A Bridge or Mirage?

In the global discourse on climate action and sustainable energy transitions, biofuels have long been positioned as a renewable alternative that can offset carbon emissions and help phase out fossil fuels seamlessly.

Yet, the enthusiasm surrounding biofuels has been increasingly tempered by concerns about their true effectiveness. In a world racing to reduce greenhouse gas emissions by at least 50 per cent by 2030, can biofuels deliver the level of transformation needed?

The Practical Edge of Biofuels

One of the most important factors in favor of biofuels is their compatibility with current energy systems. Unlike solar and wind power—which, although essential to the clean energy mix, require new grids, storage technologies, and behavioral shifts—biofuels are plug-and-play. They can power cars, trucks, airplanes, and even maritime shipping without needing to replace internal combustion engines or retrofitting fuel distribution systems.

Sustainable aviation fuel (SAF), for instance, has emerged as a frontrunner in the quest to decarbonise the aviation industry. Made from feedstocks such as waste oils, municipal solid waste, and agricultural residues, SAF can reduce lifecycle emissions by as much as 80 per cent compared to conventional jet fuel.

Quantifying Impact: Emissions, Adoption, and Policy

The International Energy Agency’s Global Energy Review 2025 reports that clean energy technologies, including biofuels, helped avoid 2.6 billion tonnes of CO₂ emissions annually.

National examples provide further validation. Brazil, a global leader in ethanol production, sources nearly 70 per cent of its transportation fuel from sugarcane ethanol. India, similarly, has accelerated its ethanol blending programs, achieving a 10 per cent blend ratio—five months ahead of schedule. In the United States, the Renewable Fuel Standard (RFS) and the Inflation Reduction Act (IRA) have incentivised production and use of cleaner fuels through tax credits and blending mandates.

Sustainability Dilemmas and First-Generation Pitfalls

Yet, the early generations of biofuels came with significant ecological costs. Most first-generation biofuels are made from staple food crops—such as maize, sugarcane, and soybeans—cultivated in monoculture systems. These large, uniform fields displace biodiversity, deplete soil health, and demand large volumes of water and fertilisers. Land-use changes to accommodate such crops have led to alarming rates of deforestation, particularly in tropical regions such as Southeast Asia and South America.

These environmental consequences have prompted tighter regulatory scrutiny. The European Union's Renewable Energy Directive III now imposes stricter sustainability criteria, particularly for feedstocks like palm oil, which are linked to habitat loss and human rights abuses. Voluntary certifications like the International Sustainability and Carbon Certification (ISCC) have tried to address these concerns, but enforcement remains inconsistent—especially in informal markets or regions where state capacity is weak.

Advanced Biofuels: Moving Beyond the Croplands

The second and third generations of biofuels—collectively termed "advanced biofuels"—aim to resolve many of these sustainability dilemmas. These biofuels are made from non-food biomass. Their production does not compete with food supply, nor does it drive land conversion to the same extent as first-generation fuels. Technological advances are rapidly transforming this sector.

According to consultancy Bain & Company, the global capacity for advanced biofuels could double from 2021 levels by 2024, and triple by 2028.

A key barrier to biofuel scale-up remains policy fragmentation. In the US, federal policy has relied heavily on tax credits and subsidies, encouraging market-driven solutions. In contrast, the European Union employs more regulatory mechanisms, such as emissions caps and blending mandates, to steer the private sector. These divergent approaches can create market distortions, and often leave producers—especially those operating across multiple jurisdictions—struggling with compliance costs and uncertainty.

The developing world, meanwhile, often combines both approaches. However, lack of infrastructure, capital, and governance capacity frequently limits their effectiveness.

Strategic Relevance in the Global South

For countries like Indonesia, Malaysia, and Thailand, biofuels offer a route toward post-colonial energy autonomy. Investment in domestic feedstocks and refining capacity reduces reliance on imported oil, improves balance of payments, and creates jobs in the agrarian sector. Indonesia’s ambitious biodiesel program, which blends palm oil with diesel fuel, has not only bolstered energy security but also redefined the role of agriculture in the country’s development agenda. Malaysia, similarly, has framed biofuels as part of its climate action plan and national development strategy.

The 2023 G20 Summit in New Delhi saw the launch of the Global Biofuels Alliance (GBA)—a landmark initiative aimed at forging an international coalition for biofuel cooperation. The alliance seeks to develop harmonised sustainability norms, facilitate green technology transfers, and create a global market for renewable fuels. For the GBA to succeed, it must uphold three core principles: ecological integrity, economic inclusiveness, and institutional transparency.

The Road Ahead

Biofuels occupy a complex and often contradictory space in the broader energy transition. On one hand, they offer practical, scalable, and transitional solutions to decarbonise hard-to-electrify sectors. On the other, their production—if poorly regulated—can perpetuate environmental degradation and social inequity. When developed responsibly, biofuels can form part of a just, inclusive, and effective climate strategy.

As global momentum for net-zero intensifies, biofuels must evolve from being merely an energy substitute to becoming part of a holistic sustainability agenda—one that accounts for biodiversity, food security, labor rights, and climate resilience.

The writer, Founder, President of India Water Foundation and former Governor of the World Water Council, is a leading strategist in the development sector with over 30 years of experience. Views expressed are personal