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Low-Emission Fuels
What are low emissions fuels?
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). They can be produced from plants, which absorb CO2 from the atmosphere as they grow, or through industrial processes powered by renewables or other low-emission energy sources.
What is the role of low-emission fuels in clean energy transitions?
Low-emission fuels play an important role in decarbonising parts of the energy system where other options, like electrification, are more difficult or expensive – especially as many of them are compatible with existing fossil fuel-based infrastructure and equipment.
Where do we need to go?
Low-emission fuels today cover only a small fraction of global final energy consumption, largely from liquid biofuels. Consequently, more rapid roll-out of low-emission fuel production and distribution is needed to get on track with the Net Zero Scenario, especially in sectors like heavy industry and long-distance transport.
In this sector
Tracking Low-Emission Fuels Supply
Low-emission fuels, comprising liquid and gaseous biofuels, hydrogen and hydrogen-derived fuels (ammonia and synthetic hydrocarbon fuels produced from hydrogen and CO2), play an important role in decarbonising parts of the energy system where other measures such as direct electrification are more difficult or expensive, such as sections of heavy industry and long-distance transport. Low-emission fuels covered only around 1% of global final energy consumption in 2022, largely from liquid biofuels, compared with almost 5% by 2030 in the Net Zero Emissions by 2050 (NZE) Scenario. In addition, low-emission fuels in the form of biogases, hydrogen and ammonia provide around 2% of global electricity generation by 2030 in this scenario. More rapid roll-out of low-emission fuel production and distribution is therefore needed in order to get on track.
Policy momentum is growing to support scale-up of low-emission fuel production and use
Policy momentum is growing to support scale-up of low-emission fuel production and use
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.
Low-emission fuels currently meet around 1% of global final energy demand, but will be critical to decarbonise parts of heavy industry and long-distance transport
Low-emission fuels currently meet around 1% of global final energy demand, but will be critical to decarbonise parts of heavy industry and long-distance transport
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.
Policy focus is moving beyond decarbonising electricity, acknowledging the need for low-emission fuels in the energy transition
Policy focus is moving beyond decarbonising electricity, acknowledging the need for low-emission fuels in the energy transition
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.
View all low-emission fuels policies
Investment in low-emission fuels grew by 66% in 2022 compared with the previous year
Investment in low-emission fuels grew by 66% in 2022 compared with the previous year
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.
Recommendations
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The development of standards and certification schemes ensuring a sustainable supply chain will be critical for scaling up the production of both biofuels and hydrogen, while avoiding potentially harmful environmental, economic and social impacts. The development of international markets and trade in these fuels will also depend on internationally agreed methods and certification processes to guarantee the sustainability of traded fuels.
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With the use of low-emission fuels still in most cases being more expensive than unabated fossil fuels, policy measures will be needed to close this cost gap and support the use of low-emission fuels. Policy instruments can include penalties for unabated fossil fuels, such as CO2 prices; quotas and standards for low-emission fuels in different sectors; and incentives to reduce the cost of low-emission fuels or end-use technologies using these fuels. Such policy instruments must be complemented by regulatory frameworks to ensure that the fuels are being sustainably produced.
Authors and contributors
Lead authors
Uwe Remme
Contributors
Praveen Bains
Stavroula Evangelopoulou
Jeremy Moorhouse