Washington (Platts)--20Apr2011/157 pm EDT/1757 GMT

Biofuels have the potential to meet more than a quarter of world demand for transportation fuels by 2050, the International Energy Agency said Wednesday in a report requested by G8 energy ministers.

The report, "Technology Roadmap: Biofuels for Transport," said displacing 27% of transportation fuels -- particularly diesel, kerosene and jet fuel -- by 2050 would cut greenhouse gas emissions by 2.1 billion tons/year. It cautioned that the levels can only be achieved if conventional technologies become more efficient at converting crops, algae and other organic material into energy.

Bo Diczfalusy, IEA's director of sustainable energy policy, after announcing the findings during an advanced biofuels conference in Washington, said the 2050 target is not unrealistic.

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"Of course, it depends on politicians, it depends on economic development, it depends on technical development," he said. "But it's not completely out of the blue."

Diczfalusy said advanced biofuels could start to compete on price with fossil fuels by 2030, unless production costs remain tied to oil prices.

"In the long term, there is no vast cost difference between fossil fuels and biofuels," he said. "It could even be that the biofuels solution becomes much more economic."

Diczfalusy said demand for biofuels would come largely from developed countries in the first part of the 40-year period and then shift to 70% consumption by China, India, Brazil and other developing countries closer to 2050.

"There is a need for international collaborations and standardization," he said. "There will be a lot of trade going on."

Reaching the 2050 goal would require the production of 65 exajoules of feedstock grown on about 100 million hectares (about 247 million acres), the report said. Another 80 exajoules of biomass would be needed to generate heat and power for production.

"This poses a considerable challenge given competition for land and feedstocks from rapidly growing demand for food and fibre," the report said. "However, with a sound policy framework in place, it should be possible to provide the required 145 exajoules of total biomass for biofuels, heat and electricity from residues and wastes, along with sustainably grown energy crops."

The report sprang from a G8 meeting in Japan in June 2008, when energy ministers directed IEA to write a roadmap for reducing carbon emissions through renewable energy policies.

Among the recommendations, IEA said governments should adopt stable renewable energy policies to increase investor confidence, enact sustained funding mechanisms, develop international criteria for land-use policies and avoid erecting trade barriers.

IEA also proposed linking financial incentives with achieving life-cycle emissions savings of greater than half, accelerating research of feedstocks and land availability, and sharing technology between countries.

--Meghan Gordon, meghan_gordon@platts.com