TNFD Alternative Fuels Guidance: The Nature Test

Every airline, shipping line, logistics operator and industrial group that has promised to decarbonise has placed a quiet bet on the same thing. Somewhere upstream, a cleaner molecule will arrive in time, and at scale, to keep their engines, furnaces and turbines running. Electrification is taking a growing share of the energy system, but it does not reach everywhere. Long-haul flights, ocean freight, much of heavy road transport, high-temperature industrial heat and parts of power generation still need fuels that pack a lot of energy into a small space. That physical reality, combined with hard emissions targets and the COP28 commitment to transition away from fossil fuels, has turned alternative fuels from a niche into one of the most consequential supply stories of the decade.

The category is broad. It spans bioenergy in solid, liquid and gaseous form, drawn from crops, woody biomass, residues and biogenic waste. It includes low-emissions hydrogen and the synthetic fuels made from it, such as e-methanol, e-kerosene and e-ammonia. Demand for all of them is climbing as the sectors that cannot easily plug into a grid go looking for something to pour into a tank. Capital is following. Offtake agreements, mandates and green premiums are pulling supply forward faster than most of these technologies have ever had to move.

So far, the market has judged these fuels by a single number. How much carbon does this molecule save against the fossil fuel it replaces? That question built the entire commercial logic of the sector. It set the mandates, priced the premiums and decided which projects got financed. It was the right first question. It was never the only one.

 

Carbon was only ever half the proof

 

The Taskforce on Nature-related Financial Disclosures has just published additional sector guidance for alternative fuels, and its effect is to widen the lens. The document does not say carbon accounting is wrong. It says carbon accounting is incomplete. A fuel can score well on a lifecycle emissions chart and still draw down an aquifer, convert a grassland, strip nutrients from a soil, or lean on a feedstock that an ecosystem somewhere needed more. Emissions are one axis. The guidance insists on a second one: how a fuel depends on, and acts upon, land, freshwater, ocean, the atmosphere and biodiversity across its full value chain.

This is more than a reporting nuance. It reframes what credibility means. Until now, a low-carbon fuel was assumed to be a good fuel. The new frame treats low carbon as a necessary condition and nature performance as the test that decides whether the claim actually holds. It pushes companies to ask not only what a fuel emits, but what it takes and what it disturbs. For a market that has spent years optimising a single metric, that is a different kind of scrutiny, and a harder one to pass with a spreadsheet alone.

 

Bioenergy carries nature on its back

 

Bioenergy is where this lands first, because bioenergy is where most of the near-term supply will come from. For the foreseeable future, a large share of alternative fuel volume will be made from agricultural and forestry feedstocks, residues and waste streams. And bioenergy, more than any other pathway, is built directly on the natural world.

Every step depends on it:

• Land and soil to grow the feedstock.
• Freshwater, for cultivation and for processing.
• Ecosystem services that keep a field productive, such as water regulation, soil fertility, and resilience to drought and flood.

When those services weaken, yields fall, prices wobble and supply contracts become harder to honour. The dependency is not abstract. It is the difference between a refinery that runs and one that idles.

The impacts run in the other direction, and can be just as material:

• Land use change and the loss of natural habitat as energy crops expand.
• Over-extraction from already stressed water systems through irrigation.
• Soil degradation from intensive cultivation.
• Pollution of water, soil and air from agrochemicals.

Underneath all of it sits competition: between energy crops and food crops, and between fuel production and the land, water and ecosystems that local communities and wildlife depend on. Two batches of the same biofuel can have completely different nature profiles depending on where the feedstock was grown and how it was grown. The molecule looks identical. The footprint does not.

That is the uncomfortable insight for anyone who assumed bioenergy was a settled good. The carbon case for a biofuel can be strong while its land and water case is weak. The guidance makes that gap visible, and once a gap is visible, it becomes something buyers and regulators can ask about.

 

Waste is not an alibi

The sector's favourite answer to the land problem has been to move to waste and residues. Used cooking oil, agricultural leftovers, forestry offcuts, biogenic waste. The logic is appealing. If the material was going to be thrown away anyway, then turning it into fuel looks like a clean win with no land footprint attached.

The guidance takes that assumption apart, and this is one of its sharpest contributions. Every litre of fuel made from a waste stream still began as biomass that required land, water and other natural resources at some earlier point in its life. Calling a material waste does not erase the impacts embedded in how it was produced. It only moves them out of view. The honest question is not whether a feedstock has been labelled as waste, but whether it is truly residual, and whether it has a better use somewhere higher up the chain.

That is the heart of it. The waste hierarchy and the principle of cascading use both suggest that material reuse and recycling should usually come before burning something for energy, unless energy recovery clearly delivers the better environmental outcome. Markets for real residues such as waste oils, crop residues and fats are also finite. Their supply depends on production and consumption happening elsewhere in the economy, which means demand for fuel can quietly compete with other valuable uses, and can even create an incentive to misclassify or overstate what counts as waste in the first place.

So the differentiator for waste-based fuels is not the word on the label. It is traceability. Can a producer show what the feedstock actually was, where it came from, and that diverting it to fuel did not displace a higher-value use or strip something a soil or ecosystem needed? Without that evidence, a waste claim is just a more comfortable version of the same unanswered question.

 

Synthetic fuels move the pressure, they do not remove it

Hydrogen and e-fuels look like an escape from all of this. No crops, no land use change, no feedstock competition. For sectors anxious about the limits of biomass, synthetic fuels are the long-term hope. But the guidance is clear that they do not eliminate nature pressure. They relocate it.

The pressure moves to electricity, water, minerals and land:

• Electricity. Producing hydrogen by electrolysis takes large volumes of power, and that power carries its own footprint through the land and sea used for renewable generation and the water it draws.
• Water. Electrolysis consumes water, and it does so most in exactly the places many projects want to build, the sunny and windy regions that are often already water-stressed.
• Minerals. A critical minerals supply chain sits upstream, with extraction impacts of its own.
• Land. The enabling infrastructure of plants, pipelines and storage has to be put somewhere, and where it goes shapes the footprint it leaves.

The guidance flags additionality as a nature-relevant idea, not only a carbon one. The principle that hydrogen should be tied to new renewable generation rather than diverting existing clean power is meant to protect the climate case. From a nature perspective it cuts both ways. New generation built to feed hydrogen demand can increase land and water pressure unless it is paired with careful spatial planning and biodiversity safeguards. Where these projects are sited, and how that siting is decided, becomes one of the most important early choices a synthetic fuel developer makes. The same is true for carbon storage, where the wrong site carries leakage risk. Synthetic fuels are not the clean exit from nature questions. They are a new set of them.

 

The buyers are about to get demanding

This is where the guidance stops being a reporting exercise and starts reshaping the market. The organisations driving alternative fuel demand are airlines, shipping companies, logistics firms and utilities. They do not usually make these fuels. They buy them. Which means their exposure to land, water and biodiversity risk sits upstream, in suppliers they do not control and often cannot fully see.

Until now, those buyers have largely been able to procure on carbon intensity and price. That is about to change. As nature-related disclosure becomes expected rather than optional, a fuel buyer with its own decarbonisation and sustainability commitments cannot credibly ignore whether the fuel meeting its targets is degrading a watershed or converting habitat somewhere upstream. The reputational and regulatory exposure flows downhill to whoever burned the fuel and claimed the benefit.

Investors are moving in the same direction, and they want something specific. They need information they can compare, supplier against supplier and fuel against fuel, on a consistent basis. That comparability is precisely what a standardised disclosure framework is designed to deliver. It turns sourcing quality from a marketing claim into something that can be assessed, benchmarked and priced. Once buyers and capital can compare nature performance across suppliers, the suppliers who can evidence it gain an advantage, and the ones who cannot begin to look like a liability. Due diligence stops ending at carbon intensity and starts asking where the feedstock came from and what it touched on the way.

 

The proof phase

 

Step back, and the shape of the next few years comes into focus. The alternative fuels market is leaving its promise phase and entering its proof phase. The opening argument, that these fuels can cut emissions, has largely been won. The harder argument is whether they can do it without quietly transferring the damage from the atmosphere to the land, the water and the living systems underneath.

That is the test the winners will be built to pass. Advantage is shifting toward companies that can show credible sourcing, real traceability, genuine nature safeguards and disclosures that stand up next to their competitors'. The producer who can demonstrate where a feedstock originated, and prove it did no hidden harm, will out-compete the one offering only a carbon figure and a reassuring adjective. This rewards operators who have invested in knowing their own value chains, and exposes those who have not.

The story of alternative fuels has always been told as a story about molecules. The next chapter is about everything those molecules touch on the way to the tank. Companies that understand this early will treat nature evidence not as a compliance burden but as the thing that makes their product trustworthy, and therefore valuable. The next generation of sustainable fuel claims will need more than carbon math. They will need a map.

Source: TNFD
Full guidance: Additional sector guidance - Alternative fuels