For the first time in the IEA Renewable Market Report series, we are dedicating a specific chapter to renewable fuels. These fuels include solid biomass (excluding for traditional uses), liquid biofuels, biogases (biogas and biomethane), electrolytic hydrogen made from renewable electricity (renewable hydrogen) and e-fuels (fuels made from renewable hydrogen, including e-kerosene, ammonia and methanol) used in transport, industry and buildings. Renewable fuels are garnering increasing interest as an option to reduce GHG emissions in sectors that are difficult to electrify, while also providing energy security and economic development opportunities.

Renewable fuel demand in industry, buildings and transport stands at 22 EJ (5% of global energy demand for these sectors), exceeding total wind and solar PV generation in 2023. Modern solid bioenergy use accounts for the majority of renewable fuel demand (75%), followed by liquid biofuels (20%) in the transport sector and biogases (5%), primarily in the buildings sector. Renewable hydrogen and e-fuels are used in only small quantities today as renewable fuels, primarily in the transport sector.

Renewable fuel deployment is set to expand 4 EJ by 2030 from the 2023 level, to 5.5% of global industry, building and transport energy consumption. Demand expands in all regions, but is concentrated in India, China, Brazil, the United States and Europe, which collectively support more than two-thirds of this growth. All five regions have dedicated support policies for several – and in some cases all – renewable fuels. The support policies vary by fuel, sector and country, but often include a combination of mandates, GHG performance criteria and direct production and CAPEX investment incentives.

Bioenergy, including liquid, gaseous and solid fuels, accounts for the vast majority (95%) of renewable fuel growth over the forecast period. New demand for bioenergy expands the most in the industrial sector followed by transport and buildings, although the bioenergy type differs by sector. Compared with hydrogen and e-fuels, modern use of bioenergy is less expensive, its production technologies have been commercialised, and it already benefits from broad policy support. For instance, more than 80 countries have liquid biofuel policies, whereas only the European Union and the United Kingdom have e-fuel requirements.

Solid bioenergy (+2.6 EJ by 2030) alone provides over half of global renewable fuel growth during 2024-2030, with most of the new demand coming from the industry sector, reflecting rising activity in the pulp and paper, sugar and ethanol, and cement industries that already use bioenergy thanks to onsite waste and residue availability.

Liquid biofuels (+1.1 EJ) account for the most growth in the transport sector, since they are compatible with the existing vehicle fleet (with minimal modifications). While biofuels for road transport dominate expansion, new policies for aviation and maritime biofuels spur near 30% of new demand in the transport sector overall.

Demand for biogases increases across all fuel-use sectors (+0.4 EJ), helping governments meet transport, building and industry targets. Most growth occurs in Europe and the United States thanks to established biogas production and support infrastructure, policies and experience. 

While renewable fuel uptake would need to nearly double by 2030 to be on track with a net zero trajectory, it is set to expand only near 20% under existing market conditions. Gaps vary significantly by technology. E-fuel deployment should rise more than seven times, hydrogen more than ten times and biogases near four times from our main case by 2030, to be in line with the IEA Net Zero by 2050 Scenario.

Liquid biofuel use would need to nearly double, but solid bioenergy is closest, requiring only a 20% increase. Higher costs continue to be one of the primary barriers to quicker deployment, but efforts are also needed to support innovation and develop robust supply chains and sustainability measures.

Accelerating deployment will be possible if governments establish supply and demand policies to close the cost gap with fossil fuels; support innovation; develop robust supply chains; implement sustainability requirements; and remove fossil fuel subsidies and other barriers to renewable fuel uptake. To close the cost gap, widely recognised policies that are used around the world include mandates, financial incentives, performance-based standards and carbon pricing.

The share of biofuels in total liquid fuel transport demand expands from 5.6% in 2023 to 6.4% in 2030 (on a volume basis) to reach 215 billion litres a year (5.7 EJ) by 2030 in the main case. This growth is concentrated in the United States, Europe, Brazil, Indonesia and India, which together account for 85%. These regions are not only maintaining but, in many cases, strengthening their mandates, GHG intensity targets and financial incentives to support biofuel adoption. Globally, road biofuel demand expands by 27 billion litres (0.8 EJ) and aviation and maritime fuel use increases nearly 9 billion litres (0.3 EJ).

However, by 2030, aviation and shipping are responsible for more than 75% of new biofuel demand. Average annual consumption in these sectors expands 30% between 2023 and 2030 to meet targets in North America, Europe and Japan. Overall aviation and maritime fuel demand also increases to 2030, further supporting growth. 

Conversely, annual demand growth for road biofuels slows considerably by 2030, dropping to just 0.3%. While governments continue to enforce biofuel mandates, incentives and GHG intensity standards over the forecast period, overall global road transport fuel demand is expected to peak in 2028, with earlier peaks in the United States and Europe, thereby limiting growth. Even in fast-growing markets such as India, Indonesia and Brazil, total transport fuel demand growth slows considerably by 2030 (to 3% from 10% expected in 2024). Fuel demand declines globally owing to a combination of electric vehicle adoption and vehicle efficiency improvements.

In 2023, solid bioenergy was the most-used modern renewable fuel globally, accounting for 3.5% (16 EJ) of total final energy consumption. In addition, another 19 EJ is consumed through traditional uses of biomass for cooking and heating, primarily in the developing world. Excluding these, modern solid bioenergy is dedicated predominantly to industrial process heat, then to space and water heating in buildings, district heating and, marginally, to agriculture. Modern solid bioenergy consumption is projected to increase by about one-fifth reaching 18 EJ by 2030.

More than 70% of the growth comes from the industry sector, reflecting mostly expanding sugar and ethanol production in India. The next-largest increases in the industry sector are in the European Union, owing mainly to greater use of municipal waste in the cement industry, and of biomass in non-energy-intensive subsectors. Growth in other regions remains limited to small expansions in industries that already use modern bioenergy, such as the pulp and paper industry.  

The remaining development in solid biomass consumption results primarily from substituting traditional uses of biomass with improved biomass cooking and heating stoves in sub-Saharan Africa, India and China, following efforts to provide modern energy access. Another smaller contribution comes from the rollout of modern biomass stoves and boilers for space and water heating in Europe, where biomass markets are expected to benefit from several recent policy.

Overall, efficiency gains from modernising biomass use in developing and emerging economies allow total annual solid bioenergy consumption to decline by 5% globally over the outlook period.  

In the IEA Net Zero by 2050 Scenario, modern solid bioenergy consumption expands 2.4 times more quickly than in our outlook, owing to greater reliance on biomass residues and municipal solid waste in industry, especially the cement sector, and to faster substitution of traditional uses of biomass. 

Global demand for biogases (including both biogas and biomethane) is expected to accelerate, climbing an estimated 30% in the period 2024-2030 to reach almost 2 270 PJ (around 59 bcme1) per year in 2030.

Today, electricity production is the primary use for biogas globally, but there is a growing trend to use it as a renewable fuel in the form of biomethane to decarbonise hard-to-abate sectors such as industry and transport.

In 2024-2030, the transport sector leads demand growth for biogases owing to significant support in regions such as India, the European Union and the United States. In these countries, the lower carbon intensity of biomethane made from wastes and residues (compared with other biofuels) and the reduction of methane emissions from livestock when processing animal manure remain key drivers for the use of biogases.

Biogas and biomethane use in buildings and industry is also gaining traction, supported by policies and voluntary carbon markets in Europe and the United States. Corporations, industries, cities and utilities are entering into long-term contracts to use green gases to meet voluntary carbon reduction targets, creating substantial market opportunities.

However, current global production expansion is not in line with the IEA Net Zero by 2050 Scenario, which requires the production of biogases to grow 3.7-fold by 2030. Despite accelerated growth in the main-case forecast, 2030 demand of 2 270 PJ/year falls 64% short of what is needed in the Net Zero by 2050 Scenario. 

The use of renewable hydrogen and e-fuels for energy (primarily in transport) expands to 0.17 EJ by 2030, from near zero today. A few key policies in Europe, the United States and China spur almost all this increase. Most hydrogen and e‑fuel demand originates from the transport market, with e-fuels being claimed for aviation and maritime applications, and hydrogen for heavy-duty transport. 

However, high costs and limited policies encouraging uptake make it difficult to construct a profitable business case, restricting growth prospects for both fuels. Existing policies have not yet catalysed the investments needed to realise ambitions, although sufficient production to match the demand forecast in this publication could be achieved if projects currently at the feasibility stage secure final investment decisions and are constructed by 2030.