Sustainable fuel use could quadruple by 2035: IEA

The International Energy Agency (IEA) has said that global use of sustainable fuels could quadruple by 2035 if countries implement existing and announced policies, alongside targeted measures to attract investment and remove market barriers.

In its new report Delivering Sustainable Fuels: Pathways to 2035, released this week in support of Brazil’s upcoming 30th Conference of Parties (COP30) to the United Nations Framework Convention on Climate Change presidency, the IEA highlighted the role of sustainable liquid and gaseous fuels, including biofuels, biogases, low-emissions hydrogen and hydrogen-based fuels, in complementing electrification and reducing dependence on fossil fuels.

These fuels offer multiple benefits for the energy sector, the report stated. “Sustainable fuels can also enhance energy security, stimulate economic development and strengthen environmental sustainability.”

Key benefits and current trends

The IEA found that sustainable fuels are already lowering transport fuel import dependence by 5-15 percentage points in importing countries and have reduced global oil demand by around 2.5 million barrels per day in 2024.

Their expansion, the report notes, can catalyse rural employment, open new income streams, and drive industrial growth — particularly in emerging economies. Liquid biofuels currently dominate the market, accounting for 4 per cent of transport energy demand globally, with biogases and low-emissions hydrogen beginning to make inroads.

In some countries, such as Brazil, renewable fuels already make up close to 10 per cent of total energy consumption. Nearly 80 per cent of liquid biofuel use today is covered by greenhouse gas (GHG) performance standards, although uptake varies widely across regions.

While sustainable fuels remain more expensive than fossil fuels, the IEA finds that “innovation has significant potential to narrow the cost gap with conventional fuels.” Emerging fuel pathways such as alcohol-to-jet and hydrogen-based synthetic fuels are still in early commercial stages but expected to become cheaper as technology scales up and financing costs fall.

In certain markets — notably ethanol in Brazil and the United States — sustainable fuels can already be competitive or even cheaper than fossil alternatives. The agency also notes that cost impacts on consumers are expected to remain modest: For instance, a 15 per cent blend of sustainable aviation fuel would raise ticket prices by 5-7 per cent.

Outlook to 2035

If current and announced policies are implemented, the IEA projects a fourfold rise in sustainable fuel use by 2035. Transport will remain the main driver of demand, but industry and power generation will also expand their use after 2030, particularly through low-emissions hydrogen in the chemical, refining and steel sectors.

By 2035, sustainable fuels could meet 10 per cent of global road transport demand, 15 per cent of aviation demand and 35 per cent of shipping fuel demand. Cumulative investments across all sustainable fuel types could reach USD 1.5 trillion, directly creating nearly 2 million jobs worldwide.

The IEA identifies six priority actions to accelerate the transition:

• Establish region-specific roadmaps and policies aligned with broader energy goals.

• Increase demand predictability to attract private investment.

• Develop transparent carbon accounting methods to support performance-based incentives.

• Support innovation to drive cost reductions.

• Build integrated supply chains and infrastructure.

• Expand access to finance, particularly in emerging economies.

The report emphasised that “international cooperation and enhanced stakeholder engagement are key to accelerating sustainable fuel deployment and matching regional strengths with global demand.” It also notes ongoing efforts by the International Civil Aviation Organization (ICAO) and the International Maritime Organization (IMO) to promote global uptake of sustainable fuels.