Biofuel has been touted as the cornerstone of a decarbonised future, but the complex supply chains and finite availability of waste lipids – historically the favoured feedstock – means that the sector faces an impending bottleneck.
As a result, biofuel producers are looking for new biomass feedstocks – and carbon dioxide (CO₂)-absorbing microalgae look to be the most sustainable, scalable solution in the long-term, according to GlobalData’s recent Next-Generation Fuels: Market Outlook, Trends and Opportunities report.
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GlobalData is the parent company of Offshore Technology.
The waste lipid problem
Alternative fuels are a growing sector, spurred by the need to curb emissions associated with heavy transport industries such as aviation and maritime. These alternative fuels include sustainable aviation fuel (SAF) and renewable diesel, which GlobalData forecasts will grow at a compound annual growth rate of 16% between 2025 and 2030, with global capacity expected to double by 2030.
The recent rapid growth of alternative fuels has been powered by waste lipids, primarily animal fats and used cooking oil (UCO). By 2030, GlobalData expects that 5.6 billion gallons per year of animal fats will be used, with UCO utilised in the highest number of plants, at 65.
The popularity of waste lipids is considered in a recent analyst briefing written by GlobalData energy transition analyst Clarice Brambilla, who spoke to Offshore Technology to expand on her report.
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By GlobalData“Animal fats and UCO have become the go-to feedstocks because they are well-known, abundant, and supported by robust collection networks built for biodiesel and renewable diesel production,” she said. “From a technical standpoint, they contain a high proportion of easily convertible lipids, which simplifies processing and reduces capital intensity compared to lignocellulosic or waste-based alternatives.”
Government policy has promoted the use of waste lipids as a biomass feedstock, putting support in place to boost the developing sector and avoid the ‘food versus fuel’ debate associated with crop-based biofuels. Instead of threatening food security, waste lipids from UCO and animal fats align with policymakers’ push for circular economy principles. As a result, frameworks such as the EU RED III double-counting mechanism and California’s Low Carbon Fuel Standard have emerged, allowing UCO and animal fats to receive ‘double counting’ credit and low carbon-intensity scores.
However, little can be done about the fact that waste lipids are finitely available and that the biofuel sector is going to hit a supply problem. The International Energy Agency doesn’t expect cooking oil supply yo ever exceed 20 million tonnes annually.
Without an alternative feedstock, waste lipids threaten to stunt the biofuel sector’s growth.
The microalgae answer
Solving this bottleneck is crucial to supporting the growth of alternative fuels. Brambilla’s briefing points to a new solution, suggesting that “microalgae stand out as the most promising option”.
Microalgae are defined as “microscopic single-celled photosynthetic microbes that can exist individually or in colonies, with sizes ranging from 1 to 10μm [micrometres]”. They differ from macroalgae not only because they are smaller but because they lack physical structures such as lamina, holdfast and haptera.
As a biofuel feedstock, microalgae can be cultivated in controlled ponds or photobioreactors, which can be placed on non-arable land. The efficient use of land gives microalgae an advantage over other biomass feedstocks such as non-edible oils and forest residue, which are land-intensive and take away from potential agricultural space.
Critics of other biomass feedstocks such as palm, soybean and vegetable oils have pointed to negative impacts on food security and water availability. However, microalgae biorefineries do not compete with food markets, making sustainable scaling possible.
The briefing explains that “unlike waste lipids, algae are not constrained by food systems, land availability, or fragmented supply chains”. Instead, it describes microalgae as a biofuel feedstock solution as “…abundant, more evenly distributed, and scalable”.
Microalgae biorefineries can be located conveniently for producers to optimise supply chains and reduce transport costs. In Chiclana, Spain, the EU-funded All-gas project uses municipal wastewater to grow microalgae cultures. Wastewater nutrients, residual biomass energy and CO₂ are used as biofuel inputs, utilising the full production chain of algae to biofuels. The project is designed to demonstrate the sustainable large-scale production of biofuels, which can be co-located near industrial or urban hubs.
Elsewhere, the FUELGAE project is targeting the production of advanced biofuels for emissions-heavy transport sectors. With €5m ($5.8m) in EU funding, the project is piloting integrated algae cultivation at a steel plant in Romania and a 2G ethanol facility in Spain. The briefing considers the project, noting: “While these efforts highlight the technical feasibility of algae as a feedstock, high production costs – driven by cultivation infrastructure, energy intensive harvesting and refining processes – continue to pose hurdles, underscoring the importance of sustained government support.”
Early days: microalgae’s obstacles
With the technology still in research, development and pilot stages, Brambilla told Offshore Technology: “Significant scaling of algae-derived fuels is unlikely before the early-to-mid 2030s, and more realistically toward 2035–40, when production costs and conversion efficiencies are expected to improve. Today, algae fuel remains in the pilot and early demonstration phase, with high cultivation costs limiting commercial rollout.”
Indeed, the biggest obstacle to scalability is the expense associated with cultivating, harvesting and refining the microalgae. Investors need to overcome operational costs including the development and installation of specialised infrastructure, and costs associated with energy-intensive harvesting and drying techniques (such as centrifugation, filtration and flocculation for harvesting and dewatering for drying).
Optimising cultivation will maximise the lipid accumulation, so producers must also maintain carefully controlled environmental conditions. Microalgae require adequate light, CO₂ supply and a temperature of between 15°C and 30°C, all factors that are energy-intensive and therefore expensive to control.
As innovation continues to bring these associated costs down, the use of microalgae to ease supply bottlenecks for biofuel feedstocks will remain a medium-to-long-term conversation. For now, waste oils and animal fats will remain the main feedstocks of the biogas sector, expected to sustain renewable diesel and sustainable aviation fuel until 2030.
In the long-term however, Brambilla’s briefing concludes: “Microalgae, with its scalability, CO₂ absorption and high yields, represents the strongest candidate for tomorrow’s feedstock, with municipal solid waste and lignocellulosic biomass providing complementary roles.”
