Accelerating the financing of sustainable transport fuels

Investment Rating - The report indicates that sustainable fuels present a significant investment opportunity for private capital, with institutional and infrastructure investors having approximately $50 billion available for fresh investment annually [4]. Core Insights - The transport sector is responsible for 14% of global greenhouse gas emissions, with sustainable, low-carbon fuels being essential for decarbonizing long-haul flights and shipping [3][5]. - By 2050, the aviation sector will need to decarbonize 11,600 million tons of fossil jet kerosene, while maritime will require 9,500 million tons of fossil fuel replacement [3]. - A significant supply-demand imbalance for sustainable fuels is projected by 2030, with a gap of over 15,000 kilotons anticipated, which could hinder decarbonization efforts [5][6]. Summary by Sections The Need for Sustainable Fuels - The transport sector faces increasing regulatory, financial, and consumer pressures to decarbonize, particularly in maritime and air transport, which are hard to electrify [7][9]. - Emissions from these sectors are expected to reach approximately 1.8 billion metric tons of CO2 equivalent by 2030 if no action is taken [8]. Challenges to Funding - The report identifies several key challenges to funding sustainable fuel projects, including technology readiness, economic risks, execution risks, regulatory uncertainty, and the need for education on investment opportunities [11][12][22][26]. - High CAPEX projects like sustainable aviation fuel (SAF) face difficulties due to inflationary pressures and high interest rates, complicating investment [12]. Government and Private Sector Actions - Governments are encouraged to introduce clear blending mandates and CO2 taxes to support sustainable fuel adoption [29][30]. - Private sector stakeholders, including producers and investors, should diversify their investment strategies and secure long-term contracts to mitigate risks [33][36]. Market Potential - Sustainable fuels are seen as an attractive investment class, with decreasing market and technology risks and comparable economic returns to other infrastructure investments [36]. - Coordinated efforts among stakeholders in the sustainable fuel ecosystem are essential to unlock financing and demonstrate market potential [37].