Biofuel energy is energy produced by burning or chemically converting organic materials, primarily plants, algae, and organic waste, into usable fuel. Unlike fossil fuels, which take millions of years to form underground, biofuels come from recently grown biological matter, making them a renewable energy source. The two most common biofuels are bioethanol (used in gasoline engines) and biodiesel (used in diesel engines), but the category also includes biogas, renewable natural gas, and newer synthetic fuels designed for aviation.
How Biofuels Are Made
The production process depends on the type of biofuel, but two core chemical reactions drive most of it. The first is hydrolysis, where acids or enzymes break down complex plant starches and sugars into simple sugars. The second is fermentation, where yeast or bacteria feed on those simple sugars and convert them into ethanol. This is essentially the same process used to make beer or wine, scaled up to an industrial level.
Biodiesel works differently. Vegetable oils or animal fats are chemically reacted with an alcohol to produce a fuel that can run in standard diesel engines. The raw oils come from crops like rapeseed, soy, and palm, or from waste sources like used cooking oil and animal tallow.
Biogas takes yet another route. Organic waste from landfills, wastewater treatment plants, livestock farms, and food production facilities breaks down naturally and releases a gas that’s 45 to 65 percent methane. That raw biogas can be upgraded into renewable natural gas with a methane content of 96 to 98 percent, clean enough to be injected directly into existing natural gas pipelines.
Generations of Biofuels
Biofuels are grouped into generations based on what they’re made from, and each generation represents an attempt to solve problems created by the one before it.
First-generation biofuels use food crops. Bioethanol comes from fermenting corn (in the U.S.), wheat (in Europe), or sugarcane (in South America). Biodiesel comes from food-grade rapeseed, soy, or palm oil. These are the most commercially mature biofuels, but they compete directly with the food supply for land and resources.
Second-generation biofuels were developed to avoid that food-versus-fuel problem. They use agricultural waste, wood residues, food industry byproducts like wheat bran, used cooking oil, and animal fats. Some use non-food crops like jatropha, a drought-resistant shrub that grows on marginal land. The tradeoff is complexity: these feedstocks contain tough compounds like lignin that resist breakdown, so they need extra processing steps that increase both time and cost.
Third-generation biofuels come from microalgae and cyanobacteria. Algae grow fast, don’t need farmland, and can produce far more oil per acre than any land crop. But harvesting microscopic algae from large volumes of water is expensive, representing 20 to 30 percent of total production costs on its own. The standard yeast used in ethanol production also can’t efficiently ferment many of the sugars found in algae, which limits yields.
Carbon Reduction Compared to Fossil Fuels
The core environmental argument for biofuels is that the plants absorb carbon dioxide as they grow, partially offsetting the carbon released when the fuel is burned. The net reduction depends heavily on the feedstock and how you account for land-use changes like clearing forests to plant fuel crops.
Biodiesel and renewable diesel made from soybean, canola, and carinata oils reduce lifecycle greenhouse gas emissions by 40 to 69 percent compared to petroleum diesel, after factoring in land-use changes. Without that land-use adjustment, the reduction climbs to 63 to 77 percent.
Waste-based fuels perform even better. Biodiesel produced from animal tallow, used cooking oil, and distillers corn oil achieves reductions of 79 to 86 percent compared to petroleum diesel. These fuels score higher because the waste feedstocks don’t carry the upstream emissions associated with growing and harvesting crops.
Where Biofuels Are Used Today
Most biofuel produced globally goes into road transportation, blended with conventional gasoline or diesel. Global ethanol production is projected to reach 155 billion liters by 2034, with biomass-based diesel reaching about 81 billion liters. Growth has slowed compared to earlier decades, with both consumption and production expected to increase at roughly 0.9 percent per year over the next decade.
Aviation is the next frontier. Sustainable aviation fuel, or SAF, is a biofuel-based replacement for jet fuel that can work in existing aircraft engines. The U.S. Department of Energy has set a target of 3 billion gallons of SAF by 2030. Reaching that goal will likely require dedicated policy tools. Researchers at Harvard’s Salata Institute have outlined two main paths: updating the federal Renewable Fuel Standard so jet fuel has its own biofuel blending target, or creating a national clean aviation standard that gradually lowers the carbon intensity of jet fuel over time.
Why Scaling Up Is Difficult
First-generation biofuels scale easily because the technology is simple and well-established, but expanding them means diverting more food crops to fuel. Second-generation biofuels avoid that problem but cost more to produce because of the extra processing steps needed to break down tough plant fibers.
Third-generation algae-based fuels face the steepest challenges. One simulation of microalgae ethanol production found that the energy required to process the algae was roughly 11 times higher than the energy contained in the ethanol produced. The acid hydrolysis step, where the algae cells are broken open using high-temperature steam, consumed the vast majority of that energy. Scaling up also introduces practical problems: using seawater in industrial systems risks corroding pipes and tanks due to salt content.
Macroalgae (seaweed) presents its own issues. Some species contain complex sulfated sugars that require specialized enzymes to break down, and those enzymes are expensive. The fermentation step also needs specific microorganisms that differ from the standard yeast used in conventional ethanol production, adding cost at every stage.
Biogas and Renewable Natural Gas
Biogas occupies a unique niche in the biofuel landscape because it turns waste that would otherwise decompose and release methane into the atmosphere into a usable energy source. Landfills, wastewater treatment plants, dairy farms, and food processing facilities all generate organic waste that produces biogas as it breaks down.
Once that raw biogas is cleaned and upgraded to renewable natural gas, it’s chemically identical to conventional natural gas and can flow through the same pipelines, power the same furnaces, and fuel the same vehicles. This compatibility with existing infrastructure gives it a practical advantage over liquid biofuels, which sometimes require engine modifications or dedicated fueling stations. The EPA actively encourages landfill methane recovery through its Landfill Methane Outreach Program, treating it as both an energy source and a way to reduce potent greenhouse gas emissions from waste.