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< 5 Years
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Sustainable Fuels:

E-Fuel value chain

Source: DHL (2024)

Relevance to the Future of Logistics

Sustainable Aviation Fuels

In aviation, sustainable aviation fuels (SAFs) are considered by the industry as the only option today to replace fossil fuels in wide-body long-distance airplanes from a technical point of view, as hydrogen and battery options are currently still in early stages of development.

Today’s SAFs can, for example, reduce air freight emissions by 70-99% in some cases. Production is ramping up, so companies can switch from fossil fuels now to meet decarbonization targets in the short- and mid-term.

Although the use of SAFs is currently the most promising emissions-reduction solution for air cargo, availability and high cost are barriers to widespread adoption. SAFs are fuels from renewable sources such as biomass, animal fats, oils, and, alcohol which can be blended with conventional kerosene. Initiatives like the Clean Skies for Tomorrow coalition, led by the World Economic Forum, bring together stakeholders across the aviation industry to drive carbon-neutral flying in future, leveraging the availability and use of SAF.

In 2023, SAF volumes reached over 600 million liters (0.5 Mt), double the 300 million liters (0.25 Mt) produced in 2022. but still only amounting to only 0.2% of the annual aviation fuel demand.

In October 2023, DHL Express and World Energy agreed a global partnership to speed up aviation decarbonization via SAF certificates (SAFc). Within the terms of a seven-year agreement – one of the longest and largest in the aviation industry to date – the partners intend to provide 668 million liters (0.6Mt) of SAF to replace jet fossil fuel. This will enable DHL to reduce approximately 1.7 million tons of CO2e on a lifecycle basis, equivalent to one year of carbon-neutral operation of the entire DHL Americas aviation network.

Another area of sustainable aviation research is the use of hydrogen fuel. Startups like H2FLY and ZeroAvia are working on promising concepts but experts do not expect commercial application of sub-regional and regional hydrogen fuel cell aircraft before 2030.

Sustainable Marine Fuels

International maritime transportation accounts for approximately 3% of global greenhouse gas (GHG) emissions, and this includes a wide variety of vessels, from small recreational boats to massive, ocean-going container ships.

More than 90% of global goods are carried by cargo ships, and many of these ships are powered by heavy fuel oil (HFO), a residual fuel produced from petroleum refining which emits relatively large amounts of GHG when combusted. Sustainable marine fuels (SMFs) are a recognized pathway for lowering GHG emissions compared to HFO and other petroleum-based marine fuels.

Compared to traditional petroleum-based marine fuels, sustainable alternatives emit lower levels of sulfur and other toxic air pollutants during combustion. This helps reduce the negative impact on air quality for the millions of people living near seaports, without requiring expensive emissions controls for marine engines. Overall, vessels powered by SMFs represent the cleanest mode of transportation per kilogram of moved goods available today.

An example of SMF innovation is provided by the Dutch startup, GoodFuels. The company produces sustainable second-generation biofuels from certified waste or residue feedstock. Its innovative process addresses land-use challenges and ensures no impact on food production or deforestation. GoodFuels biofuel oil is an effective substitute for low-sulfur fuel oil or heavy fuel in vessels, effectively eliminating sulfur emissions and significantly reducing CO2 emissions.

Looking ahead, Lloyd’s Register, the maritime shipping advisory firm, projects two different future scenarios. In one, the marine biofuels share increases significantly over time, reaching 11% by 2030 and 79% by 2050. In the other scenario, the hydrogen-based e-fuel e-ammonia is the leading candidate for decarbonizing shipping; on average, it can make up 14% of the total fuel mix by 2030 and reach 66% by 2050.

Road Transportation

Electric vehicles (EVs) are already a widespread sustainable solution for road transportation. However, this applies mostly to smaller vehicles travelling short to medium distances, due to the still-limited range and long charging times of EVs.

While battery electric trucks for long-haul, heavyweight cargo are already on the market, there is limited availability of suitable models with the required range and payload capacity. This means the industry continues to rely on combustion engines running on fossil fuels.

Sustainable fuels offer advantages over electrification in terms of utilizing existing vehicles and infrastructure. This is reflected in the International Energy Agency (IEA) forecast that the share of biofuels in road transportation will rise from 5% in 2022 to 12% in 2035 and – anticipating electric vehicles will subsequently be used almost exclusively – then fall to 3% in 2050.

Sustainable fuels for trucks are mainly biodiesel or hydrotreated vegetable oil (HVO). The former is derived from vegetable oils or recycled fats from, for example, the catering industry. Truck biodiesel is also known as fatty acid methyl esters (FAME) and this can be used directly or blended with conventional diesel fossil fuel. In the European Union, blends of up to 7% FAME biodiesel are common. The other type of sustainable fuel for trucks, HVO, is vegetable oil that has been treated with hydrogen; interestingly, after reaction with hydrogen, the properties of the oil are very similar to those of diesel. And like biodiesel, HVO can be blended with conventional diesel or can replace it completely.

Another type of sustainable fuel that is in early stages of development and commercialization is electrofuels (e-fuels), a class of synthetic fuels manufactured using captured carbon dioxide or carbon monoxide with hydrogen from water split by low-carbon electricity sources including wind and solar. Adoption of these drop-in replacement fuels is currently limited.

Helping to boost uptake of sustainable fuels, governments in several countries are supporting biofuel production and consumption for road transportation. In addition, the major companies historically producing fossil fuels are increasingly shifting focus towards the production of biofuels and e-fuels; examples include Neste, TotalEnergies, and Shell.

Challenges

Challenge 1

Biofuel production volumes are restricted by the limited availability of feedstock and e-fuel volumes will only increase when sufficient amounts of green electricity become available.

Challenge 2

Production of sustainable fuels from agricultural crops can create competition for land and resources, impacting food security and potentially driving deforestation, habitat loss, and biodiversity decline, all of which have a negative climate impact.

Challenge 3

Lack of consistent standards and definitions make it difficult to verify sustainability claims and navigate complex certification processes.

Challenge 4

Demand for sustainable fuels exceeds current supply by far; production processes can be expensive and require further technological advances to reduce costs.

Challenge 5

Governments, suppliers, and shippers find it difficult to fully understand the opportunities and challenges of sustainable fuels due to various complexities including multiple fuel types, technology pathways, and available materials.

Biofuel production volumes are restricted by the limited availability of feedstock and e-fuel volumes will only increase when sufficient amounts of green electricity become available.
Production of sustainable fuels from agricultural crops can create competition for land and resources, impacting food security and potentially driving deforestation, habitat loss, and biodiversity decline, all of which have a negative climate impact.
Lack of consistent standards and definitions make it difficult to verify sustainability claims and navigate complex certification processes.
Demand for sustainable fuels exceeds current supply by far; production processes can be expensive and require further technological advances to reduce costs.
Governments, suppliers, and shippers find it difficult to fully understand the opportunities and challenges of sustainable fuels due to various complexities including multiple fuel types, technology pathways, and available materials.

Outlook

Here at DHL, we recognize sustainable fuels will play a critical role in efforts to reduce the environmental impact of transportation. We anticipate markets for sustainable fuels and technologies will grow and become more robust, and we expect this will drive development and scalability, increasing competitiveness against traditional fossil fuels.

This trend should be ACTIVELY monitored,with use cases in some applications that can already be addressed today.

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Sources

  1. McKinsey (2024): Global Energy Perspective 2023: Sustainable fuels outlook
  2. IATA (2023): SAF Volumes Growing but Still Missing Opportunities
  3. DHL (2023): DHL Express and World Energy agree to global partnership to speed up aviation decarbonization via Sustainable Aviation Fuel Certificates
  4. LR (2023): Shipping industry faces two alternative decarbonisation paths with hydrogen-based fuels and biofuels vying for prominence
  5. IEA (2023): Road transport - Net Zero Emissions Guide