E-biofuels reduce the cost of achieving emissions targets in hard-to-electrify sectors

Abstract

Renewable liquid fuels are essential for achieving emissions targets for hard-to-electrify sectors such as aviation and shipping. While biofuels and synthetic e-fuels have been well-studied, e-biofuels, produced by adding renewable hydrogen to biomass conversion to better utilise the biogenic carbon, remain understudied and lack a clear role in EU fuel regulations. In this paper, using a sector-coupled European energy system model, we find that e-biofuels are cost-effective to meet stringent emissions targets if biomass availability is limited and fossil fuels are ineligible, either due to limited carbon sequestration capacity or to high renewable fuel mandates. By directly increasing utilisation of biogenic carbon instead of synthesising fuels based on captured $CO_2$, there are savings from fuel production and carbon capture that reduce total system costs by up to 2.7% and liquid fuel costs by more than 10%. Our results highlight the role of e-biofuels as a potential hedge against uncertainty in biomass, hydrogen, and carbon storage availability, as well as evolving policy implementation.