September 2024
Biofuels: Turning food into fuel
The capacity for biofuels keeps expanding as decarbonization efforts grow, but financial and policy challenges remain.
Key takeaways
- Biofuels have grown at a much faster pace than fossil fuels, tripling in size in the past 15 years. Green molecules today make up 3% of global total petroleum supply, and are a growing global trend, per BofA Global Research.
- An important driver behind the supply growth in the U.S. is the skewed subsidies that support distillates based off renewable feedstock over other kinds of biofuel products, setting up incentives to grow some green molecules over others. As a result, most of the growth in U.S. supply has come from renewable diesel rather than biodiesel or ethanol.
- Meanwhile, biogasoline and ethanol demand growth has slowed on less ambitious blending mandates, rising electric vehicle sales, and more conventional gasoline availability. But sustainable aviation fuel (SAF) credits from government programs like the Inflation Reduction Act aid growing decarbonization efforts.
Read our full analysis for a more in-depth look at these trends.
