Under increasing pressure to decarbonise and shift away from traditional fossil fuels, the world’s leading oil and gas companies are ramping up investments in the biofuels sector, say Rystad Energy analysts Lars Klesse and Kartik Selvaraju.
As oil majors shift to lower-carbon energy, there is a “clear trend” toward “advanced” biofuels, particularly hydrotreated vegetable oil (HVO) and sustainable aviation fuel (SAF), say the analysts in a Nov 20 note. “Companies [are] scaling up production to meet rising demand from the aviation and heavy transport sectors.”
Despite some project delays, biofuels are seeing a “significant” increase in investment and innovation as 2030 decarbonisation targets loom and the market for fossil fuel alternatives grows, says the research firm.
Major players like BP, Chevron, Shell, TotalEnergies, ExxonMobil and Eni are incorporating biofuels into their broader energy transition strategies. According to Rystad Energy’s research, these six oil majors have announced a total of 43 biofuel projects that are either already operational or are targeted to start up by 2030.
While investments span various biofuel products, including biodiesel and ethanol, the focus is “clearly” on HVO and SAF, which are expected to make up nearly 90% of the projected biofuel production, says Rystad Energy.
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‘Practical, near-term solution’
These investments could add a combined 286,000 barrels per day (bpd) of production capacity, according to Klesse and Selvaraju.
Of these 43 projects, 31 are greenfield developments while six involve co-processing — or integrating bio feedstock into existing crude-oil refineries to produce a blended feedstock.
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“Co-processing stands out as a cost-effective option that allows companies to leverage existing infrastructure and reduce upfront investment, making it an appealing choice for oil majors entering the biofuels market,” add the analysts.
The remaining six projects are full conversions of refineries to facilities dedicated exclusively to biofuel production.
Supermajors recognise biofuels’ potential as “low-carbon ‘drop-in’ fuels” that can be swiftly integrated into existing aviation, heavy transport and marine fuel systems, says Klesse, who specialises in bioenergy research.
“As the energy transition progresses, these biofuels offer a practical, near-term solution to reduce emissions without requiring significant changes to current infrastructure. With increasing regulatory pressure to adopt SAF, such as Europe’s ‘ReFuel EU’ initiative and expanding mandates in Asia Pacific, biofuels have shifted from being a potential option to becoming an essential component of decarbonisation strategies,” he adds.
BP ‘frontrunner’ in bioenergy
Chevron’s Geismar project in Louisiana, the largest of the 31 greenfield initiatives, is set to produce 22,000 bpd of biofuel, marking a “significant addition” to global capacity, note Klesse and Selvaraju.
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Meanwhile, Chevron’s El Segundo refinery in Los Angeles is the largest in co-processing capacity. It converted a diesel hydrotreating unit last year into a 10,000 bpd renewable facility.
BP’s Kwinana project in Western Australia is the largest announced refinery conversion so far. It is also poised to significantly increase the production of sustainable fuels, says Klesse and Selvaraju. “By 2030, this project is expected to produce 50,000 bpd of HVO and SAF, a game-changer that could be pivotal for meeting rising demand for biofuels in the near future.”
Among the leading companies, BP stands out with the largest announced production capacity in its pipeline, reaching a combined 130,000 bpd of ethanol and HVO/SAF capacity. This positions BP as a global frontrunner in the bioenergy space, according to the analysts.
Other oil majors, including Chevron, Eni, Shell, TotalEnergies and ExxonMobil, are also making significant strides, particularly in the advanced biofuels sector, although many of these projects are still in development, they add.
BP and Chevron hold significant positions in operational capacity. BP’s acquisition of Bunge Bioenergia, a leading Brazilian biofuel producer, has substantially increased its production capacity to approximately 66,000 bpd. The acquisition has enabled BP to exceed its 2025 milestone of 50,000 bpd and positions the company to achieve its biofuel target of 100,000 bpd by 2030.
Additionally, Chevron’s purchase of Renewable Energy Group and Eni’s operational advanced biofuel capacity of 22,000 bpd, driven by both co-processing and conversion projects, further solidify their positions in the expanding biofuels market, say Klesse and Selvaraju.
France’s TotalEnergies has also outlined “aggressive” biofuel targets, aiming to use waste biomass for 75% of its biofuel production by the end of 2024. “To achieve this, the French integrated energy and petroleum company plans to prioritise waste and residues from the food industry, such as used oils and animal fats, to avoid land-use conflicts,” say Klesse and Selvaraju.
Meanwhile, ExxonMobil is gearing up to start biofuel production at its Strathcona Refinery in Canada next year, with an initial capacity of 20,000 bpd. The company also plans to launch 12 additional biofuel projects to help it reach its goal of 200,000 bpd by 2030, note Klesse and Selvaraju.
Charts: Rystad Energy
