Policy and investment failures doomed the biofuel revolution
The mood was celebratory on a humid June evening in 2011 as a red-and-white Gulfstream G450 belonging to Honeywell International Inc. took off from a New Jersey airport at sunset on a historymaking flight to Paris.
I was onboard the executive jet to report on the first transatlantic flight powered by biofuels. One of the Gulfstream’s engines was burning a blend of petroleum and a sustainable aviation fuel made with oil from the seeds of the inedible weed camelina.
Technology from Honeywell’s subsidiary UOP had refined the camelina into renewable jet fuel, and as we reached cruising altitude executives settled into wide leather seats and clinked wine glasses. The trip avoided emitting 5.5 metric tons of carbon dioxide compared to a conventional flight.
“We’re ready to go to commercial scale and commercial use,” said Jim Rekoske, a Honeywell vice president.
Yet nine years later, biofuels account for only a tiny fraction of global jet fuel consumptionless than 0.1% in 2018 according to the International Energy Agency. In the U.S., the federal Energy Information Administration projects that the consumption of all biofuels will rise from 7.3% of total fuel consumption in 2019 to just 9% in 2040 if oil prices remain low. Even if petroleum prices skyrocket, biofuel consumption is predicted to increase to just 13.5% by 2050.
Global investment in biofuel production capacity, meanwhile, plunged from $22.9 billion in 2007 to $500 million in 2019, according to
BloombergNEF. That has significant implications for decarbonizing transportation, which is key to keeping global average temperature rise to 1.5C to avoid catastrophic climate impacts.
Biofuel’s dramatic fall stands in stark contrast to other renewable energy technologies. Over the past decade, solar and onshore wind prices dropped 90% and 70% per megawatt-hour, respectively, according to BloombergNEF, and they’re now the cheapest form of new energy generation for twothirds of the world. The price of lithium-ion battery packs fell 87%, and BloombergNEF predicts electric cars will become cost competitive with gasoline vehicles by the mid2020s.
But many advanced biofuels startups have either collapsed or now use their technology to make additives for cosmetics, dietary supplements, and food.
What went wrong? In short, a mismatch between government policy and the investment and time needed to ramp up complex biofuel supply chains. Venture capitalists accustomed to the relatively quick returns delivered by tech industry startups weren’t prepared to finance what could be a decade-long slog to develop new biofuels. Entrepreneurs were overly confident about their technologies’ potential while government policy did not offer the types of incentives and mandates that allowed the nascent solar and wind industries to take on fossil fuels and become self-sustaining.