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Global energy mix shifts slowly toward fuel alternatives

08 May, 2025
Global energy mix shifts slowly toward cleaner alternatives



The world’s energy mix is undergoing a slow but steady transformation as the global community seeks to reduce greenhouse gas emissions and combat climate change.

The share of fossil fuels in the world’s energy supply declined from 82 per cent in 2022 to 81.5 per cent in 2023, according to recent data, signalling a gradual shift toward cleaner alternatives.

This transition is being propelled by increased investment in renewables and policy incentives, especially in advanced economies.

Biofuels are emerging as a key low-carbon alternative for the transportation sector.

Their share in total liquid fuel demand is forecast to rise to 6.4 per cent by 2030, up from 5.6 per cent, according to GlobalData and the International Energy Agency.

“The oil and gas industry — including producers, contractors — are relatively new entrants in the biofuels space.

“Despite this, they are making notable movements in the competitive landscape for renewable fuels, such as renewable diesel and sustainable aviation fuels (SAF).

“Prominent refiner Neste is leading the renewable fuels segment, particularly renewable diesel with four active refineries around the world,” said Ravindra Puranik, Oil and Gas Analyst at GlobalData.

Despite their clean energy profile, biofuels face hurdles. Production costs remain high, especially when processing advanced biomass sources like agricultural and forestry waste, which limits large-scale viability.

However, refiners such as Neste, Valero, and Marathon Petroleum are investing to scale up production and drive down costs.

Technological advances in refining are also seen as critical for improving affordability and availability.

“Although biofuels contribute towards energy security while reducing emissions, their adoption remains nascent and restricted to certain markets globally,” Puranik added.

“As a result, companies are cautious while pledging investments for new facilities, and even halting project development, as was seen in the case of Shell’s upcoming facility in Rotterdam.”

Global renewable refinery capacity is on the rise, with 15 new facilities under construction in 2025 and two already operational this year.

By 2030, an additional 218 facilities are expected to come online, expanding capacity from 9,340 million gallons per year in 2024 to a projected 32,618 million gallons per year.

The US leads in renewable fuel production, holding a 51 per cent global share, but recent political shifts-including efforts to repeal parts of the Inflation Reduction Act — have created uncertainty for future growth.

Puranik stated: “Policy approaches vary widely around the world. While the European Union (EU) enforce strict mandates, such as the ReFuelEU Aviation initiative requiring a minimum of 2 per cent SAF blending by 2025, some of the other regions lack such clear policies, leading to disparities in biofuel adoption and investment.

“The commitment of a nation to achieve interim net-zero objectives, availability of biomass, and affordability of petroleum fuels are critical factors influencing policy support for biofuels,” Puranik concluded.

As the global energy landscape evolves, biofuels are expected to play an increasingly important role, but their future will depend on overcoming economic and policy challenges to achieve broader adoption and impact.

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