Global <a href="https://www.thenationalnews.com/business/energy/2024/11/05/adipec-oil-gaza-war/" target="_blank">oil companies</a> are investing heavily in biofuels to meet an expected growth in demand for sustainable fuels from sectors such as <a href="https://www.thenationalnews.com/business/aviation/2024/02/21/boeing-accuses-big-oil-companies-of-inaction-on-sustainable-aviation-fuel/" target="_blank">aviation and shipping.</a> Major players such as BP, Chevron, Shell, TotalEnergies, ExxonMobil and Eni have announced <a href="https://www.thenationalnews.com/business/energy/2024/02/13/some-oil-companies-agree-with-ieas-peak-demand-prediction-says-birol-amid-debate/" target="_blank">43 biofuel projects</a> that are either up and running or scheduled to start by 2030, Rystad Energy said in a report on Wednesday. While investments span various products, including biodiesel and ethanol, the main focus is on hydrotreated vegetable oil and sustainable aviation fuel (SAF), which are expected to make up nearly 90 per cent of the projected biofuel production, the report said. The enterprises, which could add a combined 286,000 barrels per day of production capacity, comprise 31 greenfield projects, six co-processing ventures and six full refinery conversions for biofuel production. Co-processing, which integrates bio feedstock into existing refineries, is a cost-effective option for leveraging current infrastructure, reducing upfront costs and appealing to oil companies entering the biofuels market, Rystad said. “Supermajors are accelerating investments in biofuels … recognising their potential as low carbon ‘drop-in’ fuels that can be swiftly integrated into existing aviation, heavy transport and marine fuel systems,” said Lars Klesse, bioenergy research analyst at Rystad. “With increasing regulatory pressure to adopt … biofuels have shifted from being a potential option to becoming an essential component of decarbonisation strategies." The EU aims for a 14 per cent share of renewable energy in transport by 2030, with at least 3.5 per cent coming from advanced biofuels. The US plans to produce 3 billion gallons of SAF annually by the end of the decade and offers significant tax credits to boost biofuel production under the Inflation Reduction Act. The legislation will result in an estimated $9.4 billion in production and investment support for biofuels through to 2031, the International Energy Agency has said. The agency, based in Paris, expects global biofuel demand to grow by 38 billion litres between 2023 and 2028, an increase of nearly 30 per cent compared to the previous five years. BP leads the bioenergy sector with 130,000 bpd in the pipeline. Its acquisition of Brazilian biofuel producer Bunge Bioenergia increased capacity to 66,000 bpd, surpassing its 2025 target of 50,000 bpd and advancing toward its 2030 goal of 100,000 bpd, Rystad said. Chevron's acquisition of Renewable Energy Group and Eni's 22,000 bpd advanced biofuel capacity, built through co-processing and conversion projects, further enhance their foothold in the expanding biofuels market, the report said. ExxonMobil, based in Houston, Texas, will start biofuel production at its Strathcona refinery in Canada next year, with an initial capacity of 20,000 bpd. The company seeks to launch 12 more biofuel projects to reach 200,000 bpd by 2030. The Rystad report comes amid backlash from activists and policymakers against major oil companies for scaling back climate projects to prioritise short-term profits. Even though oil prices decreased from their highest points after the Russian invasion of Ukraine, the global oil and gas industry still made more than $2.4 trillion last year. However, they invested only 4 per cent of their capital spending on clean energy, according to Energy Profits. In 2020, BP set a target of 2030 to reduce oil and gas output by 40 per cent from 2019 levels, but last year this was scaled back to a 25 per cent cut. Also last year, the London-based company wrote off $1.1 billion in offshore wind investments and recently announced plans to sell additional wind assets. Shell has dialled back spending on renewable energy, with capital expenditure in its renewables and energy solutions division falling to $409 million in the third quarter of 2024, compared to $425 million in the previous quarter and $659 million in the same quarter last year. Last week, Shell succeeded in appealing a Dutch court ruling that mandated the company to speed up its carbon reduction efforts. Although the court recognised Shell's responsibility to lower greenhouse-gas emissions, it reversed the specific directive to cut emissions by 45 per cent by 2030. Airlines and aircraft manufacturers have criticised leading oil companies for their lack of action in producing sustainable jet fuel, amid growing frustration within the aviation industry over its limited availability. The global aviation industry needs a vast increase in SAF production over the next few decades to achieve its goal of zero net carbon emissions by 2050. However, it currently meets less than 1 per cent of the industry’s fuel requirements. Governments and regulatory bodies are increasingly imposing mandates on airlines to blend SAF into their fuel supply. Aviation accounts for 2 per cent of global energy-related carbon-dioxide emissions. By the end of 2024, SAF production is predicted to triple to 1.875 billion litres year on year, making up 0.53 per cent of aviation fuel needs and 6 per cent of renewable fuel capacity, according to International Air Transport Association estimates. About 140 renewable fuel projects aiming to produce SAF are scheduled to be operational by 2030. If all these are realised, global renewable fuel production could reach 51 million tonnes by 2030, with plants in various regions, the aviation industry body reported in June.
