Driving the Transition to Clean Fuels: The Role of Industrial Policy in Achieving a Sustainable Future
Key Ideas
  • Supportive industrial policies are crucial to accelerate the adoption of clean fuels, especially in hard-to-electrify sectors like aviation and shipping.
  • Market prices currently do not reflect the true cost of fossil fuels, creating a price gap that hinders the competitiveness of clean fuels.
  • Governments are implementing demand-pull mechanisms, carbon pricing, and financial incentives to drive the transition towards clean fuels and support industrial growth.
  • Industrial policies are fostering innovation in advanced fuels, with measures like the synthetic jet fuel mandate (e-SAF) to encourage technological advancement and competitiveness.
The global shift towards cleaner energy sources necessitates a transformation in the fuel landscape to reduce emissions in sectors like aviation and shipping. Clean fuels such as sustainable aviation fuel (SAF) and renewable fuels play a vital role in meeting climate targets, but production levels are currently insufficient. Industrial policies are essential to accelerate the adoption of clean fuels and level the playing field against conventional fuels, which benefit from mature value chains and established standards. Governments are introducing mandates, carbon pricing mechanisms, and financial incentives to drive the fuel transition, ensuring a market for clean fuels and supporting clean energy projects financially. By fostering innovation and resilient supply chains, industrial policies aim to promote productivity growth and competitiveness in the clean fuels sector, ultimately contributing to a sustainable, low-carbon future.
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