A pathway presented by the European refining industry shows how low-carbon liquid fuels could enable the transport sector to contribute to the EU’s climate neutrality objective by 2050. A 650 billion euros investment plan and the necessary enabling framework would allow for the decarbonisation of the sector by the middle of the century according to the study of FuelsEurope.
“Complementary to electrification and hydrogen technologies, low-carbon liquid fuels will be essential throughout the energy transition and beyond 2050, ensuring the security of supply, providing consumer choice and also building Europe’s industrial leadership,” said John Cooper, Director General of FuelsEurope, whose members include big oil and gas companies active in exploration and production, refining and chemicals in Europe.
Low-carbon liquid fuels have a strategic role to play in the transition to a climate-neutral economy by 2050, in particular in sectors such as aviation, maritime and heavy-duty transport where no equivalent technological alternatives currently exist.
To deliver such pathway an investment of 400 to 650 billion euros will be required according to the estimations of FulesEurope. Major investments, in addition to those already deployed, could start in the next years, with first-of-a-kind plants at industrial scale potentially coming into operation at the latest by 2025.
FuelsEurope outlined a number of policy recommendations to bring emissions down to net zero in the transport sector. Fuel taxation is an essential part of those recommendations, which should be revised by accounting for the carbon-intensity, to incentivise investments in advanced renewable fuels, according to the report.
“Zero or very low tax for low- carbon fuels would achieve the double objective of keeping fuel prices socially acceptable and making a business case for investments,” says FuelsEurope.
As around 27 per cent of total greenhouse gas emissions in the EU cames from the transport sector, its decarbonisation is central to delivering on the continent’s commitments to become climate-neutral by 2050.
“This pathway is ambitious, but achievable with multi-stakeholder collaboration,” the Director General of FuelsEurope pointed out.
The evolution of the petroleum refining industry and the distribution network of oil products are demonstrated by some early R&D examples.
“These new technologies are exciting but capital-intensive and their development at scale will require investor confidence and political vision,” Mr Cooper concluded.
This is even more the case if we take into account the economic and social impacts of the coronavirus crisis.
“With the focus increasingly turning to recovery and new investments, we believe now is the time to start policy discussions with EU and national policymakers, and customer stakeholders to design the enabling policy framework for the deployment of these essential low-carbon fuels,” says FuelsEurope adding that the fuel industry respects that there will be no return to business as usual.