Towards lower carbon fuels

Reducing the carbon intensity of fuels – particularly for use in transportation – presents a major potential opportunity to support national and international efforts to meet global greenhouse gas emissions targets.

With transport contributing a large proportion of the UK’s overall carbon emissions, cutting emissions from road fuels has been a key government objective for a number of years, driven by the Department for Transport’s (DfT) flagship policy known as the Renewable Transport Fuel Obligation (RTFO). That UK transport emissions have been the highest carbon-emitting sector in the UK since 2015 (BEIS Statistics) makes the urgency even more stark.

What is being done?

Transposed into UK law in 2007 from the EU’s Renewable Energy Directive (RED), with implementation beginning in 2008, the RTFO requires suppliers of fuels for road vehicles and since 2013 non-road mobile machinery (NRMM), such as tractors and plant machinery, to incorporate a proportion of biofuels into petrol and diesel.

Obligated suppliers – fuel suppliers who sell more than 450,000 litres of applicable fuels – do this by redeeming Renewable Transport Fuel Certificates (RTFCs) or by paying a fixed sum for each litre of fuel for which they wish to ‘buy-out’ of their obligation (and sub-target).

Over time, the proportion of renewable fuels required to be included in road fuels has increased and in 2020, the RTFO requires that all transport fuels must, on average across the year, contain an 9.75% minimum volume of renewable fuel. This target must be met within the requirements of the Motor Fuel (Composition and Content) Regulations 1999 and relevant fuel standards (e.g. BS EN 228, BS EN 590 and BS 2869 Class A2).

In practice, because some waste and residue-derived biofuels count double towards the target (see First-Generation Biofuels below), the physical biofuel content of road transport fuel will be less than the obligated amount, with ethanol and biodiesel volumes capped by the current petrol and diesel fuel standards respectively.

The RTFO trajectory reaches 12.4% of road fuels volume by 2032, with a requirement within that trajectory to increase the volume of ‘development fuels’ from 0.1% in 2019 to 2.8% by 2032.

In 2018, the RTFO was also amended to implement changes to the RED to account for indirect land use changes (known as ‘ILUC’), setting a limit on the volume of some crop-derived biofuel - the 'crop-cap' - which may be counted towards renewable transport targets. From 2020, the 'crop-cap' increases in stringency from 4% by volume to 2% by volume by 2032.

But what are these lower carbon fuels? How are they made and what are they made of?

Broadly, low-carbon fuels fall into the following categories:  

  • First-generation biofuels (already available in the market)
  • Advanced or second-generation biofuels (under development)
  • Renewable fuels of non-biological origin

First-Generation Biofuels

Biofuels have become a common component of the modern petroleum fuels sector, with mandated requirements to include a proportion of products manufactured from biological sources, wastes and residues in fuel sold to the consumer.

First generation biofuels are produced from plant crops such as sugar cane or sugar beet, corn and wheat for ethanol, and rape seed, palm or soya oils, or re-processed vegetable oils for biodiesel. For example, wheat is fermented to ethanol and blended with petrol, and vegetable oils are esterified to produce Fatty Acid Methyl Ester (FAME), which is also known as biodiesel.

The ‘crop-cap’ mentioned above has created an additional challenge for fuel manufacturers to increase the proportion of biofuels. This challenge has led to alternative biofuels receiving priority from policymakers, with the preference for FAMEs derived from waste materials – such as used cooking oil (UCO) and tallow (animal wastes) - although these feedstocks are currently limited in supply. Another reason for the move to these types of feedstock is because the RTFO rewards suppliers utilising waste or residue feedstocks by awarding double the amount of RTFCs per litre or kilogram of fuel supplied. At present almost all UK FAME is derived from UCO and tallow, with the UK importing UCO from around 70 countries to meet demand for biofuels.

Advanced or Second-Generation Biofuels

A generic term used to describe biofuels produced from non-food competing feedstocks, so-called ‘advanced’ or ‘second generation’ biofuels are also being assessed for their viability. However, presently these types of advanced fuels have little or no commercial production.

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.
  • Biofuels from algae – where algae consumers carbon dioxide in producing biodiesel precursors or fermentable sugars

Under the RTFO, second generation biofuels derived from lignocellulosic and non-food material (which are grown for the purpose of being used as fuel) are considered 'dedicated energy crops' and count double towards a suppliers' obligation. Whilst these fuels must meet the land use criteria, they are not restricted by the 'crop-cap'.

'Development fuels' are defined as fuels made from sustainable waste or residues, or RFNBOs (see below), that the Department for Transport has concluded are eligible for 'development fuel' RTFCs (or dRTFCs). Note that first generation segregated oils and fats (such as used cooking oil mentioned above) are not 'development fuels'.

Renewable fuels of non-biological origin

These fuels, or RFNBOs, are produced via electrolysis using renewable power and synthesis. A primary example is a process where hydrogen, produced from a low-carbon source, reacts with CO2 to produce a hydrocarbon chain that is also referred to as power-to-liquid (PtL) or an e-fuel.

There are a number of other technology pathways and feedstocks that are being considered as a means to deliver low-carbon liquid fuels. These are considered in UKPIA’s (2019) Future Vision Publication.

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