Biofuels and Carbon Accounting: What Consumer Companies Need to Know

The Promise and Complexity of Biofuels

As companies look to decarbonize their Scope 1 and Scope 3 emissions, biofuels are increasingly part of the conversation. From renewable diesel powering delivery fleets to sustainable aviation fuel (SAF) reducing air freight emissions, biofuels offer a path to lower carbon intensity in sectors where electrification remains challenging.

But here's what many sustainability teams don't realize: not all biofuels deliver the same climate benefits. The carbon intensity of biofuels can vary dramatically based on feedstock, production methods, and land use impacts. And the way you account for biofuel emissions in your Scope 1 and Scope 3 reporting requires careful attention to avoid both over-claiming benefits and under-reporting actual emissions.

If you're evaluating biofuels for your supply chain—or already using them—understanding these nuances is critical.

Why Biofuels Aren't All Created Equal

Unlike fossil fuels, which have relatively consistent emissions profiles, biofuels vary widely. Ethanol produced from corn in the U.S. has a different carbon intensity than ethanol produced in the E.U. due to differences in cultivation practices and process energy. Renewable diesel made from used cooking oil has dramatically lower emissions than renewable diesel made from virgin soybean oil.

This variation stems from three core factors:

1. Feedstock‍

Biofuels are generally produced from three categories of feedstocks:

• Crops: Corn, sorghum, sugarcane, soybeans, and canola/rapeseeds currently support about 85% of biofuel production
• Residues and wastes: Used cooking oil (UCO), animal fats (tallow), manure, and wastewater sludge - these generally offer lower carbon intensities because they don't require dedicated land
• Woody/cellulosic biomass: Wood chips, corn stover, and forestry residues
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The feedstock choice determines not only the baseline emissions but also the potential for land use change impacts.

2. Production Methods‍

How a biofuel is processed matters. Advanced biofuels like Renewable Diesel (primarily Hydrotreated Vegetable Oil or HVO)  chemically equivalent or nearly identical to petroleum diesel and can be used at 100% concentration (R100) without modifying engines or infrastructure. Sustainable Aviation Fuel (SAF) is compositionally similar to jet fuel but currently requires blending with conventional jet fuel to meet certification limits, with compliance required under ASTM D7566. Unlike traditional biodiesel or ethanol, which have stricter blending limits, these fuels offer significant infrastructure advantages.This drop-in capability makes them particularly valuable for sectors like aviation and shipping where infrastructure changes are costly and complex.

3. Land Use Change

This is where biofuel accounting gets complicated.

Direct Land Use Change (dLUC) occurs when high-carbon stock land—like forests or grasslands—is converted to cropland for biofuel feedstocks. The resulting emissions can be substantial, potentially negating the climate benefits of the biofuel entirely. Conversely, growing feedstocks on marginal land can increase soil carbon stocks and lower emissions.

Indirect Land Use Change (iLUC) occurs when biofuel demand displaces food or feed production, causing land conversion elsewhere to make up the shortfall. iLUC cannot be directly measured but is estimated using economic models and remains a major source of uncertainty in biofuel carbon accounting.

"The carbon intensity of biofuels can vary dramatically based on feedstock, production methods, and land use impacts."

How to Account for Biofuels in Your Emissions Inventory

When it comes to Scope 1 reporting, there's a critical distinction many companies miss.

Combustion emissions from biofuels are generally considered carbon-neutral because the biomass is regrown on the same timescale as combustion. Biogenic CO₂ emitted during combustion is assumed to be fully offset by the CO₂ sequestered in the biomass feedstock during its growth. GHG Protocol and ISO 14064 treat biogenic CO₂ differently from fossil CO₂, requiring biogenic CO₂emissions as a separate memo  item in your GHG inventory, outside of Scope 1 fossil emissions.

However, the combustion of biofuels still produces non-CO₂ greenhouse gases—methane (CH₄) and nitrous oxide (N₂O)—which must be accounted for within Scope 1.

The lifecycle emissions from feedstock production, processing, and transport typically fall under Scope 3, Category 3 (Fuel- and Energy-Related Activities).

The risk: If you use arbitrary emission factors without specific data for your biofuel source, you risk "greenwashing"—overstating environmental benefits while underreporting actual emissions.

The solution: Use verified, product-specific carbon intensity data that accounts for your exact feedstock source and production pathway. For renewable diesel, for example, the carbon intensity can range from 20 to over 50 gCO₂e/MJ depending on whether it's made from waste oils or virgin crops.

The Market Reality: Costs and Trade-Offs

Production costs for biofuels range from roughly 1.5x to 4x higher than conventional fossil fuels, though retail prices can be comparable due to incentives like tax credits, Renewable Fuel Standards, and programs like California's Low Carbon Fuel Standard (LCFS). The production cost gap is largely driven by the fact that conventional fossil fuels do not currently bear the market costs of their environmental externalities (GHG emissions). 

In the US, national average retail prices for Biodiesel (B20) and petroleum diesel were recently identical at $3.74/gallon.In California, Renewable Diesel (R99/R100) traded at an average of $5.05/gallon—slightly lower than the state's average diesel price of $5.08/gallon as of October 2025. This demonstrates how policy instruments can effectively offset the "green premium" for consumers.

But this policy-dependent pricing creates volatility. As demand for renewable diesel has surged, it has diverted feedstocks like soybean oil from food markets, raising domestic prices and turning the U.S. into a net importer of soybean oil.

What This Means for Consumer Companies

If you're considering biofuels as part of your decarbonization strategy, here's what to focus on:

1. Be specific about feedstocks

Don't accept generic "renewable diesel" or "biodiesel" emission factors. Ask your fuel supplier for product-specific carbon intensity data that accounts for feedstock source and production pathway. Waste-based feedstocks like used cooking oil and animal fats generally offer significantly lower emissions than crop-based options.

2. Understand your reporting obligations

Different regulations have different thresholds. The U.S. Renewable Fuel Standard mandates a 20% reduction for conventional biofuels, 50% for advanced biofuels, and 60% for cellulosic biofuels compared to fossil fuels. California's LCFS has its own methodology and reduction requirements. Make sure your biofuel choice meets the specific reduction thresholds for your applicable regulations.

3. Account for the full lifecycle

Don't just report the combustion emissions as carbon-neutral and call it a day. Account for upstream emissions from feedstock production, processing, and transport. Include non-CO₂ emissions from combustion. Use verified data rather than industry averages.

4. Consider drop-in fuels for infrastructure simplicity

If you're operating in aviation, shipping, or heavy road transport, prioritize drop-in fuels like Renewable Diesel and SAF over traditional biodiesel or ethanol. Renewable Diesel (R100) can be used neat without engine modifications, while SAF is currently approved for blending up to 50% under ASTM D7566.

5. Track policy developments

Biofuel economics depend heavily on incentives. Changes to tax credits, fuel standards, or carbon pricing programs can significantly impact both availability and cost. Stay informed about policy developments in your operating regions.

The Path Forward

Biofuels represent an important tool for decarbonizing hard-to-electrify sectors. But they're not a silver bullet, and they're not all equivalent.

The companies that will benefit most from biofuels are those that approach them with specificity: verifying feedstock sources, using accurate carbon intensity data, understanding lifecycle emissions, and accounting for both benefits and trade-offs transparently.

As the market continues to evolve—with new feedstocks, improved production processes, and shifting policy landscapes—the key is maintaining rigorous data practices. Use verified, product-specific emissions factors. Account for the full lifecycle. Be transparent about limitations.

Done right, biofuels can be a valuable part of your decarbonization strategy. Done carelessly, they risk becoming another form of greenwashing.

Need help accounting for biofuels in your Scope 3 inventory? Contact our climate solutions team to discuss product-specific carbon intensity data and lifecycle analysis.