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Renewable fuels and transport decarbonization: What you need to know
The role of renewable fuels in decarbonizing the transportation sector
The transportation sector, including everything from light-duty passenger vehicles to airplanes and ships, is one of the largest contributors to global greenhouse gas (GHG) emissions. In the US, the transportation sector accounts for nearly 30% of the country’s GHG footprint. Decarbonizing this sector is critical to limiting global temperature rise to 1.5°C in line with the Paris Agreement.
There are two main camps of thought on transport decarbonization strategies – electrification (electrons) and renewable fuels (molecules). Electrification has been heavily promoted in the media, and citizens often associate electrons with being the “cleanest” fuel type because they don’t create tailpipe emissions. Renewable fuels, on the other hand, are comprised of molecules and still combust.
However, when considering the use cases for each, it’s important to take a full lifecycle approach.
Defined: What are renewable fuels?
Renewable fuels are any fuel that can replace fossil fuels for a lower carbon intensity alternative. These fuels are derived from non-crude feedstocks such as wind, solar, soy, used cooking oil, municipal solid waste, grapeseed oil, forest residue, corn, sugar, woody biomass, and more.
The carbon intensity of electricity in the US is highly dependent on where it’s sourced. Unless it comes from a renewable energy source like solar, wind, or geothermal, the carbon intensity of this “fuel” is often higher than the tailpipe emissions of liquid renewable fuels.
All this to say, there’s no silver bullet solution. Read on to learn about renewable fuels’ role in decarbonizing the transportation sector and some of the most prominent fuels in the space.
Renewable fuels and transport decarbonization
As mentioned above, transport decarbonization is all about carbon intensity. Determining the carbon intensity of various fuel types means considering the entire value chain, from raw materials to how they're made, used, and disposed of – in other words, not just emissions at the tailpipe.
For instance, in California, despite statewide efforts to embrace renewable power, the grid is still fairly reliant on natural gas. In 2023, the carbon intensity of the grid was 81 grams of CO2 per megajoule, whereas the carbon intensity of renewable diesel was 34. By considering the carbon intensity of each fuel type, you can see in this case that renewable diesel, a liquid fuel, is a "cleaner” fuel source than electricity from the grid.
This isn’t to say that electrification is an inferior alternative to renewable fuels. It’s just not the be-all and end-all solution. Electrification is essential to reaching net zero goals, and there are times when electrification makes the most sense, such as for light-duty passenger cars, garbage trucks, and other short-haul vehicles. But for sectors like long-haul trucking and aviation, the physics of lithium-ion batteries don’t pan out.
"When it comes to decarbonizing the transportation sector, it isn’t about electrons versus molecules. It’s about the fastest path to decarbonization, and we need both to reach our goals."
Electrification technology is still working through some sizeable barriers that limit adoption at scale, including grid constraints, charge times, range, and more. Renewable fuels can help fill this gap with less GHG-intensive solutions that are available today.
Common renewable fuels
Below are some of the most notable renewable fuel solutions on the market, with pros and cons and industry use cases for each. While this is far from an expansive list, it reflects the most viable fuel types used now or in the near future.
Overview: Renewable diesel is molecularly similar to petroleum diesel but is made from a variety of alternative feedstocks like used cooking oil, soy, canola, and municipal solid waste. It can be used as a drop-in fuel in diesel engines with no modifications required.
Pros: On average, renewable diesel cuts carbon intensity by 65% compared to petroleum diesel and can reach up to 80%. This reduction in carbon intensity significantly lowers particulate matter, SOx, CO2, and other emissions that cause asthma and other health issues. It also has a slightly higher energy density than petroleum diesel, yielding a higher mile per gallon.
Cons: Renewable diesel can be reliant on land-based feedstocks (corn, soy, etc.), which often coincide with land use concerns and environmental justice implications.
Use cases: Any vehicle using diesel today could use renewable diesel instead, making it a great fuel source for heavy-duty trucks, ships, ferries, backup generators, passenger trucks, tractors, and forklifts. In fact, anyone filling their tanks with diesel in California is already using these blends – renewable diesel makes up over 60% of the California diesel market and is on track to fully phase out petroleum diesel by 2030.
Overview: SAF is a drop-in replacement for jet fuel made from feedstocks like canola, used cooking oil, biomass, municipal solid waste, and sugar.
Pros: As one of the few sectors not suited to electrification, at least on a meaningful scale, SAF is the only viable solution for decarbonizing the aviation sector. It reduces CO2 emissions by up to 80% and is expected to be responsible for 65% of the emissions reductions needed for aviation to reach net zero by 2050.
Cons: High-altitude emissions have an outsized impact on global warming, and although SAF enables significant reductions in SOx, NOx, particulate matter, and contrails, it still generates emissions during combustion.
Environmental impact aside, SAF prices are substantially higher than traditional aviation fuel, production is limited, and distribution networks are lacking. Learn more about these barriers and how to overcome them.
Overview: Although electricity isn’t a liquid fuel like the others on this list, it’s still recognized as a clean transportation fuel by the federal government. Electricity can be made from renewable sources like solar, wind, and hydropower, traditional sources like natural gas, nuclear, and coal, or from the grid.
Pros: Electricity generates no direct tailpipe emissions, including SOx, NOx, and particulate matter, greatly benefiting planetary and human health.
Cons: As mentioned earlier, electricity often isn’t made from renewable energy sources, and the carbon intensity of electricity from the grid can be very high. To store this energy, vehicles rely on energy-intensive materials such as cobalt and lithium, which have their own set of human rights implications.
Lithium-ion batteries are also quite heavy. This isn’t a huge concern for personal vehicles, but for heavy-duty trucks, the battery eats into the available weight for transporting goods.
More significantly, electrification requires an entirely different business model and systemic change in the transportation of people and things, such as adapting to shorter ranges, longer charging times, and reduced weight capacity.
Use cases: Passenger electric vehicles (EVs), delivery vehicles, short-haul trucks, drayage, garbage trucks, forklifts, and fleet vehicles.
Overview: Like renewable diesel, biodiesel is a biofuel made from vegetable oils and fats. However, it has different production processes and properties, most notably that it’s an additive blended into diesel fuel rather than a drop-in replacement.
Pros: Thanks to its low sulfur content, a 100% biodiesel blend can reduce carbon intensity by up to 75% compared to petroleum diesel.
Cons: Engine modifications are needed to run on 100% biodiesel. Because of this, biodiesel is typically blended with petroleum diesel from 2% to 20% until engine modifications are required. For example, in California, the current diesel blend at the pump is 65% renewable diesel, 8% biodiesel, and 27% petroleum diesel.
Use cases: Biodiesel can be blended with petroleum diesel for use in utility buses, garbage trucks, fleet vehicles, and other diesel-powered engines.
Overview: Renewable natural gas is made by converting methane emissions from landfills, wastewater treatment centers, and livestock farms into natural gas via anaerobic digestion.
Pros: RNG removes carbon from the lifecycle of natural gas, burns cleaner, and can be dropped into existing infrastructure for consumption by end users. For instance, biogas from landfills is often injected back into the distribution systems of the local natural gas network.
RNG usually has the lowest carbon intensity score of any renewable fuel because of the amount of methane it captures during the production process.
Cons: RNG is very expensive compared to other natural gas sources, as large-scale RNG production isn’t yet commercially viable without incentives and grants.
Use cases: RNG can be used as a transportation fuel in the form of compressed natural gas or liquefied natural gas or sold to utilities as a source of electricity. In the US, it’s most used by garbage trucks as a transportation fuel.
Overview: Hydrogen as a fuel can be made from a variety of feedstocks, including RNG, coal, nuclear, and renewable electricity. There are many ways to produce hydrogen, each of which has its own financial and carbon intensity implications:
- Brown: Using gasification to produce hydrogen from bituminous coal (most environmentally damaging).
- Grey: Using steam methane reforming to turn petroleum into fuel products, of which hydrogen is a byproduct.
- Blue: Using steam methane reforming plus carbon capture to remove carbon from the atmosphere.
- Turquoise: Producing hydrogen via pyrolysis (splitting natural gas into hydrogen and carbon).
- Green: Using electricity from clean power to split water into hydrogen and oxygen.
- Pink: Producing hydrogen through electrolysis from nuclear energy.
- White: Naturally occurring hydrogen in geological formations.
Pros: When used in a fuel cell, hydrogen releases water vapor instead of more harmful pollutants like hydrocarbons, particulate matter, and NOx. It also has many other industry use cases, such as steel and cement manufacturing and ammonia production, which is itself a promising renewable fuel for the maritime industry.
Cons: Hydrogen, especially green hydrogen, is very expensive but is expected to undercut grey hydrogen by the end of the decade. Existing natural gas distribution systems would also need a significant overhaul to accommodate hydrogen at higher blends, and transporting hydrogen requires heavy innovation.
Use cases: Current use cases are limited, but in the future hydrogen could be another fuel option for heavy duty trucking and aviation. Hydrogen is also an important feedstock for other fuels like SAF and renewable diesel.
- Brown: Using gasification to produce hydrogen from bituminous coal (most environmentally damaging).
- Grey: Using steam methane reforming to turn petroleum into fuel products, of which hydrogen is a byproduct.
- Blue: Using steam methane reforming plus carbon capture to remove carbon from the atmosphere.
- Turquoise: Producing hydrogen via pyrolysis (splitting natural gas into hydrogen and carbon).
- Green: Using electricity from clean power to split water into hydrogen and oxygen.
- Pink: Producing hydrogen through electrolysis from nuclear energy.
- White: Naturally occurring hydrogen in geological formations.
Overview: Renewable diesel is molecularly similar to petroleum diesel but is made from a variety of alternative feedstocks like used cooking oil, soy, canola, and municipal solid waste. It can be used as a drop-in fuel in diesel engines with no modifications required.
Pros: On average, renewable diesel cuts carbon intensity by 65% compared to petroleum diesel and can reach up to 80%. This reduction in carbon intensity significantly lowers particulate matter, SOx, CO2, and other emissions that cause asthma and other health issues. It also has a slightly higher energy density than petroleum diesel, yielding a higher mile per gallon.
Cons: Renewable diesel can be reliant on land-based feedstocks (corn, soy, etc.), which often coincide with land use concerns and environmental justice implications.
Use cases: Any vehicle using diesel today could use renewable diesel instead, making it a great fuel source for heavy-duty trucks, ships, ferries, backup generators, passenger trucks, tractors, and forklifts. In fact, anyone filling their tanks with diesel in California is already using these blends – renewable diesel makes up over 60% of the California diesel market and is on track to fully phase out petroleum diesel by 2030.
Overview: SAF is a drop-in replacement for jet fuel made from feedstocks like canola, used cooking oil, biomass, municipal solid waste, and sugar.
Pros: As one of the few sectors not suited to electrification, at least on a meaningful scale, SAF is the only viable solution for decarbonizing the aviation sector. It reduces CO2 emissions by up to 80% and is expected to be responsible for 65% of the emissions reductions needed for aviation to reach net zero by 2050.
Cons: High-altitude emissions have an outsized impact on global warming, and although SAF enables significant reductions in SOx, NOx, particulate matter, and contrails, it still generates emissions during combustion.
Environmental impact aside, SAF prices are substantially higher than traditional aviation fuel, production is limited, and distribution networks are lacking. Learn more about these barriers and how to overcome them.
Overview: Although electricity isn’t a liquid fuel like the others on this list, it’s still recognized as a clean transportation fuel by the federal government. Electricity can be made from renewable sources like solar, wind, and hydropower, traditional sources like natural gas, nuclear, and coal, or from the grid.
Pros: Electricity generates no direct tailpipe emissions, including SOx, NOx, and particulate matter, greatly benefiting planetary and human health.
Cons: As mentioned earlier, electricity often isn’t made from renewable energy sources, and the carbon intensity of electricity from the grid can be very high. To store this energy, vehicles rely on energy-intensive materials such as cobalt and lithium, which have their own set of human rights implications.
Lithium-ion batteries are also quite heavy. This isn’t a huge concern for personal vehicles, but for heavy-duty trucks, the battery eats into the available weight for transporting goods.
More significantly, electrification requires an entirely different business model and systemic change in the transportation of people and things, such as adapting to shorter ranges, longer charging times, and reduced weight capacity.
Use cases: Passenger electric vehicles (EVs), delivery vehicles, short-haul trucks, drayage, garbage trucks, forklifts, and fleet vehicles.
Overview: Like renewable diesel, biodiesel is a biofuel made from vegetable oils and fats. However, it has different production processes and properties, most notably that it’s an additive blended into diesel fuel rather than a drop-in replacement.
Pros: Thanks to its low sulfur content, a 100% biodiesel blend can reduce carbon intensity by up to 75% compared to petroleum diesel.
Cons: Engine modifications are needed to run on 100% biodiesel. Because of this, biodiesel is typically blended with petroleum diesel from 2% to 20% until engine modifications are required. For example, in California, the current diesel blend at the pump is 65% renewable diesel, 8% biodiesel, and 27% petroleum diesel.
Use cases: Biodiesel can be blended with petroleum diesel for use in utility buses, garbage trucks, fleet vehicles, and other diesel-powered engines.
Overview: Renewable natural gas is made by converting methane emissions from landfills, wastewater treatment centers, and livestock farms into natural gas via anaerobic digestion.
Pros: RNG removes carbon from the lifecycle of natural gas, burns cleaner, and can be dropped into existing infrastructure for consumption by end users. For instance, biogas from landfills is often injected back into the distribution systems of the local natural gas network.
RNG usually has the lowest carbon intensity score of any renewable fuel because of the amount of methane it captures during the production process.
Cons: RNG is very expensive compared to other natural gas sources, as large-scale RNG production isn’t yet commercially viable without incentives and grants.
Use cases: RNG can be used as a transportation fuel in the form of compressed natural gas or liquefied natural gas or sold to utilities as a source of electricity. In the US, it’s most used by garbage trucks as a transportation fuel.
Overview: Hydrogen as a fuel can be made from a variety of feedstocks, including RNG, coal, nuclear, and renewable electricity. There are many ways to produce hydrogen, each of which has its own financial and carbon intensity implications:
Pros: When used in a fuel cell, hydrogen releases water vapor instead of more harmful pollutants like hydrocarbons, particulate matter, and NOx. It also has many other industry use cases, such as steel and cement manufacturing and ammonia production, which is itself a promising renewable fuel for the maritime industry.
Cons: Hydrogen, especially green hydrogen, is very expensive but is expected to undercut grey hydrogen by the end of the decade. Existing natural gas distribution systems would also need a significant overhaul to accommodate hydrogen at higher blends, and transporting hydrogen requires heavy innovation.
Use cases: Current use cases are limited, but in the future hydrogen could be another fuel option for heavy duty trucking and aviation. Hydrogen is also an important feedstock for other fuels like SAF and renewable diesel.
The future of renewable fuels
While there likely won’t be any new fuel “types” coming to market, feedstocks will continue to develop and scale in response to market incentives, enabling continuous improvement in the carbon intensity of renewable fuels. Businesses can also expect new renewable feedstocks, such as SAF derived from direct air capture, CO2, and algae, to enter the market. Many of these emerging feedstocks have benefits beyond fuel generation and decarbonization and can be used as inputs for other industrial processes.
That said, the renewable fuel technologies that exist today already offer meaningful GHG reductions, many of which can serve as drop-in fuels compatible with existing infrastructure. In conjunction with electrification strategies and continued technological advancements, businesses have a real opportunity to rapidly decarbonize this critical sector.
Interested in exploring how your company could utilize renewable fuels and support transportation sector decarbonization? Earth Finance works with organizations across the renewable fuels value chain to implement viable decarbonization strategies and develop supportive policies to encourage industry-wide change.
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