Biofuel is fuel derived from living or recently living organic matter, known as biomass. This organic source can include agricultural crops, forestry residues, and animal waste. The history of biofuel is not a story of a single, modern invention, but a timeline of its repeated emergence, decline, and resurgence. The concept of generating power from plant-based material is nearly as old as the internal combustion engine itself, predating the dominance of petroleum-based fuels.
The 19th Century Origins of Biofuels
The initial development of foundational technologies for modern transport was linked to biofuels. The compression-ignition engine, which Rudolf Diesel built in 1897, was originally conceived to operate using vegetable oil, not the petroleum-based fuel that later bore his name. At the 1900 World Exhibition in Paris, Diesel demonstrated his engine running entirely on peanut oil.
Diesel envisioned agrarian empowerment, where farmers could grow the fuel needed to power industry, creating a decentralized energy system. He anticipated that vegetable oils, such as those from peanuts and castor beans, would become important energy sources. This early engine design set a historical precedent for biodiesel, proving that plant oils were technically viable as a power source from the beginning of the automotive era.
A similar story played out with ethanol, a fuel derived from fermenting crops like corn or sugarcane. American innovator Henry Ford was a strong proponent, designing his original 1908 Model T to be a flexible-fuel vehicle. The car was capable of running on gasoline, kerosene, or pure alcohol (ethanol), reflecting Ford’s belief that grain alcohol was the “fuel of the future.”
Ford advocated for supporting the domestic agricultural sector by turning surplus crops into fuel, promoting rural self-reliance and energy independence. Ethanol was commercially employed in the United States well into the 1920s, often blended with gasoline to increase octane and reduce engine knocking. Thus, biodiesel and bioethanol were integral to the birth of motorized transport.
The Mid-20th Century Decline of Biofuel Use
The economic landscape shifted dramatically in the early 20th century, causing biofuels to fade from prominence between the 1920s and the 1970s. The primary factor was the discovery of vast, easily accessible petroleum reserves in places like Texas and the Middle East. This abundance made crude oil a significantly cheaper and more convenient alternative to crop-based fuels.
The oil industry rapidly developed a massive, efficient infrastructure for extracting, refining, and distributing gasoline and petroleum-derived diesel. This system of pipelines, refineries, and widespread filling stations could not be matched by the smaller, decentralized production methods of early biofuel manufacturers. Petroleum products became the standard, benefiting from economies of scale that crop-based fuels could not achieve.
The period following World War II saw a surge in global oil production, keeping prices low for decades. This created a lack of economic incentive for further research or widespread investment in alternative fuels. In the United States, the Prohibition era (1920–1933) also hindered ethanol production by complicating the regulation and distribution of alcohol-based fuels.
Renewed Interest Following Energy Crises
The long period of petroleum dominance was challenged by the geopolitical shocks of the 1970s. The 1973 OPEC oil embargo, a political act by Arab oil-exporting nations, drastically cut oil production and exports. This resulted in a worldwide energy crisis that exposed the vulnerability of developed nations to foreign oil supply disruptions, triggering a fundamental shift in energy policy.
The crisis catalyzed the search for domestic energy alternatives to achieve energy security. In the United States, the government responded with legislative action to encourage a home-grown fuel supply. The Energy Tax Act of 1978 introduced tax credits for ethanol-blended fuels, exempting a portion of the federal excise tax on motor fuels to make ethanol economically viable.
This was followed by the landmark Energy Security Act of 1980, which included the Biomass Energy and Alcohol Fuels Act. This legislation was designed to reduce dependence on imported petroleum and natural gas by providing financial assistance, such as insured loans, to small ethanol plants. These initial mandates and financial incentives effectively relaunched the U.S. ethanol industry, primarily utilizing corn as a feedstock.
The European Union also experienced a renewed drive toward alternative fuels following oil price volatility. The EU eventually began using directives to promote biofuel production to diversify fuel supply and address environmental concerns. This dual focus on energy independence and environmental protection provided the foundation for the modern, large-scale biofuel sector.