Effective policy design for promoting investment in advanced alternative fuels

Low-carbon fuels produced from non-food feedstocks have the potential to deliver deep greenhouse gas (GHG) reductions in transport fuels, but their commercialization has been slow despite a decade of policy support across the European Union (EU) and United States (U.S.). This study seeks to understand why the past decade of alternative fuel policies has not led to commercialization of AAF and how we can apply lessons learned to developing proposals for fuel policy over the coming decade. In this study, we consider alternative fuel technologies such as cellulosic ethanol, biomass gasification, and pyrolysis under the umbrella term advanced alternative fuel (AAF).

By comparing the experiences in different jurisdictions, we identify elements of alternative fuel policy that are most successful at addressing the key barriers for AAF commercialization, as well as elements that have reduced the effectiveness of policies in supporting AAF. We conclude with principles for policy design to provide effective support for AAF.

The EU and U.S., as well as other countries including Canada, are currently developing plans for biofuel policies for the decade from 2020 to 2030. All of these jurisdictions have something to learn from the combined policy experience of the past decade, and they can improve the effectiveness of biofuel policy in fostering a transition to lower GHG fuels.

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