E-Fuel Blending In EVs Can Reduce Fossil Fuel Dependence By 2028: IEA Estimates

A recent report by International Energy Agency (IEA) found that a combination of electric vehicles (EVs) and biofuels is anticipated to significantly reduce global oil demand. It’s estimated to offset 4 million barrels of oil-equivalent per day by 2028, constituting over 7% of the predicted oil demand for transportation.

The IEA report on E-fuel mentioned, biofuels, particularly in diesel and jet fuel segments, remain vital for reducing oil demand, especially in emerging economies such as Brazil, Indonesia, and India. it found, that in advanced economies like the United States, Europe, Canada, and Japan, the growth of biofuels is constrained by factors like rising electric vehicle adoption and high biofuel costs.

It said, ‘Renewable diesel and biojet fuel are expected to be the primary growth segments in advanced economies, with the European Union approving the Renewable Energy Directive (RED III) to double renewable energy shares by 2030. Nonetheless, modest growth in biofuel demand is forecasted due to factors such as the directive’s double-counting provision and increasing electric vehicle and renewable electricity shares.”

It found, ‘In the United States, Europe, and China, electric vehicles are projected to be the main contributors to avoided oil demand, with biofuels and renewable electricity reducing transport sector oil demand by over 7% by 2028. Biofuels account for nearly 60% of avoided oil demand, while renewable electricity contributes to the remainder.

It mentioned, ‘Both biofuels and renewable electricity align with domestic transport policies, such as low-carbon fuel standards in the United States and the RED in the European Union. While historically biofuels have been more effective in reducing oil demand, electric vehicles are expected to claim a larger share in the gasoline segment during the forecast period.’ On the contrary, it compares, ‘In the rest of the world, biofuels remain the primary decarbonization option, is estimated to account for approximately 90% which can contribute to avoided oil demand in 2028, especially in regions like Brazil, India, and Indonesia, where biofuel shares are mandated.’ It found that, “Despite these regions having electric vehicle plans, the impact on oil demand is limited due to the predominance of combustion vehicles in their vehicle stock.’

It mentions, ‘The next five years will witness a shift from traditional biofuel blending mandates to policies incentivizing lifecycle carbon reductions, with nearly 40% of road transport fuel demand covered by such policies. The value of these credits varies by market, creating competition between liquid biofuels, electric vehicles, and other greenhouse gas emissions reduction technologies.’

It evaluates, ‘In the United States, biomethane development is driven by support schemes such as the Renewable Fuel Standard (RFS) and California’s Low Carbon Fuels Standard (LCFS), with specific volume obligations for renewable natural gas (RNG) established through the RFS Set Rule in 2023. The discussion around including a new pathway for biogas-based electricity used in electric vehicles is underway.’