What are biofuels?

Biofuels can be produced from organic matter, or biomass, such as corn or sugar, vegetable oils or waste feedstocks.

As biofuels emit less carbon dioxide (CO2) than conventional fuels they can be blended with existing fuels as an effective way of reducing CO2 emissions in the transport sector. The use of biofuels have grown over the past decade, driven largely by the introduction of new energy policies in Europe, the USA and Brazil that call for more renewable, lower-carbon fuels for transport. Today biofuels represent around 3% of road transport fuels in use around the world.

Types of biofuels

Today, most biofuels are produced from agricultural crops and are called conventional biofuels. New technologies and processes that produce fuels from waste, inedible crops or forestry products are being developed and these fuels are known as advanced, or second-generation biofuels. Advanced biofuels are likely to become the primary form of biofuels in the future as they can improve their sustainability.

The two main types of biofuels are ethanol and biodiesel.



Ethanol is produced by fermenting sugar or starch from products such as sugarcane, maize or wheat. It is used in blended fuels with petrol, either at low levels in regular vehicles (up to 10%) or at higher levels in cars that have been adapted to take both petrol and ethanol, known as “flex-fuel” vehicles.


Biodiesel and HVO

Biodiesel is produced from vegetable oils, fats or greases. It is blended with diesel, generally at low levels (up to 7%).

HVO, or Hydrotreated Vegetable Oil, differs from biodiesel in the way it is produced and in the quality of the final product. HVO is produced through the hydroprocessing of oils and fats. It can typically be blended with diesel without a blending limit. HVO is also commonly referred to renewable diesel.

Advanced or second generation biofuels

A variety of waste feedstocks can be used to produce transport fuels that contribute to reducing CO2 emissions when compared to traditional fossil fuels. Some of these biofuels can be blended with conventional fuels and others are fully compatible with current vehicles and so can be used as complete replacements for conventional fuels.

Raízen cellulosic ethanol plant at Costa Pinto mill, São Paulo

Investing in the production of biofuels

The formation of the Raízen joint venture (Shell interest 50%) in Brazil in 2011 marked Shell's first move into large-scale biofuels production. Outside Brazil, Shell continues to invest in new ways of producing advanced biofuels, using sustainable feedstocks, such as waste products or cellulosic biomass. In 2017, for example, we completed the installation of a demonstration plant at the Shell Technology Centre Bangalore, India, that uses a technology called IH².


producing sugarcane

Producing sugarcane ethanol in Brazil

Through Raízen in Brazil, a joint venture with biofuels company Cosan, Shell is one of the world’s largest sugarcane ethanol producers. Raízen has a production capacity of around 2 billion litres of ethanol per year.

Raízen produces one of the lowest CO2 emitting biofuels available today. Brazilian sugarcane ethanol can reduce CO2 emissions by 70% when compared with petrol. From cultivation through to use this sugarcane ethanol emits less CO2 than any other conventional biofuel available in commercial volumes..

Raízen opened its first cellulosic ethanol plant at its Costa Pinto mill in Brazil in 2015, which produced approximately 15.5 million litres in 2018. When fully operational, the plant is expected to produce around 40 million litres a year of advanced biofuels from sugar-cane residues.

(Image credit - Valdemir Cunha)


Blending biofuels globally

Shell’s biofuels portfolio is not just limited to production: Shell is one of the largest blenders and distributers of biofuels in the world.

In many of the countries where Shell operates, governments require fuel retailers to blend a certain percentage of biofuels into their petrol and diesel. As such the purchasing, trading, storage, blending and distribution of biofuels are also part of Shell’s daily business.

In 2018, Shell used around 9.5 billion litres of biofuels in the petrol and diesel sold worldwide.

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What will transport look like in 2040


As well as producing conventional biofuels and developing advanced biofuels, Shell also purchases biofuels to blend into the fuels we supply to final consumers, at Shell’s retail sites across the globe.

Shell requires these biofuels to be produced in a way that is environmentally and socially responsible, across the whole supply chain. In addition to understanding biofuel emissions, we want to ensure that other environmental impacts from their production are well managed – such as the effect on soil, air and water – and there is a positive impact on the livelihoods of local communities.

Where possible, Shell sources biofuels that have been certified against internationally recognised sustainability standards. These include the Round Table on Responsible Soy, the Roundtable for Sustainable Palm Oil (RSPO) and Bonsucro, a non-profit organisation for sugar cane. Shell also supports the Roundtable for Sustainable Biomaterials and the International Sustainability and Carbon Certification (ISCC) scheme.

Shell also has specific purchasing policies for biofuels made from palm oil, soy from South America or sugar cane, in order to increase the use of independently certified sustainable biofuels.100% of the palm oil that Shell blends has been certified by RSPO or the ISCC, or is covered by offsets from the RSPO certificate trading system. Furthermore Shell aims to have 100% of the sugar-cane ethanol and South American soy biodiesel used in Shell-blended biofuels certified as sustainable by 2020.

encouraing sustainable

Encouraging sustainable production

In Thailand, locally-grown palm oil is turned into biodiesel and then blended into diesel. This is designed to increase energy from renewable sources as part of a 10-year government plan, while supporting agriculture. In Thailand, in partnership with Patum Veg, our largest biodiesel supplier, we supported palm oil smallholder farmers to obtain certification against RSPO. In 2015, nearly 800 farmers passed an independent audit against this robust standard. We are looking at expanding its scope so more farmers in Thailand can benefit from the value RSPO certifications brings to their products.

Learn about other areas of Shell's New Energies business

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What will transport look like in 2040

Our activities focus on two core areas. The first is electricity: generating, buying and selling it and supplying it directly to our customers. The second is new fuels for transport such as hydrogen and biofuels. Find out more about our activities.

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What will transport look like in 2040

Shell’s New Energies business was born in 2016. Since then, we have been investing, acquiring and supporting cleaner energy related projects around the world.