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Issues brief

Biofuels and biodiversity

• Biofuels can offer a more sustainable alternative to fossil fuels, but their sustainability depends on how biomass is grown, sourced and governed. Poorly planned production and expansion can harm biodiversity, ecosystems and food security.

• Sustainability varies across biofuel types. Crop-based fuels often compete with food crops and drive the conversion of natural areas into farmland, while advanced biofuels from waste, residues or algae offer lower-impact alternatives.

• Biodiversity safeguards, strong policy frameworks, clear sustainability standards and community participation are key to ensuring sustainable biofuel production and its contribution to climate, biodiversity and sustainable development goals.

• Investment in advanced techniques can make the conversion of biomass into fuel more efficient, while digital tools can help monitor land use and ensure supply chain transparency.

What is the issue?

Biofuels are combustible materials derived from non-fossil biomass. Used in a range of applications, from transport to electricity and heat, they are renewable resources that can offer a more environmentally friendly alternative to fossil fuels. Because the feedstock used in biofuel production recycles carbon dioxide (CO2) from the atmosphere through plant or other biomass growth, biofuels can contribute to climate change mitigation and other environmental goals – but only if they are produced sustainably (IPCC 2022).

The environmental impact of biofuels may vary significantly depending on the type of feedstock used, land-use implications and the governance frameworks in place (IRENA 2020). First-generation biofuels, such as bioethanol and biodiesel, are food-based and produced from crops such as sugarcane, corn, wheat, soybean, rapeseed and palm oil. If not properly planned, production of first-generation biofuels can compete with food crops, raising concerns about food availability and price volatility. It can also lead to land clearing and threaten biodiversity through deforestation, monoculture expansion, wetland drainage and soil degradation, resulting in habitat loss and species decline. These impacts may be particularly acute in regions where fuel crops replace high-biodiversity ecosystems, such as tropical forests, peatlands or savannas.

Christine Walker/Unsplash

Sugarcane cultivation can be used to produce first-generation biofuels.

Why is this important?

Despite the environmental risks of first-generation biofuel production, sustainably produced biofuels have the potential to reduce lifecycle greenhouse gas emissions (the total gases released across all production stages) compared to fossil fuels (IEA 2021, IPCC 2022). They provide a renewable energy source that can help reduce the demand for fossil fuels and create a low-carbon energy mix in emission-intensive economic sectors such as transportation, while enhancing energy security.

Sustainable biofuel production can support biodiversity and ecosystem health when embedded in well-designed land-use systems. For instance, when integrated with agroforestry, mixed cropping or the use of native perennial species, biofuel production can support soil restoration, enhance pollinator habitats and contribute to landscape-level ecological connectivity (FAO 2020). Restoring degraded farmland, such as land that is no longer fertile due to monoculture farming, rather than clearing forests for biofuel production, can also prevent deforestation and contribute to ecosystem restoration. These strategies not only support biofuel production but also enhance ecosystem services and biodiversity when robust safeguards are applied. Another practice that helps reduce pressure on natural ecosystems is using agricultural residues for biofuel production rather than expanding cropland.

Advanced biofuel production can bypass many of the risks associated with first-generation biofuel production. Second and third-generation biofuels offer the possibility to minimise land-use change, reduce lifecycle emissions and support circular-economy objectives.

Second-generation biofuels include cellulosic ethanol, biodiesel from used cooking oil and biogas. These are residue and waste-based fuels produced from agricultural residues, forestry by-products, used cooking oil and organic waste. Third-generation biofuels are produced from algae and other high-yielding microorganisms. These biofuels, which include algal biodiesel and algal-based sustainable aviation fuel, offer high productivity and can be grown on non-arable land.

Advanced biofuels offer the highest climate benefits because they reduce pressure on land and enable more efficient use of resources. They also help reduce methane emissions when produced from organic waste or manure. These fuels can help decarbonise sectors that are difficult to electrify due to technical, logistical or financial challenges, such as aviation, shipping and heavy-duty road transport.

Beyond production systems, sustainable supply chains are vital to ensuring biofuels help reduce lifecycle emissions, often requiring efficient procurement. This involves sourcing feedstock sustainably, ensuring year-round availability and managing logistics to minimise environmental impact.

Rohit Kumar/Unsplash

Macroalgae like seaweed can be used to produce third-generation biofuels.

What can be done?

Policies and legislation should promote integrated land-use planning to prevent conflicts between food production, nature conservation and energy needs. Integrated planning enables governments to balance multiple objectives, such as climate mitigation, rural development and ecosystem protection, within a coherent spatial framework. An example is the aforementioned integration of biofuel production into landscape restoration, wetland recovery and degraded land rehabilitation programmes. Nutrient-rich byproducts of biofuel production, such as biochar and digestate, can help return organic materials to the soil, promoting nutrient cycling that can close the loop in agricultural production.

Public incentives such as the use of biodiesel in public transport fleets are also crucial. Additionally, policies that incentivise the transition to second and third-generation biofuels must be strengthened. This is essential because advanced biofuels typically require higher upfront investment, more complex supply chains and clearer long-term policy signals to become competitive with fossil fuels and first-generation biofuels.

In parallel, the development and promotion of sustainability standards and certification schemes can guide investments and trade in sectors such as agriculture and forestry, while also helping establish safeguards for biodiversity and human rights (GBEP 2020).

Measures to empower communities focused on second and third-generation biofuels can ensure participatory processes that meaningfully include Indigenous Peoples and local communities in decision-making, strengthen transparency, legitimacy and social acceptance of biofuel initiatives, while limiting the risk of job losses. At the same time, targeted support for smallholders and rural enterprises through capacity building, technical assistance and fair market access is essential to enable a just transition toward sustainable biofuel production. Ensuring inclusive market conditions helps prevent rural marginalisation, supports livelihood diversification and allows smallholders to benefit from biofuel development.

As the costs of producing advanced biofuels, especially third-generation biofuels, remain high, more efficient technologies are needed to reduce costs and improve biomass feedstock conversion efficiency to scale sustainable production. Advanced conversion technologies such as gasification, pyrolysis and enzymatic hydrolysis can enhance overall energy yields, reduce waste, lower greenhouse gas emissions and improve the economic and environmental sustainability of biofuel production systems. On the supply chain side, digital tools and technologies such as remote sensing, Geographic Information Systems, artificial intelligence and blockchain can help monitor land use, improve efficiency and ensure transparency.

Finally, strengthened international cooperation is needed to help harmonise sustainability standards across countries and ensure consistent safeguards. Platforms where IUCN plays an observer role, such as the Global Bioenergy Partnership, hosted by the UN Food and Agriculture Organisation and the Clean Energy Ministerial, offer valuable spaces to align methodologies, share best practices and promote science-based approaches to sustainable bioenergy. In addition, the joint platform on sustainable biofuels, launched by IUCN and the UN Economic Commission for Europe, provides an opportunity to coordinate work on sustainability criteria, data transparency and capacity building across regions.

Such multilateral platforms and development finance institutions can be leveraged to support nature-positive biofuel projects, helping countries adopt harmonised sustainability frameworks while mobilising investment for advanced biofuels that contribute to climate mitigation, biodiversity protection and rural development.