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Report on the Stagnation of Biofuel Development and its Impact on Sustainable Development Goals

Executive Summary

Momentum in the development of biofuels, particularly Sustainable Aviation Fuel (SAF), has significantly stalled despite initial optimism. Major energy corporations are scaling back or cancelling projects, citing high costs, market uncertainty, and insufficient policy support. This trend presents a substantial challenge to the achievement of several key Sustainable Development Goals (SDGs), including SDG 7 (Affordable and Clean Energy), SDG 9 (Industry, Innovation, and Infrastructure), and SDG 13 (Climate Action). The scaling back of private sector investment threatens global decarbonization targets, especially in hard-to-abate sectors like aviation.

Current Status of Biofuel Projects

Analysis of the biofuel sector indicates a reversal of previous investment trends. While a strong project pipeline was anticipated, recent developments highlight a growing reluctance from key industry players to proceed with large-scale production facilities.

• Initial Projections: According to Rystad Energy, 43 biofuel projects with a combined production capacity of 286,000 barrels per day were expected to be operational by 2030, with major commitments from firms including Shell, ExxonMobil, and TotalEnergies.
• Project Cancellations: A significant setback is Shell’s decision to cancel its large-scale biofuels plant in Rotterdam, which was intended to be a major European hub for SAF and biodiesel. The company cited a lack of competitiveness and high costs.
• Low Realization Rate: A Reuters analysis of 165 SAF projects announced over the past 12 years found that only 36 have become operational, with just 10 (6% of the total) producing at a commercial scale. This demonstrates a critical failure in translating commitments into tangible infrastructure, hindering progress on SDG 9.
• Diverging Demand Forecasts: The OECD projects global biofuel use to grow by only 0.9% annually over the next decade, a sharp decline from the 3.3% growth seen in recent years. While demand is expected to stagnate in high-income nations, growth is forecast in middle-income countries like Brazil, Indonesia, and India.

Primary Challenges to Biofuel Expansion and SDG Attainment

The slowdown in biofuel development can be attributed to several interconnected factors that directly impact the viability of achieving global sustainability targets.

1. Economic Unviability: High production costs make biofuels, especially SAF, uncompetitive against conventional fossil fuels. This economic barrier slows the transition to cleaner energy sources as outlined in SDG 7.
2. Weak Policy Support: Insufficient or inconsistent government mandates and incentives create market uncertainty, discouraging the long-term capital investment required for large-scale projects. This lack of robust public-private collaboration undermines SDG 17 (Partnerships for the Goals).
3. Market Dynamics: Fluctuating market conditions and a strategic shift by some energy majors back towards fossil fuels have further eroded confidence in the biofuel sector.

Implications for Global Climate Action and Sustainable Development

The failure to accelerate biofuel production has profound consequences for international climate commitments and the broader sustainable development agenda.

• SDG 13 (Climate Action): The aviation industry, responsible for approximately 2% of global greenhouse gas emissions, relies heavily on SAF for its decarbonization strategy. The current stagnation makes it significantly more difficult for the sector to meet its net-zero targets, thereby jeopardizing global climate goals.
• SDG 7 (Affordable and Clean Energy): The slow uptake of biofuels as a viable alternative to traditional jet fuel and diesel impedes progress towards increasing the share of renewable energy in the global energy mix, particularly within the transport sector.
• SDG 9 (Industry, Innovation, and Infrastructure): The cancellation of advanced biofuel facilities represents a missed opportunity to build resilient and sustainable infrastructure, a core target of this goal. It signals a failure to innovate and industrialize clean energy technologies at the necessary scale.
• SDG 12 (Responsible Consumption and Production): Since many biofuels are produced from waste materials like used cooking oil, the slowdown limits the potential to advance circular economy models and promote sustainable production patterns.

Analysis of Sustainable Development Goals in the Article

1. Which SDGs are addressed or connected to the issues highlighted in the article?

• SDG 7: Affordable and Clean Energy

  The article’s central theme is the development and production of biofuels, specifically Sustainable Aviation Fuel (SAF), which are forms of renewable and cleaner energy intended to replace fossil fuels. The discussion about oil majors scaling back projects due to high costs and market uncertainty directly relates to the challenges of ensuring access to affordable and clean energy.

• SDG 9: Industry, Innovation, and Infrastructure

  The article discusses the construction and cancellation of industrial infrastructure, such as Shell’s planned biofuels plant in Rotterdam. It highlights the innovation required to produce SAF from waste and residue and the challenges faced by “hard-to-abate industries like aviation” in adopting sustainable technologies. The stalling of projects signifies a setback in upgrading industrial infrastructure for sustainability.

• SDG 12: Responsible Consumption and Production

  The production of SAF from “waste and residue, like used cooking oil or organic crops” is a direct example of promoting sustainable production patterns by creating value from waste materials. The shift from conventional jet fuel to biofuels represents a move towards more responsible consumption in the aviation sector.

• SDG 13: Climate Action

  The primary motivation for developing biofuels, as stated in the article, is to achieve “decarbonisation” and reduce “greenhouse gas emissions.” The article explicitly warns that “slower biofuel growth could undermine global decarbonisation targets,” directly linking the issue to the urgent need for climate action.

• SDG 17: Partnerships for the Goals

  The article highlights the complex interplay between oil majors (private sector), government policies, and market forces. The failure of projects is attributed to a combination of financial decisions by companies like Shell and “weak policy support,” demonstrating how a lack of effective public-private partnerships can hinder progress towards sustainability goals.

2. What specific targets under those SDGs can be identified based on the article’s content?

• SDG 7: Affordable and Clean Energy

  • Target 7.2: By 2030, increase substantially the share of renewable energy in the global energy mix. The article’s entire focus on the production and use of biofuels and SAF as an alternative to conventional jet fuel directly addresses this target. The slowdown in biofuel development is a direct threat to achieving this increase, particularly in the aviation sector.

• SDG 9: Industry, Innovation, and Infrastructure

  • Target 9.4: By 2030, upgrade infrastructure and retrofit industries to make them sustainable…and greater adoption of clean and environmentally sound technologies. The article discusses plans to build new biofuel facilities, such as the “massive Rotterdam biofuels plant,” which represents an upgrade to energy infrastructure. The use of SAF in existing aircraft engines is an example of retrofitting an industry to make it more sustainable.

• SDG 12: Responsible Consumption and Production

  • Target 12.2: By 2030, achieve the sustainable management and efficient use of natural resources. The article mentions that SAF is produced from “waste and residue, like used cooking oil or organic crops,” which aligns with the efficient use of resources and the principles of a circular economy.

• SDG 13: Climate Action

  • Target 13.2: Integrate climate change measures into national policies, strategies and planning. The article references the European Union’s policy that “requires a minimum of 2 percent of SAF use in aviation by 2025.” This is a clear example of integrating climate measures into regional policy. Conversely, the mention of “weak policy support” in other contexts points to a failure to meet this target.

3. Are there any indicators mentioned or implied in the article that can be used to measure progress towards the identified targets?

• Indicators for SDG 7 (Target 7.2)

  • Share of biofuels in aviation fuel: The article mentions the European Union’s mandatory “minimum of 2 percent of SAF use in aviation by 2025,” which serves as a specific, measurable indicator of renewable energy share.
  • Annual growth rate of biofuel use: The article provides a direct indicator by stating, “The OECD expects the global use of biofuels to grow by 0.9 percent a year over the next decade, much lower than the 3.3 percent annual growth seen in recent years.” This metric tracks the rate of adoption.

• Indicators for SDG 9 (Target 9.4)

  • Biofuel production capacity: The article quantifies the planned increase in industrial capacity, noting a “production capacity pipeline of 286,000 barrels per day (bpd)” from oil majors.
  • Number of operational projects: Progress is measured by the number of successful projects. The article provides a stark indicator of the challenge: “out of 165 SAF projects over the past 12 years, only 36 have come to fruition.”

• Indicators for SDG 13 (Target 13.2)

  • Existence of supportive policies and mandates: The article implies this indicator by contrasting the EU’s 2% mandate with the general problem of “weak policy support,” suggesting that the presence and strength of such regulations are key measures of progress.

4. Table of SDGs, Targets, and Indicators

Source: oilprice.com