The Global Energy Perspective 2023 models the outlook for demand and supply of energy commodities across a 1.5°C pathway, aligned with the Paris Agreement, and four bottom-up energy transition scenarios. These energy transition scenarios examine outcomes ranging from warming of 1.6°C to 2.9°C by 2100 (scenario descriptions outlined below in sidebar “About the Global Energy Perspective 2023”). These wide-ranging scenarios sketch a range of outcomes based on varying underlying assumptions—for example, about the pace of technological progress and the level of policy enforcement. They are shaped by more than 400 drivers across sectors, technologies, policies, costs, and fuels, and serve as a fact base to inform decision makers on the challenges to be overcome to enable the energy transition. In this article, we dive into the role that sustainable fuels are projected to play in decarbonizing energy systems and what is needed to harness this solution.
Achieving decarbonization targets will require a combination of decarbonization measures. One such measure—sustainable fuels—could help reach those decarbonization targets. Sustainable fuels include conventional biofuels like ethanol or fatty acid methyl ester (FAME) that can be blended until a blend-wall is reached, or more advanced drop-in fuels like hydrotreated vegetable oil (HVO) or synthetic fuels (synfuels) like e-kerosene (see sidebar “Know your sustainable fuels” at the end of the article). These fuels can be used particularly for the hard-to-abate transportation sectors, and could support faster decarbonization of existing fleets in the near term. Sustainable fuels are projected to see significant growth across sectors, and as demand increases, so may the need for investment in capacity projects. Expanding sustainable fuels may require both support for capital recovery and solutions to overcome the potential feedstock bottleneck.
Sustainable fuels have the potential to play a significant role in decarbonizing the energy sector. They offer a versatile solution that can be used across a wide range of applications, from transportation to industry. However, the landscape of sustainable fuels is complex, with multiple fuel types, technology pathways, and feedstocks to consider. This complexity can make it challenging for customers, governments, and suppliers to fully understand the benefits and challenges of sustainable fuels.
Unlocking future demand, investment, and supply of sustainable fuels will require collaboration between stakeholders. In particular, given the long-term payback periods typical for sustainable fuels projects, clarity in regulation could help to enable investment decisions. Through collaborative efforts, a low-carbon future could be established that benefits both the environment and the economy as the demand for sustainable transportation continues to increase.
To request access to the data and analytics related to our Sustainable fuels outlook, or to speak to our team, please contact us.