IEA: Production of Renewable Biofuels Will Quadruple by 2035

If you are looking for a temperature check in the world of energy, then assessments do not get much more authoritative than those dealt out by the International Energy Agency (IEA).

This week, the world's largest governing body for all things energy published a report that analyses the state of play for sustainable fuels globally. The IEA's analysis projects that use of sustainable liquid and gaseous fuels will quadruple by 2035, should existing and recently announced policies be fully implemented.

The report, which was prepared to support COP30, looks at the pathways the world must take in order to accelerate the rollout and production of biofuels, biogas and all hydrogen-based fuels across sectors like transport, heavy industry and power generation.

The current landscape and the projected trajectory

Currently, sustainable fuels represent just 1.3% of the world's total energy consumption, with liquid biofuels making up nearly 80% of that amount.

In 2024, these fuels helped to reduce global oil demand by around 2.5 million barrels a day, while lowering the dependence that some countries have on imported transport fuels by between 5-15%.

"Between 2010 and 2024, global demand for sustainable liquid and gaseous fuels doubled," the report states, encouragingly. Nevertheless, prevailing trends suggest that we are likelier to see gradual progress, rather than the level of acceleration that will be needed to meet global climate targets.

Policy implementation as catalyst

The IEA's accelerated case scenario assumes that any policies that are currently 'planned' will become fully legislated, while it also assumes that market barriers will be removed and production capacity expanded in order to meet new demand.

Should these things fall into place, the IEA forecasts that sustainable fuel use will nearly double to 13 exajoules by 2030 and reach 28 exajoules by 2035.

Transport would remain the primary driver here, accounting for 50% of sustainable fuel consumption in 2035, with fuels covering 10% of road transport demand, 15% of aviation and 35% of shipping.

The report also identifies six priority actions for governments, including the establishment of clear roadmaps, increasing the predictability of demand and developing transparent carbon accounting methodologies.

"Accelerating the deployment of sustainable fuels requires a mix of ambitious, stable and enforceable policies, such as mandates and performance standards, along with proactive public procurement," according to the analysis.

Those in the private sector also understand the need for state support. "We need policy on our side," says Alice Henry, Co-Founder and CEO of RegenRate, a small UK-based business that helps to grow biofuel feedstock.

"We need rules that reward farmers for doing the right thing, and certification that’s fast, fair and rooted in reality," she adds.

Cost challenges and innovation needs

Current sustainable fuels remain more expensive than fossil alternatives, with electrolytic hydrogen approximately 3.8 times costlier, electrolytic ammonia 2.7 times more expensive and biomethanol 3.7 times the price of conventional fuels.

Despite these premiums, consumer price impacts are projected to remain modest due to low blending rates and energy's small share in final product costs.

A 15% sustainable aviation fuel blend would increase ticket prices by 5-7%, whilst steel produced with low-emissions hydrogen would add less than 1% to electric vehicle prices.

The report emphasises that "policies that address only one dimension risk leaving critical gaps" and advocates for integrated frameworks combining long-term demand signals, transitional support for emerging technologies and international cooperation.

Investment and employment implications

Cumulative investments between 2024 and 2035 could reach US$1.5 trillion across all sustainable fuel types in the accelerated scenario.

Direct employment would nearly triple to approximately 2 million jobs by 2035, with liquid and gaseous biofuels accounting for two-thirds of this growth.

Investments in sustainable fuels grew 20% between 2023 and 2024, driven by policies in the United States and Brazil for liquid biofuels, and the European Union's REPowerEU Plan for biogas.

Technology diversity and regional variation

The portfolio of sustainable fuels is expected to evolve significantly, with liquid and gaseous biofuels maintaining a two-thirds share in 2035 whilst low-emissions hydrogen and derivatives expand from 1% currently to one-third of total use.

That shift is reflected in the IEA's analysis, wherein it is predicting that funding for hydrogen-based solutions will skyrocket.

"With $1.5tn in sustainable fuel investments expected through 2035, and hydrogen-based fuels accounting for nearly half, renewable methanol is positioned as a vital solution for shipping, chemicals and beyond," says Antonio Villaluenga, VP of US Project Development at Carbon Recycling International.

Still, it is important to note that investments will vary depending on geography, suitability and accessibility. As the report suggests: "National shares, mixes and volumes would still vary widely depending on regional conditions."

The report's authors conclude that no single fuel or feedstock will be able to meet global demand. Instead, the IEA is calling for united efforts and progress on multiple fronts including established market expansion, new market development and emerging technology commercialisation.