With electric vehicles, there’s no tailpipe emissions, however, looking at the full cycle from “well to wheels”, it’s not entirely carbon neutral. As an example, the carbon intensity (CI) score from the California Air Resources Board (CARB) for standard value for electricity from the California grid used as transportation fuel is 82.9, which is still lower than the CI score of diesel (100.5) but it’s not as low as you would have expected. For reference, fossil fuel based Compressed Natural Gas (CNG) has a CI score of 79.2 while biodiesel has the lowest CI score of 25.8.
Why biodiesel?
Biofuels are renewable transportation fuels produced from biomass and Biodiesel is a diesel fuel substitute made from renewable materials. These materials include recycled cooking oil, soybean oil, or animal fats. One of the reasons it’s considered an easier option to replace petroleum diesel is because it can be used in existing diesel engines without modification. The United States Environmental Protection Agency designated biodiesel as an advanced biofuel for its ability to minimize greenhouse gas emissions (GHG) by more than 50% when compared to petroleum.
Commercial use with trucks
Biodiesel is also the most widely used alternative fuel among work truck fleets. Commercial fleets are specifically looking for biodiesel, either to fill up at retailers that sell it or to incorporate it into their own fueling stations. The reason being, biodiesel performs well, reduces pollution, and is simple to implement. No equipment or infrastructure improvements are needed for diesel trucks to integrate biodiesel blends into their operations. According to the National Truck Equipment Association’s 2019 Fleet Purchasing Outlook, biodiesel was the most common alternative fuel choice among respondents.
Potential to reach air fleet?
Commercial aviation contributes about 2% of global carbon emissions and about 12% of transportation emissions. The airline industry is targeting net-zero carbon emissions by 2050. With that goal in mind, Boeing is aiming to making its planes be able to fly on 100% biofuel by 2030. On a FedEx Corp 777 freighter, it flew the world’s first commercial flight using 100% biofuel in 2018. As of now, biofuels are mixed with conventional jet fuel with a 50/50 ratio, which is the maximum allowed as it stands.
With the same target in picture, Airbus also plans to launch zero-emission commercial aircrafts by 2035. Although their version of green fuel could be different from Boeing, however, both aviation firms would need to determine what changes are required to be made to enable safe flight on alternative fuels and which option would end up being approved.
Why are we talking about this?
As an investor, I like to keep an eye on what would drive the next decade. If I had mention my top picks, it would be climate change, AI, cloud and cyber security. The potential of biofuel is certainly going to play a role in fighting climate change. It remains to be seen in what capacity we would see the changes unfold, however, it does open an investment opportunity. Bill Gates pointed out that airplanes will need with electrofuels or biofuels and right now he’s buying biofuels.
While analysts may argue it’s too early to identity which alternative fuel could become the global standard, biofuels market is forecasted to grow at 5.10% CAGR over the next five years. Considering the lower carbon footprint of biodiesel, there is a strong case for it. Over the eight-year period of 2010–2018 the consumption of biodiesel in the United States grew by 632%.
There is clearly a case to be made but it’s still early days, so keeping an eye on the developments is crucial.
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