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What is a biofuel, and is it a good alternative to conventional transport fuels?

Vidhu Bajaj avatar
Vidhu Bajaj
- 6 min read
What is a biofuel, and is it a good alternative to conventional transport fuels?

Each day, we make several choices that define our impact on the environment. The type of food we eat, how we commute to work, the appliances we use at home - everything affects the environment positively or negatively.

For instance, using solar electricity at home is an environmentally friendly choice, as it reduces your reliance on energy generated using fossil fuels. Similarly, there are some green alternatives, such as biofuel, that you may want to consider for fueling your car for a greener commute.

What is a biofuel?

Biofuels refer to any fuel created from biomass, such as plant, algae or animal waste. Unlike fossil fuels that are created over hundreds of years through slow natural processes, biofuels can be derived from easily replenishable material over short spans of time. 

They are therefore considered a source of renewable energy. Two commonly known biofuels are ethanol and biodiesel, which may be used to replace transportation fuels such as petrol and diesel in automobiles. 

Different types of biofuels explained

What is ethanol?

Ethanol is denatured alcohol produced by fermenting high-starch crops such as corn and sugarcane. Ethanol is also found in your wine, but don't consider fueling your car's tank with wine. The biofuel ethanol is not sourced from fermented grapes (like your wine) but uses biomass or organic matter for production. Compared to traditional petroleum, burning ethanol is associated with lower carbon emissions. It is also cheaper and more readily available. 

You can find ethanol biofuel at some service stations. It is most commonly available as E10 fuel, which contains 10 per cent ethanol and 90 per cent unleaded petrol. Blending petrol with ethanol creates a more eco-friendly fuel, but the efficiency of this fuel blend vs traditional petroleum remains debatable. While ethanol can increase the octane rating of petrol, it may not always translate into better mileage. The alcohol content increases fuel consumption by changing the energy density of the fuel. As a result, your car might consume more fuel per kilometre when you use E10 instead of your regular petrol. 

While this may mean insignificant savings for your pocket (depending on the current price of both fuels), switching to E10 could still be a more environmentally friendly choice to make than using standard petrol for your car. 

However, before you switch to ethanol-based fuel, make sure to check if your car can run E10 or not. Most modern cars are supposed to have E10-compatible engines, but you may want to use the compatibility checker provided on the NSW State Government website to be sure.

Another ethanol blend you're likely to come across is E85, containing 70 to 85 per cent ethanol mixed with regular unleaded petrol. E85 is designed for performance vehicles and is generally used in V8 racing supercars. It can also be used in flexible-fuel vehicles, but filling a non-compatible car with E85 fuel may damage the engine.

What is Biodiesel?

Biodiesel is a biofuel made from vegetable oils, wasted cooking oils, or even animal fats through the process of transesterification. Biodiesel can replace conventional diesel in some vehicles, but it is generally used as a blend for optimal power and efficiency. B5 and B20 are common biodiesel blends, with five and 20 per cent of fatty acids derived from plant or animal fats, respectively. Most modern diesel car engines are compatible with B5, and some can also accept B20 without any issue. However, it's worth checking with your manufacturer and confirming the percentage of biodiesel your car can accept to avoid engine damage. 

Like ethanol-blend fuels, the prime benefit of using biodiesel is reduced carbon emissions. However, filling a car with biodiesel could impact power, potentially leading to higher fuel consumption than regular diesel. Simply put, any beneficial impact of biodiesel on a car's performance or efficiency isn't proven, but it could still be a more environmentally-friendly choice compared to regular or premium diesel. However, be sure to check whether your car can run on biodiesel blends before you make the switch.

The benefits of using biofuels in cars

Reduced carbon emissions

One of the biggest reasons behind the growing popularity of biofuels is reduced carbon emissions. By adding biofuels to regular transportation fuels, it's possible to reduce the emission of carbon dioxide and other greenhouse gases, leading to a greener commute. 

Biofuels are also considered renewable energy sources, and they can be produced at a larger scale to reduce the reliance on rapidly depleting fossil fuels. Despite these benefits, it is worth remembering that biofuels also have some negative impacts on the environment. 

Most biofuels use plant-based materials that take up nutrition from the land. The same land can be used for growing crops for food production. Some of the fats or oils needed for the production of biofuels might come from forests or other delicate ecosystems – potentially leading to their destruction if biofuel production were to suddenly increase. 

Can be more affordable

Aside from the environmental impact, you also need to check the effect of using biofuels on your car and your pocket. Rising fuel costs could make you look for cheaper alternatives, but there's no guarantee that using a biofuel blend will bring your fuel costs down. 

Even though some biofuel blends may be slightly more affordable than conventional petrol or diesel, they don't always give the same efficiency or mileage owing to the change in fuel density. So you might find yourself filling up the fuel tank more frequently when you switch to a biofuel blend. 

It's also worth researching and selecting a good quality biofuel for your car, as poor-quality fuels could corrode the car's engine. If you're looking for an option that's both environmentally friendly and pocket friendly, an electric vehicle (EV) could be worth considering.

Consider an Electric Vehicle

An EV can save you up to 70 per cent of your fuel costs. It's also kinder to the environment, with the potential to significantly reduce greenhouse gas emissions. One potential drawback to buying an EV could be the higher purchase price compared to fuel-based cars with similar features. However, lower running costs could help you recoup this cost difference over time. 

Still, the cost of a vehicle remains an important factor, and you should remember to compare both the purchase price and running costs of different models to pick a car that meets your present and future needs. 

If you're looking for financing options, you may want to check your eligibility for green car loan products that offer incentives like lower interest rates or fees to borrowers who plan to purchase EVs.


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Product database updated 16 Jun, 2024

This article was reviewed by Personal Finance Editor Alex Ritchie before it was published as part of RateCity's Fact Check process.