Colin McKerracher, Head of Transport and Energy Storage at BloombergNEF, leads a riveting discussion with industry leaders. Freya Burton from LanzaTech shares insights on sustainable aviation fuel's development challenges. Chris Johnson of C2X highlights the promising future of green methanol production. Lara Naqushbandi from ETFuels delves into the complexities of e-fuels and the financial landscape for clean energy investment. Together, they explore the paths to decarbonizing heavy transport and the critical role of government policy in fuel adoption.
Decarbonizing the heavy transport sector requires a mix of clean fuels like SAF and methanol rather than solely relying on electrification.
Investor confidence is contingent on clear policy frameworks and stable revenue prospects, necessitating robust project execution and supply chain reliability.
Deep dives
Decarbonizing Heavy Transport
Decarbonizing the heavy transport sector, including aviation, maritime shipping, and long-haul trucking, is a significant challenge that requires clean fuels rather than just electrification. Current data suggests that aviation and shipping make up around 2.5% of global CO2 emissions, a figure projected to double in the coming decades. Sustainable Aviation Fuels (SAF), biofuels, ammonia, methanol, and synthetic fuels are among the various clean fuel options that can help reduce carbon emissions in these sectors. However, high costs and unclear investment pathways complicate decisions for investors looking to support these technologies.
Shifts in Demand and Supply
Recent changes in the heavy transport sector's supply and demand dynamics emphasize a growing interest in clean fuels. Conversations about fuel purchases have evolved, revealing that less sophisticated shipping companies are hesitant about regulatory changes, while more informed entities are analyzing complex legislation governing e-fuels. There’s a noted increase in interest around green methanol, especially among companies that aim to prove their competitiveness in a cost-sensitive market. The ability to attract investment hinges on demonstrating not only solid technologies but also a clear understanding of cost-effective production pathways.
Investor Concerns and Market Stability
Investor sentiment in the clean fuel sector has shifted notably due to historical volatility and the lack of consistent revenue lines among many projects. The ongoing uncertainty around policy frameworks and market stability has left many investors cautious, leading to hesitance in committing funds without definitive long-term offtake agreements. Observations indicate that as sustainable aviation fuel mandates become clearer, investors are more inclined to support projects that align with well-defined regulatory incentives. Feedback from investors often stresses the need for robust project execution tied to reliable, long-term supply chains to ensure financial viability.
Future Outlook on Clean Fuels
The future of clean fuels will likely see regulatory frameworks evolving to significantly impact operational strategies for transport sectors. There is an increasing awareness that companies must go beyond surface-level compliance; instead, they should aim for substantial investments to meet impending decarbonization targets. As emission reduction deadlines approach, those failing to adapt to the new landscape may find themselves at a competitive disadvantage. Ultimately, fostering diverse pathways in clean fuel development, rather than chasing singular 'silver bullet' solutions, will be crucial for achieving long-term sustainability goals.
Heavy transport is at a crossroads. There are many possible paths for decarbonizing aviation, maritime shipping and long-haul trucking, including sustainable aviation fuel (SAF), ammonia, methanol and synthetic fuels. Now that companies are working to secure feedstocks, governments are writing clean-fuel policies, and investors are looking for new fuels to back, will these sectors coalesce around a single low-carbon pathway? Or will a cornucopia of options be the way of the future?
On today’s episode, Colin McKerracher, BloombergNEF’s Head of Transport and Energy Storage, moderates a discussion at the BNEF Summit London on the future of clean fuels in heavy transport. He is joined by panelists Freya Burton, Chief Sustainability Officer at LanzaTech; Chris Johnson, Chief Commercial Officer at C2X; and Lara Naqushbandi, Chief Executive Officer at ETFuels. Together, they discuss which clean fuels are seeing the greatest uptake, what they’d most like to see from government policy, and how to stimulate investor activity across the sector at large.
Today’s episode was recorded live at BNEF's London Summit. To learn more about our Summits and to listen to more interviews, please visit https://about.bnef.com/summit/