United Nations Environment Programme

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Tool 14: Alternative fuels

In many parts of the world, there are alternatives to petrol and diesel fuels. Despite this availability, the total market share is still very small (<1%).

In order to be competitive with petrol or diesel, most of the alternatives are being supported by direct governmental subsidies and regulations or by tax exemptions. However, increasing costs of crude oil have raised the price of petrol and diesel, making alternatives more competitive and appealing to consumers.

Photo: Max Ahman

The three major alternative fuels available today are:

Choosing alternative fuel for your fleet:The main factor to consider in terms of what alternative fuel to choose is local availability. Many fuel providers are now supplying low-blends of biodiesel or bio ethanol. Selecting natural gas/biogas requires vehicles to be modified (see Tool 16), as well as the necessary infrastructure. CNG is a possible option, but can sometimes cause problems if the infrastructure is not well-built (see the UPS CNG strategy example).


Ethanol has been used as a motor fuel since cars were first manufactured. It is a fuel well-suited for petrol engines; it has a clean combustion process resulting in lower emissions of particulate matter, hydrocarbons and carbon monoxide. The greatest benefit of using ethanol is the potential for CO2 emissions reductions (based on life-cycle emissions). Drawbacks include reliance on subsidies (in some cases), and a potential resultant increase in food prices and deforestation (in certain cases).

Ethanol can be made from a variety of different renewable feed stocks; today, ethanol is made for the most part from corn (in the US), sugar cane (in Brazil and Malawi), or grain (in parts of Europe). Benefits from CO2 emissions reductions and cost competitiveness differ substantially depending upon which feedstock is utilised.

All petrol vehicles can use petrol blended with ethanol:All petrol vehicles can use petrol that has been blended with up to 20% ethanol without any problems. To convert a conventional spark-ignition engine vehicle to run on pure bio ethanol requires the adjustment of the ignition timing, and the fitting of a larger fuel tank due to the fuel's low energy density. As alcohol fuels degrade certain types of rubber and accelerate the corrosion of several metals, some engine components may also need to be replaced.
The so called Flexible Fuel Vehicles (FFV) can run on conventional petrol but also on blends with a higher percentage of ethanol (up to 85%) – these are highly efficient and produce lower emissions.

Ethanol from corn has been produced mainly in the US since the 1970s. In order to be competitive, ethanol production from corn is heavily dependent on subsidies, and therefore is not considered a long-term solution for replacing petrol. Benefits of CO2 emissions reduction are partly offset by the energy-intensive production process needed to produce ethanol, although fuelling a vehicle with corn-based ethanol will still reduce CO2 emissions by 20-30% on a-life cycle basis, compared with petrol use

Ethanol from grain has been produced mainly in Europe for a number of years. But, as with ethanol from corn, it is highly unlikely that ethanol from grain will ever become competitive and a long-term solution, because of heavy subsidies.. CO2 emissions reductions from fuelling a vehicle with ethanol from grain are approximately 30-40% on a life-cycle basis, compared with petrol use.

Ethanol from sugar cane is produced in Brazil, Malawi and other countries with extensive sugar cane production. Brazil is currently the major producer and exporter of ethanol from sugar cane. With the current petrol prices, ethanol from sugar cane is fairly competitive; the cost of ethanol from sugar cane is approximately half of that of ethanol from grain or corn. CO2 emissions reductions from fuelling a vehicle with ethanol from sugar cane are estimated to be 50-90% on a life-cycle basis, compared with petrol use.

Ethanol from sugar cane is currently the major alternative fuel in the world. In fact, Brazil exports ethanol to some EU member states (notably Sweden), which in turn assists to fulfil the EU Renewable Fuels Directive.

Figure 10: Global ethanol production.
Source: IEA, World Energy Outlook 2006

Ethanol production has almost doubled in 5 years, with the bulk of the increase coming from Brazil & the United States

Biodiesel is usually made from rapeseed, and the resulting product is called rapeseed methyl ester (RME). Biodiesel can also be produced using soybeans or sunflower plants. Biodiesel growth in the fuels market is predominately based in Europe (particularly France and Germany). Biodiesel can reduce CO2 emissions by approximately 40-60%, including emissions released during the fuel production stage. Another important factor is that biodiesel is inherently a zero-sulphur diesel fuel.

Biodiesel can be used in all diesel-fuelled vehicles. Some vehicles (built since 1994) may be able to use 100% biodiesel, though many vehicles require some engine modification, such as replacing the rubber fuel hoses and fuel pump seals with a compatible elastomer.

Biodiesel is still costly to produce – currently, it is 1.5 to 2 times more than ordinary diesel. The price of biodiesel is dependent upon feedstock prices (i.e. rapeseed, sunflower, or soybeans). The total amount of feedstock available for biodiesel production is limited due to land constraints and economic reasons; therefore biodiesel is seen as a future niche fuel or low-blending fuel. Current biodiesel production is dependent on government subsidies and regulations, such as the EU Renewable Fuels Directive.

Figure 11: Biodiesel production. Source: IEA, World Energy Outlook 2006

Biodiesel production has almost quadrupled since 2000, with European countries - notably Germany - contributing most of the growth

Natural gas and Biogas

Natural gas and biogas are in essence the same fuel, but with different origins. Natural gas/biogas is made up of >95% methane (CH4), is clean-burning, and in comparison to petrol or diesel, has lower emissions of hydrocarbons, particulate matter, and carbon monoxide. Furthermore, using biogas greatly reduces CO2 emissions.

Figure 12: Biogas production in Laholm, Sweden Photo: Mikael Lantz

Natural gas is a fossil fuel that is found in underground gas fields. It requires no refining – the gas must be pumped out,  cleaned, and compressed so that it can be transported and/or stored in a vehicle tank. Natural gas as a transport fuel is used primarily in Argentina, Brazil and Pakistan, followed by Italy and India.

Biogas is a renewable fuel produced from the “digestion” of household or agricultural wastes. Biogas can be blended easily with natural gas. Biogas is currently used as a transport fuel in Sweden, Switzerland and Germany.

Adjusted “gas” vehicles needed. Natural gas and biogas can be used in petrol vehicles relatively easily, but some engine adjustments are necessary. For passenger cars, there are purpose-built vehicles that can be fuelled with both petrol and compressed natural gas (CNG), i.e. bi-fuel vehicles. For heavy-duty vehicles with diesel engines, an additive can be added to boost the cetane number and therefore make it possible to, after some adjustments, use CNG. This has been done in a number of situations, such as in Delhi, India. For more information on CNG vehicles, see Tool 13.

Natural gas and biogas are low-cost fuels and cheaper than petrol. However, the introduction and use of natural gas or biogas requires huge infrastructure costs. Natural gas can be competitive if the infrastructure is already in place, but it is rarely cost-effective to install new infrastructure for natural gas if it is to be used only for transportation purposes. In countries where the number of CNG vehicles is high – such as Argentina, Brazil and Pakistan – there is high availability of CNG filling stations.

For more info on ethanol >> www.ethanol.org