Summary of Key Points
Driven by intensive domestic and international policies, biomass fuels (green fuels) have become a "must-have" option for decarbonization in the two sectors with the greatest emissions challenges: aviation and shipping. Market demand has exploded (global aviation and shipping will require 34 million tons by 2030). However, the industry faces three major hurdles: unstable raw materials, high costs, and inconsistent standards, leading to a "wait-and-see" situation for both upstream and downstream players. China, with its abundant agricultural and forestry waste resources and a mature chemical industry foundation, has companies exploring localized solutions (such as standardized raw material processing). Additionally, the industry is breaking through barriers through full-chain collaboration, innovative models (like the Book and Claim mechanism), and green finance support.
I. Policies Create a Demand of Hundreds of Billions: No Alternative for Aviation and Shipping Decarbonization
Aviation and shipping are among the hardest sectors to decarbonize—airplanes and ships cannot be easily electrified like cars (due to insufficient battery energy density), making biomass fuels the most practical choice at present (they can be used in existing fueling facilities without significant infrastructure changes).
- International Policy Constraints: The International Civil Aviation Organization (ICAO) requires airlines to purchase Sustainable Aviation Fuels (SAF) or carbon credits by 2027; the International Maritime Organization (IMO) aims to reduce shipping emissions by 20% by 2030 and achieve net zero by 2050.
- Regional Mixing Policies: The EU mandates that airports mix 2% SAF by 2025 and increase this to 6% by 2030; Japan aims for 10% by 2030, with Singapore gradually raising standards starting in 2026.
- Amazing Demand Scale: According to the Norwegian Classification Society, global aviation and shipping will consume 34 million tons of green fuels by 2030. The International Energy Agency predicts that global demand for biofuels will exceed 300 billion liters by 2035.
More importantly, biomass fuels can contribute to rural revitalization—using agricultural and forestry waste as raw materials creates green jobs in rural areas, bringing the benefits of energy transformation to local communities.
II. Why Can China Be a Game-Changer? Both Resources and Industrial Foundations Are Present
China has two significant advantages in developing biomass fuels:
- Abundant Raw Materials: There are 4.3 billion tons of agricultural and forestry waste annually, with 3.3 billion tons available for collection (e.g., straw and branches). China accounts for 27% of global biomass pellet production and over 60% of methanol production (methanol is also a type of green fuel).
- Mature Industrial Base: The chemical industry is well-developed, allowing companies to quickly transform these resources into usable products. For example, Longji Energy has developed "micronized bio-carbon-based materials" that are 1.5 times denser than regular pellets, reducing transportation costs by 50% and addressing issues with raw material spoilage and storage.
There is also new demand in industrial contexts: zero-carbon factories and parks require high-temperature steam, which is more cost-effective to produce using green electricity; biomass fuels are already replacing fossil fuels in applications like glass furnaces.
III. Three Major Barriers Hindering the Industry
Despite the large demand, supply struggles due to three main issues:
1. Unstable Raw Materials: The moisture and calorific value of agricultural and forestry waste vary by season and location. For example, wet materials in summer can cause mold and equipment corrosion during combustion, making stable mass production difficult.
2. High Costs: SAF costs between $1,800 and $2,600 per ton, which is 2-3 times more expensive than traditional aviation kerosene. Raw material collection and transportation account for over 50% of the cost due to their dispersed nature (they must be transported from rural areas to factories).
3. Inconsistent Standards: Different certification rules exist between the EU and ICAO, leading to additional costs in cross-border trade. China does not yet have a national green certification, making its products unrecognized in international markets.
IV. A Comprehensive Approach to Overcoming Barriers: Standardized Raw Materials + Innovative Models + Financial Support
The industry is addressing these issues from three directions:
- Standardized Raw Materials: Implementing a "dispersed collection-centralized granulation" model where farmers collect waste, and specialized companies process it into uniformly sized pellets to solve stability issues. Longji Energy's micronized materials are a good example.
- Innovative Trading Models: The Book and Claim mechanism allows producers to register their emission reduction credits online. Airlines can purchase these credits to offset their carbon emissions without actually using green fuels, aggregating global demand and securing long-term contracts for producers.
- Financial Support: The government has established low-carbon transformation funds, providing access to green loans, green bonds, and REITs (Real Estate Investment Trusts) to reduce companies' financial pressures.
Experts also recommend developing county-wide raw material storage and transportation systems, upgrading old refineries to lower costs, gradually implementing mandatory mixing policies, and aligning with international certifications to enable the monetization of emission reduction benefits (e.g., through carbon trading).
Conclusion
Biomass fuels are a necessary solution for aviation and shipping decarbonization, with clear demand but insufficient supply. China has the resources and industrial foundation to lead in this field. By addressing raw material, cost, and standard issues, it can not only contribute to global decarbonization but also drive rural revitalization, creating a win-win situation for the industry. However, overcoming these barriers requires collaboration among governments, companies, and investors to establish a complete supply chain from raw materials to applications.