Working Paper

Assessing the potential advanced alternative fuel volumes in Germany in 2030

Fuels GHG emissions

This working paper assesses the potential for Germany to meet the transport sector targets set by the European Union’s recast Renewable Energy Directive (RED II) using advanced, non-food-based fuels. Policies supporting advanced, non-food-based fuels can deliver substantial carbon savings —as much as 16 million tonnes of CO2-equivalents with high policy support, after taking into account indirect emissions.

The volume of waste and residue-based biofuels necessary to meet the advanced biofuels sub-target in RED II are largely constrained by price and are only cost-viable with high levels of policy support. Large, commercial-scale facilities are only cost-viable at policy support levels above €1 per diesel-equivalent liter, at which waste and residue-based biofuels could fulfill 2.6% of Germany’s transport energy demand. It will be necessary to implement a strong incentive to overcome the investment risks and high upfront costs of these emerging technologies in order to allow them to expand to the necessary scale of production.

The potential volumes for advanced fuels in 2030 that are lower than previous studies’ estimates, particularly for electrofuels and lignocellulosic feedstocks. Likewise, the 2030 timeframe presents a severe constraint for cellulosic ethanol and the gasification of wastes and residues. While lignocellulosic feedstocks such as agricultural residues are abundant, the slow pace of deployment for new facilities hinders the market penetration of these fuels. While this paper finds that the rate of deployment constrains these fuels within the next decade, a stable policy environment with high incentives could support a larger expansion of these fuels beyond 2030.

The existing greenhouse gas quota intended to drive transport sector decarbonization in Germany could be used to meet the RED II targets if it is reconfigured to incentivize the purchase of advanced biofuels. At Germany’s carbon penalty price of €470 per tonne of CO2e, enough of the advanced biofuel pathways are cost-viable to meet 3.4% of transport energy demand—which is nearly sufficient to meet the advanced biofuel sub-target. However, it is much easier to comply with the quota by using food-based biofuels.