels such as advanced biofuels and electrofuels created with clean-power generation are essential.

Fuels whose lifecycle GHG emissions, including land use and feedstock impacts, are lower than the fossil fuels they displace can help decarbonize sectors in transportation where the green premium of electrification is very high. Electrofuels can also complement renewable energy sources, such as solar and wind power, whose availability fluctuates over the course of the day. (This is known as “load balancing.”) Finally, the combustion of low-carbon fuels can improve air quality relative to the fossil fuels they replace, meaning their rollout should be prioritized in communities that are disproportionately impacted by poor air quality and adverse health outcomes from fossil fuel combustion today.

New policies to drive innovation and investment will further reduce costs and accelerate widespread deployment of these necessary transportation technologies.

Market Challenges

  1. Supply of Feedstocks

    Deep decarbonization analyses suggest there may not be sufficient feedstock to produce enough biofuels to displace today’s petroleum-based transportation fuels. By one estimate, converting all the world’s grassland to energy would replace only 15 percent of world energy requirements by 2050. Land use, water quality, and biodiversity concerns may limit the feedstock for biofuel production, while technological limitations and costs may prevent increased use of advanced, low-carbon biofuels.

    While consistent supplies of dedicated energy crops present the best opportunity for the supply of low-GHG liquid fuels, significant market barriers and sustainability concerns still pose challenges to the deployment of dedicated energy crops at scale. Increasing the total supply of sustainable biomass would require an expansion of dedicated cellulosic energy crops such as switchgrass, miscanthus, and short-rotation poplar. Consistent supply of renewable energy can also be a barrier to the economic viability of synthetic hydrocarbon fuel production.

  2. Regulatory Uncertainty

    Uncertainty in regulatory policies related to biofuel requirements can hamper investment in low-carbon fuel technology. Current federal fuels policies, including the Renewable Fuel Standard and production and investment incentives, do not provide a long-term price signal that would help drive deeper investment in advanced biofuel technology. At the local level, permitting and siting related to land use and production facilities can also present a barrier to biofuel production.

    Policies that encourage long-term regulatory certainty and support project efficiency can work to remove these market barriers while also providing important health, safety, and environmental benefits. Permitting and land use policies should also promote equity and ensure that communities in need are prioritized for low-carbon investments that do not increase local air pollution levels. These investments are vital to reduce the amount of income spent on meeting energy needs and to offset energy poverty.

  3. Cost Barriers

    High feedstock and production costs are significant market barriers to advanced biofuels. Feedstock price is often seen as the single most important influence on advanced biofuel production overall. For electrofuels, the high cost of renewable hydrogen and challenging production processes also limit adoption. Costs are also a factor in market penetration of hydrogen as well as synthetic hydrocarbon fuels where infrastructure and energy requirements are high-cost relative to fossil fuels. Policies that bridge the financial gap between advanced technology fuels and conventional fossil-based fuels can spur additional demand and work to eliminate these market barriers.

Technology Innovation Examples

Phases of Technology
Research and Development
Validation and Early Deployment
Large Scale Deployment

Low-carbon biofuels made from sustainably produced non-food biomass can dramatically reduce CO2 emissions from the transportation sector while providing the high energy density and easy storage of a liquid transportation fuel. In the U.S. alone, even before considering the potential for algae as a biofuel feedstock, more than 1 billion tons per year of biomass could sustainably be converted to biofuels, replacing up to one-third of the petroleum the U.S. transportation sector uses today.

To produce biofuels cost-effectively at global scale, we must develop transformational innovations that reduce the costs of energy crop production, harvesting, and transportation and develop new higher yield, low-cost technologies for biofuels conversion.

Advanced Biofuels
A variety of sustainably-sourced non-food biomass can be transformed into all types of renewable transport fuels through fermentation, biological and/or chemical processes, and microorganism-based production.

Electrofuels (also called power-to-gas or synthetic fuels) are fuels produced from electricity, CO2, and water. Electrofuels are produced by mixing hydrogen and CO2 in a synthesis reactor, resulting in a range of liquid and gaseous fuels including gasoline and diesel. The production process also generates marketable byproducts: high-purity oxygen and heat.

Electrofuels can help manage variations in electricity production, reduce the need for biofuels, and aid in decarbonizing transportation sectors where fuel switching is difficult, such as shipping. If electrofuels are produced from renewable electricity and CO2 from either sustainable bioenergy or air capture, they could also be a carbon-neutral alternative that enables the continued use of existing investments in vehicles and fuel infrastructure.

A variety of electrofuels can be produced by reacting hydrogen (produced from the electrolysis of water) and CO2. For example, methane and methanol can be produced through the Sabatier reaction.

At present, electrochemical conversion technologies such as fuel cells can convert hydrogen into automotive power with almost 60 percent efficiency, and are theoretically capable of exceeding 80 percent. In addition to solving other challenges, such as the development of high-density onboard hydrogen storage technologies and low-cost hydrogen production and distribution, the cost of fuel-cell technology must be significantly reduced for the widespread deployment of fuel-cell–powered vehicles.

Key challenges for fuel-cell cost reduction include reducing the use of precious-metal catalysts, improving the performance of potentially cheaper anion-exchange–based fuel cells, and finding transformational new fuel-cell technologies that can efficiently convert easily distributed and storable liquid fuels (like alcohols or hydrocarbon) into low-carbon automotive power. In addition, additional hydrogen infrastructure is needed to support hydrogen fueling for transportation and could help in expanding clean public transit options in historically marginalized communities.

Fuel Cells
A hydrogen fuel cell utilizes hydrogen and oxygen to power a vehicle through a chemical conversion process, with heat and water as the only byproducts.

Low-Carbon Fuels Policy Recommendations