Sustainable Fuel Market

[341 Pages Report] The global sustainable fuel market in terms of revenue was estimated to be worth $193.8 billion in 2024 and is poised to reach $299.9 billion by 2029, growing at a CAGR of 9.1% from 2024 to 2029. Rising concerns about climate change, stringent government regulations to reduce carbon emissions and reduced dependency on fossil fuels are few of the factors accelerating the growth of sustainable fuel market.

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Sustainable Fuel Market Dynamics

Driver: Growing environmental concerns associated with conventional fuels

Most transportation relies heavily on conventional fuel market like gasoline and diesel, which when burned, emit carbon dioxide, a significant greenhouse gas, into the atmosphere, contributing to environmental issues. According to the United Nations Environment Programme (UNEP), the transportation sector accounts for approximately one-quarter of all greenhouse gas (GHG) emissions related to energy. Also, carbon dioxide emissions directly resulting from fossil fuel combustion in the road sector increased by 200 million metric tons from 2015 to 2022 According to the International Energy Agency (IEA). To meet the IEA Net Zero Emissions by 2050 Scenario (NZE Scenario), emissions must decrease by about one-third by 2030. Many countries are actively working to reduce their greenhouse gas emissions, necessitating a shift towards cleaner energy sources.

Sustainable fuels, such as low-carbon and renewable fuel market, are crucial in transitioning to sustainable transportation. According to the World Economic Forum, Sustainable Aviation Fuel (SAF) Market Size made from renewable biomass and waste resources will play a significant role in achieving net zero emission goals. Additionally, hydrogen, biofuels, and renewable natural gas (RNG) have the potential to reduce emissions from the transportation sector.

Restraint: Requirement of high initial capital investment

The high initial investment acts as one of the major barriers to the adoption of sustainable fuels. The cost of building and operating biofuel, biomethane, e-fuels, and hydrogen plants is significant, making it difficult for these fuels to compete with fossil fuels. The investment encompasses costs associated with the installation of biorefineries, procurement, testing, maintenance, and feedstock. Sustainable fuel production is a capital-intensive endeavor, relying on advanced technologies with limited prior experience and insufficient historical data. The energy-intensive processes involved necessitate specialized energy production systems for co-generating heat or electricity. These factors contribute to the high expense and perceived undesirability of investing in sustainable fuels.

Opportunities: Transitioning towards renewable energy

Global economies' efforts to diminish their carbon footprint and greenhouse gas emissions have spurred the adoption of clean and sustainable energy alternatives. The increasing energy demand driven by rapid industrialization and urbanization has further hastened the shift towards renewable energy sources. This transition has prompted economies to utilize renewable energy sources such as biomass, hydroelectric, and geothermal power. For instance, vehicles can utilize biofuels like ethanol and biodiesel, derived from renewable biomass sources such as corn, sugarcane, and soybeans. Similarly, hydrogen fuel cells can use green hydrogen, another renewable energy source.

According to the International Energy Agency (IEA), biofuels and renewable electricity could reduce oil demand in the transportation sector by nearly 4 million barrels of oil equivalent per day by 2028. This reduction would help to limit the global carbon footprint and greenhouse gas emissions.

Challenges: Limited commercial availability of sustainable fuel powered vehicles

Sustainable fuels such as e-fuels, biofuels, biomethane, and hydrogen play a pivotal role in reducing carbon emissions whereas one of the major challenges faced by these fuels is their limited infrastructure. Hydrogen powered vehicles are still in their early stage of commercialization. According to the International Energy Agency’s (IEA) new Global EV Outlook 2023 report, there are approximately 72,000 Fuel Cell Electric Vehicle (FCEV) in the world as of 2022. The developing countries such as India, Brazil are still in its early stages of development.

Various countries like US, Brazil, UK, and other countries are focusing on flex fuel vehicles, which have the capability to function using gasoline or any combination of gasoline and ethanol, with blends reaching up to 83% whereas, 100% biofuel powered vehicles are still in its early stages of development. For instance, in August 2023, India has introduced world’s first electrified flex-fuel vehicle which can run on 100% ethanol. Also, the maritime sector is adopting hydrogen to reduce its emissions, but it is still in its early stages of development.

Sustainable Fuel Market Ecosystem

In this market, leading companies emerge as established and financially robust suppliers of sustainable fuels. With extensive experience, these firms offer a diverse product range, advanced technologies, and strong global sales and marketing networks. Their track record in the industry makes them dependable partners for customers seeking sustainable fuel solutions. These companies have shown agility in responding to market changes and consistently delivering top-quality products and services, establishing themselves as leaders in meeting the needs of the oil and gas sector. Prominent companies in this market include ADM (US), Shell plc (UK), Saudi Arabian Oil Co. (Saudi Arabia), Siemens Energy (Germany) and Chevron Corporation (US).

The e-fuels segment, by fuel type, is expected to be the fastest growing during the forecast period.

This report segments the sustainable fuel market based on fuel type into different types: biofuels, e-fuels, hydrogen, biomethane and compressed natural gas (CNG). The e-fuels segment is expected to be the fastest market during the forecast period. E-fuels are hailed as a sustainable and environmentally friendly alternative to conventional fuels, which are typically derived from fossil fuels. E-fuels are gaining prominence owing to the increasing government initiatives for cleaner fuel and achieving the goal of net-zero emissions.

By end user, marine is expected to be the fastest growing during the forecast period.

This report segments the sustainable marine fuel market based on phase into three segments: road transportation, marine, and aviation. The marine segment is expected to be the fastest growing during the forecast period. According to United Nations (UN), around 80% of global trade relies on maritime shipping, contributing to nearly 3% of total global greenhouse gas emissions. Achieving zero CO2 emissions from ships by 2050 is essential in combating climate change; therefore, various organizations and countries are setting different standards and policies. Enforcement of strict regulations to curb emissions in maritime drives the growth of sustainable fuels.

“North America: The largest region in the sustainable fuel market.”

North America is expected to be the largest region in the sustainable fuel market between 2024–2029, followed by Asia Pacific and Europe. North America has been leading the sustainable fuel market. Urbanization and population growth have resulted in the need for vast infrastructure development, which has propelled the energy demand across the region. The growth is driven by the enforcement of stringent pollution control regulations, efforts to reduce greenhouse gas emissions, and a growing preference for low-carbon and renewable energy alternatives. Reflecting the global trend towards sustainable fuels, investments in North America are on the rise. These increased investments in sustainable fuels are expected to bolster market growth in the region during the forecast period. The regional sustainable fuel market is experiencing growth due to the presence of leading sustainable fuel providers like ADM (US), INFINIUM (US) and Air Products and Chemicals, Inc. (US) also contribute to the market's development by creating opportunities for sustainable fuel projects.

Key Market Players

The sustainable fuel market is dominated by a few major players that have a wide regional presence. The major players in the sustainable fuel market include ADM (US), Shell plc (UK), Saudi Arabian Oil Co. (Saudi Arabia), Siemens Energy (Germany) and Chevron Corporation (US). Between 2019 and 2024, Strategies such as new product launches, contracts, agreements, acquisitions, and expansions are followed by these companies to capture a larger share of the sustainable fuel market.

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Scope of the Report

This research report categorizes the sustainable fuel market based on fuel type, state, type, end user, and region.

On the basis of fuel type:

• Biofuels
• E-fuels
• Hydrogen
• Biomethane
• Compressed Natural Gas (CNG)

On the basis of state:

• Liquid
• Gas

On the basis of type:

• Renewable Fuels
• Low carbon Fossil Fuels

On the basis of end user:

• Road Transportation
• Aviation
• Marine

On the basis of region:

• North America
• Europe
• Asia Pacific
• Middle East & Africa
• South America

Recent Developments

• In May 2024, TotalEnergies and SINOPEC have been working together for many years, notably in Angola and Brazil in Upstream operations, and more generally in various domains such as oil, LNG, oil product trading, and engineering. Recently, the companies have joined forces to develop a 230,000 tons per year sustainable aviation fuel (SAF) production unit at a SINOPEC refinery in China.
• In March 2024, Gasum and the Norwegian Road Transport Association (NLF) signed a collaboration agreement to promote biogas as one of various green energy sources for the green transition. This will be accomplished by promoting biogas as a viable alternative to fossil fuels.
• In September 2023, OPAL Fuels signed a joint venture with South Jersey Industries, an energy infrastructure holding company, to develop, construct, own, and operate RNG facilities.
• In April 2023, Air Products and Chemicals, Inc. signed an agreement with Edmonton International Airport as the hydrogen and technology provider for Alberta’s first hydrogen fuel cell passenger vehicle fleet.
• In October 2022, Air Liquide, Chevron Corporation, LyondellBasell, a global chemical and plastic company, and Uniper SE intended to work on a collective study to assess and progress the creation of a hydrogen and ammonia production facility along the US Gulf Coast.

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