Low-Emission Fuels

Countries and regions making notable progress in advancing low-emission fuel supply include: 

• The European Union reached a provisional agreement on targets for the use of sustainable aviation fuels (SAF) (biofuels, hydrogen and synthetic fuels) in April 2023, with the overall SAF share in the aviation sector increasing from 6% in 2030 to 70% in 2050. 
• Canada has in 2023 started to implement its Clean Fuel Regulations, which aim to reduce the carbon intensity of gasoline and diesel by 15% by 2030 (compared to 2016 levels). These efforts are complemented by the CAD 1.5 billion Clean Fuels Fund to support the construction or expansion of clean fuel production facilities for hydrogen, renewable diesel, cellulosic ethanol, synthetic fuels, renewable gas and SAFs.
  

Liquid and gaseous biofuels are largely compatible with existing fossil fuel-based transport infrastructure and end-use technologies. These fuels cover 5% of final energy demand by 2030 in the NZE Scenario (compared with 1% in 2022), but with a share of 11% in the final energy demand of the transport sector, biofuels are particularly important for decarbonising long-distance transport modes.  

Low-emission hydrogen and hydrogen-derived fuels attract much attention, but with a share of around 1% in total final energy consumption, they play a limited role by 2030 in the NZE Scenario. Still, scaling up the production of low-emission hydrogen, developing the necessary transport and storage infrastructure and readying the end-use technologies will be critical over the coming years to ensure that hydrogen can make a larger contribution to emission reductions after 2030. 

Low-emission fuels can be grouped into gaseous fuels (biogases, hydrogen and synthetic methane) and liquid fuels (liquid biofuels, ammonia and synthetic liquid hydrocarbon fuels). The supply of gaseous fuels is dominated today by natural gas, accounting for 99% of the gas consumed in end-use sectors in 2022. By 2030 in the NZE Scenario, low-emission gases meet 12% of global final gas demand, of which 70% are biogases and 30% hydrogen. 

Low-emission fuels met almost 2.5% of liquid fuel demand in end-use sectors in 2022, entirely in the form of liquid biofuels. By 2030 in the NZE Scenario, low-emission fuels meet 8% of global liquid fuel demand. Low-emission liquid fuels meet 10% of the energy needed in road transport, 10% in aviation and 6% in shipping by 2030. Biofuels continue to dominate low-emission liquid fuel demand by 2030, with a share of 92%. Still, efforts will be required to develop the supply chains and infrastructure for hydrogen-derived liquid fuels (ammonia and synthetic kerosene), which will be critical for decarbonising long-distance transport after 2030 and reducing the pressure on sustainable bioenergy supplies.

Low-emission fuels will be needed to decarbonise parts of the energy system where direct electrification is more difficult or more expensive, such as elements of heavy industry and long-distance transport. Many countries have developed or are working on policy frameworks to support the production and use of low-emission fuels. As of June 2023, around 80 countries have policies in place to support biofuels. For hydrogen, 6 countries have launched hydrogen strategies and roadmaps since the last edition of TCEP, so that in total 31 countries and the European Union have adopted hydrogen strategies, Several other countries are in the process of preparing their strategies.

Global investment in low-emission fuels continued to experience strong growth in 2022, reaching USD 13 billion. A large part of this investment was in liquid biofuels (USD 9.4 billion) and biogases (USD 2.7 billion). Liquid biofuels accounted for around 80% of the investment growth in 2022, while investments in biogases contributed 4%. The remainder was from investments in low-emission hydrogen production, which reached USD 1.2 billion in 2022, almost quadrupling the 2021 figure.