Ten years ago, switching from burning coal to gas was a key element of China’s policy to reduce severe air pollution.
However, while gas is seen in some countries as a “bridging” fuel to move away from coal use, rapid electrification, uncompetitiveness and supply concerns have suppressed its share in China’s energy mix.
As such, while China’s gas demand has more than doubled over the past decade, the fuel is not currently playing a decisive role in the country’s strategy to tackle climate change.
Instead, renewables are now the leading replacement for coal demand in China, with growth in solar and wind generation largely keeping emissions growth from China’s power sector flat.
While gas could play a role in decarbonising some aspects of China’s energy demand – particularly in terms of meeting power demand peaks and fuelling heavy industry – multiple factors would need to change to make it a more attractive alternative.
Small, but impactful
The share of gas in China’s primary energy demand is small and has remained relatively unchanged at around 8-9% over the past five years.
It also comprises 7% of China’s carbon dioxide (CO2) emissions from fuel combustion, according to the International Energy Agency (IEA).
Gas combustion in China added 755m tonnes of CO2 (MtCO2) into the atmosphere in 2023 – double the total amount of CO2 emitted by the UK.
However, its emissions profile in China lags well behind that of coal, which represented 79% of China’s fuel-linked CO2 emissions and was responsible for almost 9bn tonnes of CO2 emissions in 2023, according to the same IEA data.
Gas consumption continues to grow in line with an overall uptick in total energy demand. Chinese gas demand, driven by industry use, grew by around 7-8% year-on-year in 2024, according to different estimates.
This rapid growth is, nevertheless, slightly below the 9% average annual rise in China’s gas demand over the past decade, during which consumption has more than doubled overall, as shown in the figure below.
The state-run oil and gas company China National Petroleum Corporation (CNPC) forecast in 2025 that demand growth for the year may slow further to just over 6%.
The majority of China’s gas demand in 2023 was met by domestic gas supply, according to the Institute for Energy Economics and Financial Analysis (IEEFA).
Most of this supply comes from conventional gas sources. But incremental Chinese domestic gas supply in recent years has come from harder-to-extract unconventional sources, including shale gas, which accounted for as much as 45% of gas production in 2024.
Despite China’s large recoverable shale-gas resources and subsidies to encourage production, geographical and technical limitations have capped production levels relative to the US, which is the world’s largest gas producer by far.
CNPC estimates Chinese gas output will grow by just 4% in 2025, compared with 6% growth in 2024. Nevertheless, output is still expected to exceed the 230bn cubic metre national target for 2025.
Liquified natural gas (LNG) is China’s second most-common source of gas, imported via giant super-cooled tankers from countries including Australia, Qatar, Malaysia and Russia.
This is followed by pipeline imports – which are seen as cheaper, but less reliable – from Russia and central Asia.
One particularly high-profile pipeline project is the Power of Siberia 2 pipeline project. However, Beijing has yet to explicitly agree to investing in or purchasing the gas delivered by the project. Disagreements around pricing and logistics have hindered progress.
Evolving role
Beijing initially aimed for gas to displace coal as part of a broader policy to tackle air pollution.
A three-year action plan from 2018-2020, dubbed the “blue-sky campaign”, helped to accelerate gas use in the industrial and residential sectors, as gas displaced consumption of “dispersed coal” (散煤)”– referring to improperly processed coal that emits more pollutants.
Meanwhile, several cities across northern and central China were also mandated to curtail coal usage and switch to gas instead. Many of these cities were based in provinces with a strong coal mining economy or higher winter heating demand.
China’s pollution levels saw “drastic improvement” as a result, according to a report by research institute the Centre for Research on Energy and Clean Air (CREA).
(In January 2026, there were widespread media reports of households choosing not to use gas heating despite freezing temperatures, as a result of high prices following the expiry of subsidies for gas use.)
Industry remains the largest gas user in China, with “city gas” – gas delivered by pipeline to urban areas – trailing in second, as shown in the figure below. Power generation is a distant third.
Gas has never gained momentum in China’s power sector, with its share of power generation remaining at 4% while wind and solar power’s share has soared from 4% to 22% over the past decade, Yu Aiqun, a research analyst at the US-based thinktank Global Energy Monitor, tells Carbon Brief.
Yu adds that this stagnation is largely due to insufficient and unreliable gas supply, which drives up prices and makes gas less competitive compared to coal and renewables. She says:
“With the rapid expansion of renewables and ongoing geopolitical uncertainties, I don’t foresee a bright future for gas power.”
Average on-grid gas-fired power prices of 0.56-0.58 yuan per kilowatt hour (yuan/kWh) in China are far higher than that of around 0.3-0.4 yuan/kWh for coal power, according to some industry estimates. Recent auction prices for renewables are even cheaper than this.
Meanwhile, the share of renewables in China’s power capacity stood at 55% in 2024, compared with gas at around 4%.
Generation from wind and solar in particular has increased by more than 1,250 terawatt-hours (TWh) in China since 2015, while gas-fired generation has increased by just 140TWh, according to IEEFA.
As the share of coal has shrunk from 70% to 61% during this period, IEEFA suggests that renewables – rather than gas – are displacing coal’s share in the generation mix.
However, China’s gas capacity may still rise from approximately 150 gigawatts (GW) in 2025 to 200GW by 2030, Bloomberg reports.
A report by the National Energy Administration (NEA) on development of the sector notes that gas will continue to play a “critical role” in “peak shaving”, where gas turbines can be used for short periods to meet daily spikes in demand. As such, the NEA says gas will be an “important pillar” in China’s energy transition.
In 2024, a new policy on gas utilisation also “explicitly promoted” the use of gas peak-shaving power plants, according to industry outlet MySteel.
China’s current gas storage capacity is “insufficient”, according to CNPC, reducing its ability to meet peak-shaving demand. The country built 38 underground gas storage sites with peak-shaving capacity of 26.7bn cubic metres in 2024, but this accounts for just 6% of its annual gas demand.
Transport use
Gas is instead playing a bigger part in the displacement of diesel in the transport sector, due to the higher cost competitiveness of LNG as a fuel – particularly in the trucking sector.
CNPC expects that LNG displaced around 28-30m tonnes of diesel in the trucking sector in 2025, accounting for 15% of total diesel demand in China.
This is further aided by policy support from Beijing’s equipment trade-in programme, part of efforts to stimulate the economy.
However, gas is not necessarily a better option for heavy-duty, long-haul transportation, due to poorer fuel efficiency compared with electric vehicles (EVs).
In fact, “new-energy vehicles” (NEVs) – including hydrogen fuel-cell, pure-electric and hybrid-electric trucks – are displacing both LNG-fueled trucks and diesel heavy-duty vehicles (HDVs).
In the first half of 2025, battery-electric models accounted for 22% of all HDV sales, a year-on-year increase of 9%, while market share for LNG-fueled trucks fell from 30% in 2024 to 26%.
Gas can be cheaper than oil but is not competitive with EVs and – with the emergence of zero-emission fuels such as hydrogen and ammonia – gas may eventually lose even this niche market, says Yu.
Supply security
Chinese government officials frequently note that China is “rich in coal, poor in oil and short of gas” (“富煤贫油少气”). Concerns around import dependence have underpinned China’s focus on coal as a source of energy security.
However, Beijing increasingly sees electrification as a more strategic way to decarbonise its transport sector, according to some analysts.
“Overall, electrification is a clear energy security strategy to reduce exposure to global fossil fuel markets,” says Michal Meidan, head of the China energy research programme at the Oxford Institute for Energy Studies.
Chinese oil and gas production grew dramatically in the last few years under a seven-year action plan from 2019-25, as Beijing ordered its state oil firms to ramp up output to ensure energy security.
Despite this, gas import dependency still hovers at around 40% of demand. This, according to assessments in government documents, exposes the country to price shocks and geopolitical risks.
The graph below shows the share of domestically produced gas (dark blue), LNG imports (mid-blue) and pipeline imports (light blue), in China’s overall gas supply between 2017 and 2024.
“Gas use is unlikely to play a significant role in decarbonising the power system, but could be more significant in industrial decarbonisation,” Meidan tells Carbon Brief.
She estimates that if LNG prices fall to $6 per million British thermal units (btu), compared to an average of $11 in 2024-25, this could encourage fuel switching in the steel, chemical manufacturing, textiles, ceramics and food processing industries.
The chart below shows the year-on-year change in gas demand between 2001-2022.
Growth in gas demand has been decelerating in some industries in recent years, such as refining. But it also remains unclear if Beijing will adopt more aggressive policies favouring gas, Meidan adds.
A roadmap developed by the Energy Research Institute (ERI), a thinktank under the National Development and Reform Commission’s Academy of Macroeconomic Research, finds that gas only begins to play an equivalent or greater role in China’s energy mix than coal by 2050 at the earliest – 10 years ahead of China’s target for achieving carbon neutrality.
Both fossil fuels play a significantly smaller role than clean-energy sources at this point.
Wang Zhongying and Kaare Sandholt, both experts at the ERI, write in Carbon Brief:
“Gas does not play a significant role in the power sector in our scenarios, as solar and wind can provide cheaper electricity while existing coal power plants – together with scaled-up expansion of energy storage and demand-side response facilities – can provide sufficient flexibility and peak-load capacity.”
Ultimately, China’s push for gas will be contingent on its own development goals. Its next five-year plan, from 2026-2030, will build a framework for China’s shift to controlling absolute carbon emissions, rather than carbon intensity.
Recent recommendations by top Chinese policymakers on priorities for the next five-year plan did not explicitly mention gas. Instead, the government endorses “raising the level of electrification in end-use energy consumption” while also “promoting peaking of coal and oil consumption”.
The Chinese government feels that gas is “nice to have…if available and cost-competitive but is not the only avenue for China’s energy transition,” says Meidan.
The post Explainer: Why gas plays a minimal role in China’s climate strategy appeared first on Carbon Brief.
Explainer: Why gas plays a minimal role in China’s climate strategy
Climate Change
DeBriefed 27 February 2026: Trump’s fossil-fuel talk | Modi-Lula rare-earth pact | Is there a UK ‘greenlash’?
Welcome to Carbon Brief’s DeBriefed.
An essential guide to the week’s key developments relating to climate change.
This week
Absolute State of the Union
‘DRILL, BABY’: US president Donald Trump “doubled down on his ‘drill, baby, drill’ agenda” in his State of the Union (SOTU) address, said the Los Angeles Times. He “tout[ed] his support of the fossil-fuel industry and renew[ed] his focus on electricity affordability”, reported the Financial Times. Trump also attacked the “green new scam”, noted Carbon Brief’s SOTU tracker.
COAL REPRIEVE: Earlier in the week, the Trump administration had watered down limits on mercury pollution from coal-fired power plants, reported the Financial Times. It remains “unclear” if this will be enough to prevent the decline of coal power, said Bloomberg, in the face of lower-cost gas and renewables. Reuters noted that US coal plants are “ageing”.
OIL STAY: The US Supreme Court agreed to hear arguments brought by the oil industry in a “major lawsuit”, reported the New York Times. The newspaper said the firms are attempting to head off dozens of other lawsuits at state level, relating to their role in global warming.
SHIP-SHILLING: The Trump administration is working to “kill” a global carbon levy on shipping “permanently”, reported Politico, after succeeding in delaying the measure late last year. The Guardian said US “bullying” could be “paying off”, after Panama signalled it was reversing its support for the levy in a proposal submitted to the UN shipping body.
Around the world
- RARE EARTHS: The governments of Brazil and India signed a deal on rare earths, said the Times of India, as well as agreeing to collaborate on renewable energy.
- HEAT ROLLBACK: German homes will be allowed to continue installing gas and oil heating, under watered-down government plans covered by Clean Energy Wire.
- BRAZIL FLOODS: At least 53 people died in floods in the state of Minas Gerais, after some areas saw 170mm of rain in a few hours, reported CNN Brasil.
- ITALY’S ATTACK: Italy is calling for the EU to “suspend” its emissions trading system (ETS) ahead of a review later this year, said Politico.
- COOKSTOVE CREDITS: The first-ever carbon credits under the Paris Agreement have been issued to a cookstove project in Myanmar, said Climate Home News.
- SAUDI SOLAR: Turkey has signed a “major” solar deal that will see Saudi firm ACWA building 2 gigawatts in the country, according to Agence France-Presse.
$467 billion
The profits made by five major oil firms since prices spiked following Russia’s invasion of Ukraine four years ago, according to a report by Global Witness covered by BusinessGreen.
Latest climate research
- Claims about the “fingerprint” of human-caused climate change, made in a recent US Department of Energy report, are “factually incorrect” | AGU Advances
- Large lakes in the Congo Basin are releasing carbon dioxide into the atmosphere from “immense ancient stores” | Nature Geoscience
- Shared Socioeconomic Pathways – scenarios used regularly in climate modelling – underrepresent “narratives explicitly centring on democratic principles such as participation, accountability and justice” | npj Climate Action
(For more, see Carbon Brief’s in-depth daily summaries of the top climate news stories on Monday, Tuesday, Wednesday, Thursday and Friday.)
Captured
The constituency of Richard Tice MP, the climate-sceptic deputy leader of Reform UK, is the second-largest recipient of flood defence spending in England, according to new Carbon Brief analysis. Overall, the funding is disproportionately targeted at coastal and urban areas, many of which have Conservative or Liberal Democrat MPs.
Spotlight
Is there really a UK ‘greenlash’?
This week, after a historic Green Party byelection win, Carbon Brief looks at whether there really is a “greenlash” against climate policy in the UK.
Over the past year, the UK’s political consensus on climate change has been shattered.
Yet despite a sharp turn against climate action among right-wing politicians and right-leaning media outlets, UK public support for climate action remains strong.
Prof Federica Genovese, who studies climate politics at the University of Oxford, told Carbon Brief:
“The current ‘war’ on green policy is mostly driven by media and political elites, not by the public.”
Indeed, there is still a greater than two-to-one majority among the UK public in favour of the country’s legally binding target to reach net-zero emissions by 2050, as shown below.
Steve Akehurst, director of public-opinion research initiative Persuasion UK, also noted the growing divide between the public and “elites”. He told Carbon Brief:
“The biggest movement is, without doubt, in media and elite opinion. There is a bit more polarisation and opposition [to climate action] among voters, but it’s typically no more than 20-25% and mostly confined within core Reform voters.”
Conservative gear shift
For decades, the UK had enjoyed strong, cross-party political support for climate action.
Lord Deben, the Conservative peer and former chair of the Climate Change Committee, told Carbon Brief that the UK’s landmark 2008 Climate Change Act had been born of this cross-party consensus, saying “all parties supported it”.
Since their landslide loss at the 2024 election, however, the Conservatives have turned against the UK’s target of net-zero emissions by 2050, which they legislated for in 2019.
Curiously, while opposition to net-zero has surged among Conservative MPs, there is majority support for the target among those that plan to vote for the party, as shown below.
Dr Adam Corner, advisor to the Climate Barometer initiative that tracks public opinion on climate change, told Carbon Brief that those who currently plan to vote Reform are the only segment who “tend to be more opposed to net-zero goals”. He said:
“Despite the rise in hostile media coverage and the collapse of the political consensus, we find that public support for the net-zero by 2050 target is plateauing – not plummeting.”
Reform, which rejects the scientific evidence on global warming and campaigns against net-zero, has been leading the polls for a year. (However, it was comfortably beaten by the Greens in yesterday’s Gorton and Denton byelection.)
Corner acknowledged that “some of the anti-net zero noise…[is] showing up in our data”, adding:
“We see rising concerns about the near-term costs of policies and an uptick in people [falsely] attributing high energy bills to climate initiatives.”
But Akehurst said that, rather than a big fall in public support, there had been a drop in the “salience” of climate action:
“So many other issues [are] competing for their attention.”
UK newspapers published more editorials opposing climate action than supporting it for the first time on record in 2025, according to Carbon Brief analysis.
Global ‘greenlash’?
All of this sits against a challenging global backdrop, in which US president Donald Trump has been repeating climate-sceptic talking points and rolling back related policy.
At the same time, prominent figures have been calling for a change in climate strategy, sold variously as a “reset”, a “pivot”, as “realism”, or as “pragmatism”.
Genovese said that “far-right leaders have succeeded in the past 10 years in capturing net-zero as a poster child of things they are ‘fighting against’”.
She added that “much of this is fodder for conservative media and this whole ecosystem is essentially driving what we call the ‘greenlash’”.
Corner said the “disconnect” between elite views and the wider public “can create problems” – for example, “MPs consistently underestimate support for renewables”. He added:
“There is clearly a risk that the public starts to disengage too, if not enough positive voices are countering the negative ones.”
Watch, read, listen
TRUMP’S ‘PETROSTATE’: The US is becoming a “petrostate” that will be “sicker and poorer”, wrote Financial Times associate editor Rana Forohaar.
RHETORIC VS REALITY: Despite a “political mood [that] has darkened”, there is “more green stuff being installed than ever”, said New York Times columnist David Wallace-Wells.
CHINA’S ‘REVOLUTION’: The BBC’s Climate Question podcast reported from China on the “green energy revolution” taking place in the country.
Coming up
- 2-6 March: UN Food and Agriculture Organization regional conference for Latin America and Caribbean, Brasília
- 3 March: UK spring statement
- 4-11 March: China’s “two sessions”
- 5 March: Nepal elections
Pick of the jobs
- The Guardian, senior reporter, climate justice | Salary: $123,000-$135,000. Location: New York or Washington DC
- China-Global South Project, non-resident fellow, climate change | Salary: Up to $1,000 a month. Location: Remote
- University of East Anglia, PhD in mobilising community-based climate action through co-designed sports and wellbeing interventions | Salary: Stipend (unknown amount). Location: Norwich, UK
- TABLE and the University of São Paulo, Brazil, postdoctoral researcher in food system narratives | Salary: Unknown. Location: Pirassununga, Brazil
DeBriefed is edited by Daisy Dunne. Please send any tips or feedback to debriefed@carbonbrief.org.
This is an online version of Carbon Brief’s weekly DeBriefed email newsletter. Subscribe for free here.
The post DeBriefed 27 February 2026: Trump’s fossil-fuel talk | Modi-Lula rare-earth pact | Is there a UK ‘greenlash’? appeared first on Carbon Brief.
Seven Pacific island nations say they will demand heftier levies on global shipping emissions if opponents of a green deal for the industry succeed in reopening negotiations on the stalled accord.
The United States and Saudi Arabia persuaded countries not to grant final approval to the International Maritime Organization’s Net-Zero Framework (NZF) in October and they are now leading a drive for changes to the deal.
In a joint submission seen by Climate Home News, the seven climate-vulnerable Pacific countries said the framework was already a “fragile compromise”, and vowed to push for a universal levy on all ship emissions, as well as higher fees . The deal currently stipulates that fees will be charged when a vessel’s emissions exceed a certain level.
“For many countries, the NZF represents the absolute limit of what they can accept,” said the unpublished submission by Fiji, Kiribati, Vanuatu, Nauru, Palau, Tuvalu and the Solomon Islands.
The countries said a universal levy and higher charges on shipping would raise more funds to enable a “just and equitable transition leaving no country behind”. They added, however, that “despite its many shortcomings”, the framework should be adopted later this year.
US allies want exemption for ‘transition fuels’
The previous attempt to adopt the framework failed after governments narrowly voted to postpone it by a year. Ahead of the vote, the US threatened governments and their officials with sanctions, tariffs and visa restrictions – and President Donald Trump called the framework a “Green New Scam Tax on Shipping”.
Since then, Liberia – an African nation with a major low-tax shipping registry headquartered in the US state of Virginia – has proposed a new measure under which, rather than staying fixed under the NZF, ships’ emissions intensity targets change depending on “demonstrated uptake” of both “low-carbon and zero-carbon fuels”.
The proposal places stringent conditions on what fuels are taken into consideration when setting these targets, stressing that the low- and zero-carbon fuels should be “scalable”, not cost more than 15% more than standard marine fuels and should be available at “sufficient ports worldwide”.
This proposal would not “penalise transitional fuels” like natural gas and biofuels, they said. In the last decade, the US has built a host of large liquefied natural gas (LNG) export terminals, which the Trump administration is lobbying other countries to purchase from.
The draft motion, seen by Climate Home News, was co-sponsored by US ally Argentina and also by Panama, a shipping hub whose canal the US has threatened to annex. Both countries voted with the US to postpone the last vote on adopting the framework.
-
IMO head: Shipping decarbonisation “has started” despite green deal delay
Arsenio Dominguez said the shipping industry’s net zero emissions goal is not in dispute although countries have stalled on adopting a framework to reach it -
US-led alliance wins a year’s delay in adoption of green shipping deal
The IMO’s Net-Zero Framework will be up for approval again in October 2026, after the US and Saudi Arabia persuaded countries not to vote on it as planned
The IMO’s Panamanian head Arsenio Dominguez told reporters in January that changes to the framework were now possible.
“It is clear from what happened last year that we need to look into the concerns that have been expressed [and] … make sure that they are somehow addressed within the framework,” he said.
Patchwork of levies
While the European Union pushed firmly for the framework’s adoption, two of its shipping-reliant member states – Greece and Cyprus – abstained in October’s vote.
After a meeting between the Greek shipping minister and Saudi Arabia’s energy minister in January, Greece said a “common position” united Greece, Saudi Arabia and the US on the framework.
If the NZF or a similar instrument is not adopted, the IMO has warned that there will be a patchwork of differing regional levies on pollution – like the EU’s emissions trading system for ships visiting its ports – which will be complicated and expensive to comply with.
This would mean that only countries with their own levies and with lots of ships visiting their ports would raise funds, making it harder for other nations to fund green investments in their ports, seafarers and shipping companies. In contrast, under the NZF, revenues would be disbursed by the IMO to all nations based on set criteria.
Anais Rios, shipping policy officer from green campaign group Seas At Risk, told Climate Home News the proposal by the Pacific nations for a levy on all shipping emissions – not just those above a certain threshold – was “the most credible way to meet the IMO’s climate goals”.
“With geopolitics reframing climate policy, asking the IMO to reopen the discussion on the universal levy is the only way to decarbonise shipping whilst bringing revenue to manage impacts fairly,” Rios said.
“It is […] far stronger than the Net-Zero Framework that is currently on offer.”
The post Pacific nations want higher emissions charges if shipping talks reopen appeared first on Climate Home News.
Pacific nations want higher emissions charges if shipping talks reopen
Doubts over whether governments will maintain ambitious targets on boosting the use of sustainable aviation fuel (SAF) are a threat to the industry’s growth and play into the hands of fossil fuel companies, investors warned this week.
Several executives from airlines and oil firms have forecast recently that SAF requirements in the European Union, United Kingdom and elsewhere will be eased or scrapped altogether, potentially upending the aviation industry’s main policy to shrink air travel’s growing carbon footprint.
Such speculation poses a “fundamental threat” to the SAF industry, which mainly produces an alternative to traditional kerosene jet fuel using organic feedstocks such as used cooking oil (UCO), Thomas Engelmann, head of energy transition at German investment manager KGAL, told the Sustainable Aviation Fuel Investor conference in London.
He said fossil fuel firms would be the only winners from questions about compulsory SAF blending requirements.
The EU and the UK introduced the world’s first SAF mandates in January 2025, requiring fuel suppliers to blend at least 2% SAF with fossil fuel kerosene. The blending requirement will gradually increase to reach 32% in the EU and 22% in the UK by 2040.
Another case of diluted green rules?
Speaking at the World Economic Forum in Davos in January, CEO of French oil and gas company TotalEnergies Patrick Pouyanné said he would bet “that what happened to the car regulation will happen to the SAF regulation in Europe”.
The EU watered down green rules for car-makers in March 2025 after lobbying from car companies, Germany and Italy.
“You will see. Today all the airline companies are fighting [against the EU’s 2030 SAF target of 6%],” Pouyanne said, even though it’s “easy to reach to be honest”.
While most European airline lobbies publicly support the mandates, Ryanair Group CEO Michael O’Leary said last year that the SAF is “nonsense” and is “gradually dying a death, which is what it deserves to do”.
EU and UK stand by SAF targets
But the EU and the British government have disputed that. EU transport commissioner Apostolos Tzitzikostas said in November that the EU’s targets are “stable”, warning that “investment decisions and construction must start by 2027, or we will miss the 2030 targets”.
UK aviation minister Keir Mather told this week’s investor event that meeting the country’s SAF blending requirement of 10% by 2030 was “ambitious but, with the right investment, the right innovation and the right outlook, it is absolutely within our reach”.
“We need to go further and we need to go faster,” Mather said.
SAF investors and developers said such certainty on SAF mandates from policymakers was key to drawing the necessary investment to ramp up production of the greener fuel, which needs to scale up in order to bring down high production costs. Currently, SAF is between two and seven times more expensive than traditional jet fuel.
Urbano Perez, global clean molecules lead at Spanish bank Santander, said banks will not invest if there is a perceived regulatory risk.
David Scott, chair of Australian SAF producer Jet Zero Australia, said developing SAF was already challenging due to the risks of “pretty new” technology requiring high capital expenditure.
“That’s a scary model with a volatile political environment, so mandate questioning creates this problem on steroids”, Scott said.
Others played down the risk. Glenn Morgan, partner at investment and advisory firm SkiesFifty, said “policy is always a risk”, adding that traditional oil-based jet fuel could also lose subsidies.
Asian countries join SAF mandate adopters
In Asia, Singapore, South Korea, Thailand and Japan have recently adopted SAF mandates, and Matti Lievonen, CEO of Asia-based SAF producer EcoCeres, predicted that China, Indonesia and Hong Kong would follow suit.
David Fisken, investment director at the Australian Trade and Investment Commission, said the Australian government, which does not have a mandate, was watching to see how the EU and UK’s requirements played out.
The US does not have a SAF mandate and under President Donald Trump the government has slashed tax credits available for SAF producers from $1.75 a gallon to $1.
Is the world’s big idea for greener air travel a flight of fancy?
SAF and energy security
SAF’s potential role in boosting energy security was a major theme of this week’s discussions as geopolitical tensions push the issue to the fore.
Marcella Franchi, chief commercial officer for SAF at France’s Haffner Energy, said the Canadian government, which has “very unsettling neighbours at the moment”, was looking to produce SAF to protect its energy security, especially as it has ample supplies of biomass to use as potential feedstock.
Similarly, German weapons manufacturer Rheinmetall said last year it was working on plans that would enable European armed forces to produce their own synthetic, carbon-neutral fuel “locally and independently of global fossil fuel supply chain”.
Scott said Australia needs SAF to improve its fuel security, as it imports almost 99% of its liquid fuels.
He added that support for Australian SAF production is bipartisan, in part because it appeals to those more concerned about energy security than tackling climate change.
The post Doubts over European SAF rules threaten cleaner aviation hopes, investors warn appeared first on Climate Home News.
Doubts over European SAF rules threaten cleaner aviation hopes, investors warn
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