Biofuels & Alternative Fuels

Over the last few decades, considerable progress has been made in reducing pollution from vehicles.

This is reflected in Government statistics which show that emissions of the main pollutants, excluding carbon dioxide, from road transport peaked in 1989 and have been declining significantly since then. The oil industry has played an important part in this achievement through substantial investment in the production of cleaner petrol and diesel, which has enabled new engine and exhaust clean-up technologies in vehicles. 

Further measures are in hand which will ensure that the decline continues. However, exceedances of the UK air quality standards for NOx and PM10 are still forecast in some urban areas. This has led to further consideration of ways to improve air quality, including further vehicle improvements and replacing, or partially replacing, standard petrol and diesel with alternative fuels.

Some Alternative Fuels 

Broadly, these fall into the following categories:  

  • First generation biofuels (already in the market)
  • Advanced biofuels (under development)
  • Hydrogen (under development)


The description ‘biofuel’ is a generic one used to describe liquid or gas fuels that are not derived from petroleum based fossils fuels or contain a proportion of non-fossil fuel. Biofuels fall into two main categories: conventional and advanced. Conventional, or first generation, biofuels are produced from plant crops such as sugar cane/beet, corn and wheat for ethanol, and rape seed, palm or soya oils, or re-processed vegetable oils for biodiesel. Advanced biofuels are produced from gasified biomass. At present, most biofuels fall into the conventional category.

Although biofuels can be used as road fuels on their own, mostly they are blended with conventional petrol or diesel fuel. The EU CEN fuel standards currently limit the concentration of biofuel content of conventional petrol to 5% ethanol (E5) by volume and diesel to 7% biodiesel (B7) by volume without affecting the vehicle manufacturer’s warranty. A European standard for E10 is currently under development.

Oil companies and vehicle manufacturers, working with biofuel producers, have agreed European standards for these biofuels.

In diesel, the vegetable oils are processed to produce fatty acid methyl esters (FAME). EN 14214 defines the requirements and characteristics of FAME product which is suitable for blending with conventional diesel to ensure that the product meets the technical requirements of modern diesel engines.

In petrol, the standard for bioethanol is EN 15376. The use of bioethanol in petrol presents some particular problems as it picks up water and moisture during transportation and storage. As a result, it may be preferable, in the case of refineries linked to product pipelines, to blend bioethanol and petrol at the point at which road tankers are loaded rather than at the refinery itself. In addition, changes to tanks at filling stations will be necessary. The higher vapour pressure of ethanol could also make it difficult to keep the level, when blended with petrol, within the limits laid down by legislation. For this reason, widespread introduction of bioethanol into the UK market continues to require investment at road loading terminals to introduce new blending and storage facilities.

Biofuels are normally more expensive to produce than conventional petrol or diesel so their addition would increase the pump price. 

Renewable Transport Fuel Obligation and Renewable Energy Directive

In October 2007, Parliament approved the Renewable Transport Fuel Obligation (RTFO), requiring suppliers of road fuels to incorporate a proportion of biofuel in petrol or diesel. The Renewable Fuels Agency (RFA), established in 2007, was responsible for monitoring the implementation of the RTFO by obligated companies until 1st April 2011, when the Department of Transport took over responsibility for the governance of the RTFO. Each year guidance notes are issued on how to report carbon saved and sustainability of biofuels.

The RTFO commenced in April 2008 with a target of 2.5% biofuel content in road fuels in 2008/09 and envisaged a biofuel content of 3.75% in 2009/10 rising to 5% in 2010/11 with a buy-out penalty for suppliers failing to meet the obligation of 30p per litre.

On 28th January 2009, the RTFO was revised and new limits were announced. The yearly obligation level for fuel suppliers under the RTFO became: 3.25% for 15th April 2009/ 14th April 2010; 3.5% for 2010/11; 4% for 2011/12; 4.5% for 2012/13; 5% for 2013/14. The new levels are in line with the recommendations contained in the 2008 Gallagher Review of Biofuels, advising a slowing down in the rate of increase of biofuel content in road fuels to reach 5% in 2013/14.

On 1st April 2010, following the ending of the duty differential for biofuels for road use, the duty rates for biodiesel and bioethanol were increased to the same rate as the main road fuels, though biodiesel made from waste cooking oil continued to benefit from a 20p per litre duty differential until 31st March 2012.

The RTFO was amended again in December 2011 to reflect the requirements of the Renewable Energy Directive (RED, 2009/28/EC). The RED came into force and required that all biofuels crossing the duty point should meet the carbon and sustainability criteria as defined in the Directive. At the same time, biofuels produced from approved wastes and residues were allowed to ‘double’ count towards the RTFO target.

A further amendment to the RTFO saw the obligation expanded beyond petrol and road diesel to include fuel for Non-Road Mobile Machinery from April 2013. So that the overall volume of biofuel to be added to fuel remained the same, the overall obligation was correspondingly reduced from 5.00% volume to 4.75%.

In September 2015, the Renewable Energy Directive and the Fuel Quality Directive were amended to start the transition to biofuels that deliver substantial GHG saving when estimated indirect land-use change emission are also included. Amendments include a cap on crop based biofuels and a small sub-target for advanced biofuels.

The Renewable Energy Directive amendments are planned to be transposed into the RTFO during 2017.

Advanced biofuels

Advanced biofuels is the generic term used to describe biofuels produced from non-food feedstocks. A number of processes are under development, including ethanol production from straw and wood, and diesel production from wood using gasification and the Fischer-Tropsch process or developments of that process. The Fischer-Tropsch process can also be used to convert natural gas (Gas to Liquids or GTL), low value refinery residues or coal into a high-quality blending component for diesel. The process has been used in South Africa for some years and, more recently, GTL plants have been constructed in Malaysia and Qatar.

The processes to make advanced biofuels are predicted to give better quality fuels or extend the range of biomass that can be processed. Because of their characteristics and the ability to blend them with conventional petrol and diesel without unwanted side-effects, advanced biofuels are unlikely to be constrained by the limit on the bio-content of fuels for the quality/performance reasons outlined above.

View the UKPIA Briefing paper on Biofuels in the UK.

The Fuel Quality Directive

The European Commission’s White Paper on Transport, published in March 2011, proposed a reduction of at least 60% of GHGs from the transport sector by 2050 with respect to 1990 levels (or 70% versus 2008 levels). By 2030, the goal for transport will be to reduce GHG emissions to around 20% below their 2008 level.

The Fuel Quality Directive (FQD, 2009/30/EC) requires suppliers to reduce, as gradually as possible, the lifecycle greenhouse gas intensity of transport fuel by 6% by 31st December 2020 compared with a 2010 baseline. The 6% reduction can be achieved through the use of biofuels, renewable electricity and a reduction in the flaring and venting of gases at the extraction stage of fossil fuel feedstocks.

The FQD was transposed into UK law as the ‘The Motor Fuel (Road Vehicle and Mobile Machinery) Greenhouse Gas Emissions Reporting Regulations 2012’ and came into force on 1st January 2013.

The Fuel Quality Directive amendments are planned to be transposed into these regulations during 2017.


Hydrogen (chemical formula H2) is the lightest and most abundant element in the universe. It is not an energy source in its own right, merely an energy carrier rather like electricity. However, since it combines easily with other elements - water is a common example - hydrogen is usually found as a part of other compounds, including fossil fuels and plant material.

Hydrogen as a future fuel is the focus of a great deal of attention and research, since the only product of combustion is water vapour when used in an internal combustion engine or fuel cell. It therefore has attractions in terms of reducing vehicle emissions and CO2. However, a great deal of energy is required to produce a pure hydrogen stream separate from the other compounds to which it is usually attached, so in order to reduce CO2 emissions on a 'wells to wheels' basis the energy consumed in producing hydrogen needs to come from a low carbon source. 

Hydrogen can be separated using a variety of energy resources: fossil fuels, such as coal and natural gas, renewables, such as biomass, and renewable energy technologies, including solar, wind, geothermal and hydroelectric, or nuclear power.

The most common process used to extract hydrogen is steam reforming of natural gas. Equally, hydrogen could be extracted from gasification of biomass, followed by reforming or on-board vehicle reforming of petrol or diesel.

Although hydrogen can be used in a suitably modified internal combustion engine, most research is focused on its use in fuel cells. The use of hydrogen in fuel cells has the potential to replace the conventional internal combustion engine in vehicles or in other IC power applications. Currently, a number of prototype vehicles, including buses, cars and motor bikes have reached the demonstration stage.

How a fuel cell works

A fuel cell is a device that uses hydrogen (or a hydrogen-rich fuel) and oxygen to create an electric current. 

Most fuel cells currently under development are of the proton exchange membrane type, converting chemical energy in the fuel into an electric current, used to power an electric motor.

The principle is not unlike a battery in reverse but in this case the hydrogen and oxygen are fed to opposite poles, combining to form water in a process that releases electrons thus generating a current.

Power produced by a fuel cell depends on several factors, including fuel cell type, cell size, the temperature at which it operates and the pressure at which the gases are supplied to the cell. A single fuel cell produces enough electricity for only the smallest applications. To provide the power needed for most applications, individual fuel cells are combined in series into a fuel cell ‘stack’. A typical fuel cell stack may consist of hundreds of fuel cells. 

The potential benefits of fuel cells are significant but many challenges, both technical and cost related, must be overcome first. One of the major challenges, aside from extraction, is storage and distribution of hydrogen. Stored in a liquid form, it has to be kept very cool - below minus 200°C - or under very high pressure as a gas. Alternatives being researched include storing hydrogen in a solid form as a hydride. Either way, on-board storage will take up space and add weight to the vehicle whilst large scale distribution would require a completely new infrastructure to replace that presently dedicated to petrol and diesel. Above all, for fuel cells to be successful, the technology has to gain acceptance from consumers both in terms of reliability and ease of use, as well as cost. 

For this reason, fuel cell vehicles are unlikely to be widely available on a commercial scale within the next twenty years, although vehicles operating from fixed depots such as buses or delivery vehicles may be the first to develop.

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For more information please contact:

Hugh Tucker

direct line: +44 (0) 20 7269 7611