storage hubs to invest in, and which offtakes to secure to gain access to supply. Winning traders will build and enhance selected capabilities to keep pace with the market’s evolution.
and regulatory constraints on feedstocks have resulted in price volatility; supply chain and infrastructure bottlenecks, variations in pricing across regions, and import and export rulings have added to this volatility. The mix of fuel types will evolve through 2050: road fuels have represented most of the demand and growth to date, but in the 2020s categories such as sustainable aviation fuel (SAF), renewable natural gas and synthetic natural gas, and bio- and e-methanol will make up a larger share. During the 2030s, technological advancements could spur growth in new advanced-biofuel pathways and e-fuels, complicating the global market while injecting much-needed capacity and liquidity. With such complex market fundamentals, sustainable-fuel traders should seek to understand which markets will increase in liquidity, which arbitrage plays to explore across products, which
Current market and development factors
A fascinating but challenging aspect of the sustainable-fuel market is the broad range of categories it encompasses (Exhibit 2). Biofuels account for the vast majority of the current market, but drop-in sustainable fuels and hydrogen-based e-fuels could reshape the landscape in the coming decades. The development of these fuels will be nonlinear: they will mature at different paces, and their specific uses could replace fossil fuels at different rates.
Several factors will shape the market’s development over the next few decades.
Winning traders will build and enhance selected capabilities to keep pace with the market’s evolution.
Accelerating the journey to net zero
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