Environmental performance
Market readiness
Cost-effectiveness
Operational reliability
Regulatory readiness
Technological maturity
Energy density
Infrastructure compatibility
Evolution of transport fuels
Aviation
Learn more
Alternative fuels readiness and adoption potential
Maritime
Road transport
High
Medium
Low
Case studies
Source: KPMG analysis, “Fueling the energy transition” (2024)
Further detail
Road transport accounts for
45%
nearly
INFOGRAPHIC
Promising: Natural gas, LPG, and biofuels (first-generation HVO and renewable diesel) Emerging alternatives: Methanol and Dimethyl Ether (DME)
Adoption readiness
It may not be one versus the other. In the race towards decarbonization, it is likely that all low-carbon fuels will find a place in the energy transition journey. The choice of technology for different countries and players will depend on the resources available, policy push, facilitative supply chains, availability of infrastructure, ease of implementation, and the availability and scale of investments.
Global Co-Lead Climate Change & Decarbonization, KPMG International and Partner and Lead, Renewable Energy
Previous detail
Download the report
Accelerating diversification
Challenges
Opportunities
As regulations tighten for this sector, alternative-fuels adoption needs to accelerate. In the near term this means more drop-in replacements (biofuels) or switching to readily available alternatives such as LNG and CNG.
High production costs Limited infrastructure Regulatory uncertainties E-fuels (renewable pathways) face readiness and cost challenges
Immediate emission reductions with biofuels and natural gas Competitive edge and preparation for stricter regulations
Considerations
Diesel
Biofuels
Dimethyl Ether
Methanol
Natural gas (LNG and CNG)
E-fuels (renewable pathways)
Hydrogen
Electric
Propane
Source: International Energy Agency (IEA), "World Energy Outlook 2023" (October 2023)
Anvesha Thakker
KPMG in India
of global oil demand
Bio-SAF has the potential to reduce carbon emissions in the aviation sector
compared to traditional jet fuel.
65%
by
Promising: Bio-Sustainable Aviation Fuel (SAF) and E-fuels (renewable pathways)
Policy makers, the energy value chain, airlines, banks and lessors, each can point to what the others should be doing more of to accelerate the transition. But there are relatively low risk steps each can be more adventurous with today, regardless of what the others do.
Partner, Strategy KPMG in Ireland
Soaring sustainability
Finding economic ways to transition to net zero cost effectively is imperative for this sector. To mitigate further emissions for growth, several measures will be needed, such as the greater use of alternative fuels, enhancements to air frame designs and engine technologies, operational optimizations, and demand-management solutions.
High costs and scalability issues Supply chain and feedstock sustainability concerns Regulatory readiness for E-fuels (renewable pathways)
Position airlines as sustainability leaders Meet regulatory demands through investment and collaboration
Conventional ATF
Bio-SAF
Source: IATA, "Net zero 2050: sustainable aviation fuels" (May 2024)
Chris Brown
Traditional jet fuel
of fuels used by global maritime industry are fossil fuels:
100%
Almost
High readiness: Natural gas (CNG and LNG) Promising alternatives: Methanol and ammonia
Global partnerships are important for the commercial and public transportation sectors. The intention to develop green freight corridors which bring together maritime, aviation and trucking solutions to develop more sustainable transport are now crucial to meet net zero.
Global Head of Shipping
Navigating cleaner waters
The IMO introduced regulations to reduce CO2 emissions, as an average across international shipping, by at least 40% by 2030.
High initial investment costs Infrastructure modifications needed Safety concerns
Significant emission reductions and operational cost savings Leverage regulatory incentives for early adopters
Conventional VLSFO
Low-carbon ammonia
Low-carbon methanol
Source: Global Maritime Forum, “The shipping industry’s fuel choices on the path to net zero” (April 2023)
Monique Giese
KPMG in Germany
Heavy fuel oil (HFO)
Light fuel oil (LFO)
and some marine gas oil (MGO).
Source: IMO, “2023 IMO Strategy on Reduction of GHG Emissions from Ships,” (July 2023)
Click the links below to find out how these industries are adopting alternative fuels across the globe.
World Energy began Bio-SAF production in 2016 at its Paramount, California, facility. The organization initially supplied fuel to Los Angeles International Airport prior to supplying additional California airports. International producer Neste began supplying Bio-SAF to San Francisco International Airport in 2020 before expanding to other California airports in 2021 and 2022, as well as Aspen/Pitkin County Airport and Telluride Regional Airport, both in Colorado. Montana Renewables LLC began production in partnership with Shell at an existing petroleum production plant in 2023, supplying fuel to several partner airlines.
Airport fueling
Trucking manufacturers like Volvo are investing in various alternative-fuel operated trucks. Volvo offers battery, fuel cell and LNG powered trucks and is researching DME as a fossil fuel alternative. It estimates that by 2030, 50 percent of all Volvo trucks sold in Europe will be electric, using either battery or fuel cell technology.
Trucking
Shipping organizations are exploring other, more innovative alternative fuels. Over the past few years, Unifeeder, a Danish shipping company, has participated in the world’s first maritime trial of Synthetic Natural Gas (SNG) The SNG fuel is a synthetic form of LNG that is carbon-neutral and generated entirely from renewable energy. Using a blend of 20 tons SNG and 20 tons conventional LNG, the “ElbBlue” is now saving about 56 tons of carbon output on its voyages compared to using LNG.
Maritime shipping in Europe
Source: Volvo website, "FAQ about electric trucks", Accessed 15 May 2024
Source: US Department of Energy website, “Sustainable aviation fuel”, Accessed May 14, 2024
Source: Unifeeder website, “Zero CO2 emissions with renewable SNG” (September 20, 2021)
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World Energy began SAF production in 2016 at its Paramount, California, facility. The organization initially supplied fuel to Los Angeles International Airport prior to supplying additional California airports. International producer Neste began supplying SAF to San Francisco International Airport in 2020 before expanding to other California airports in 2021 and 2022, as well as Aspen/Pitkin County Airport and Telluride Regional Airport, both in Colorado. Montana Renewables LLC began production in partnership with Shell at an existing petroleum production plant in 2023, supplying fuel to several partner airlines.
Trucking manufacturers like Volvo are investing in various alternative-fuel operated trucks. Volvo offers battery, fuel cell and LNG powered trucks and is researching DME as a fossil fuelalternative. It estimates that by 2030, 50 percent of all Volvo trucks sold in Europe will be electric, using either battery or fuel cell technology.
Source: Volvo.com
Source: “Sustainable aviation fuel,” US Department of Energy
Source: “Zero CO2 emissions with renewable SNG”, Unifeeder.com, September 29, 2021
Maritime shipping
SAF has the potential to reduce carbon emissions in the aviation sector
80%
Promising: Sustainable Aviation Fuel (SAF) and synthetic fuels (PtL).
Chris Brown Partner, Strategy KPMG in Ireland
Download the full report to learn more
High costs and scalability issues Supply chain and feedstock sustainability concerns Regulatory readiness for synthetic fuels
Synthetic fuels (renewable pathways)
Maritime and shipping
Road transportation
Case in point
0
1
2
3
4
5
6
Performance efficiency
of the energy needs of the global transport sector are still met by traditional fuels such as gasoline and diesel.
Alternative fuels readiness factors
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Natural gas (LNG/CNG)
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Ammonia
LPG (Propane)
SAF
Synthetic fuels
91%
Over
Environmental performance efficiency
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XX%
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Fuel 1
Fuel 2
Fuel 3
Quote
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Maritime & Shipping
Consideration
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More detail
The barriers to scaling renewables
Emerging markets
Planning and permitting
Investment in grid infrastructure
Critical raw minerals
Supply chain issues
Market structures
Accelerating storage solutions
Access to capital
Nature and biodiversity
Social license to operate (SLO)
Which relate to specific investment risks for such markets including currency, land ownership, policy certainty and a range of other factors.
How to use
Including the capacity and skills needed to build out renewables faster, and the risks around mineral extraction, processing, and transportation.
That support low carbon flexibility.
Solutions that support renewable energy storage and on-demand usage. These require advanced technologies such as energy storage systems, smart grid infrastructure and demand-side management systems.
Where the combination of high interest rates and various other risks have slowed down availability of new investment capital.
Where the wider community and other social issues need to be considered in the context of any renewable development project.
While nature and biodiversity depend on a rapid expansion of renewables to limit temperature increases, we must acknowledge the potential negative impacts of renewable development and take steps to alleviate or avoid them.
Delays timely implementation of renewable projects.
That supports the integration of renewable energy sources and a higher resilience of the power grid.
For renewable energy technology whose availability is subject to geological, geopolitical, and governance challenges.
Critical raw materials
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Europe
Earlier this year, the European Union’s (EU) Corporate Sustainability Reporting Directive (CSRD) went into effect.
companies to report information about the environmental impacts of their operations, including supply chain, human rights, diversity, and other social metrics.
The CSRD requires about
50,000
Recommendations
Insights
of renewable energy industry stakeholders surveyed cited supply chain risks as a highly significant barrier to scaling renewables.
61%
Ensure a skilled workforce.
03
Avoid technology obsolescence.
02
Diversify manufacturing of renewable equipment.
01
Our recommendations include:
The renewable energy industry has an opportunity to think expansively and act decisively to proactively overcome supply chain challenges.
Download the full report below to learn more.
Commitment to transparency.
04
The COVID-19 pandemic highlighted the challenges to scaling renewables that arise when supply chains are disrupted. Higher prices and lack of access to equipment have delayed or cancelled many planned projects.
Introduce incentives for long-duration storage.
07
Stronger carbon price signals.
06
Pursue grid access and connection reform.
05
Greater interconnection.
Utilize firm power markets.
Greater use of demand-side response.
Introducing emissions limits into capacity markets.
Outdated market structures limit the rapid growth of renewables and their critical role in meeting climate targets.
of renewable energy stakeholders surveyed agreed that market structures and design were a highly significant obstacle to scaling renewables.
According to
75%
There are promising reforms and advances worldwide that can provide guidance and inspiration to accelerate deployments of renewables.
A transition to net zero requires innovative market designs that result in ample zero-carbon flexibility capacity.
Finland | Germany | Sweden
These designs encourage the construction of flexible generators:
Generators are kept in reserve to be available to meet demands of emergencies, like extreme heat or cold, or widespread outages.
A transition to net zero would require innovative market designs that result in ample low-carbon flexible capacity.
These markets use different designs to encourage the construction of flexible generators.
Generators are kept in reserve to meet demand during emergencies, like extreme heat or cold or widespread outages.
Collaborate to close the talent gap.
Invest in tackling supply chain constraints.
Prioritize speedy grid connection.
Source: Electricity Market Report 2023, International Energy Agency (IEA), February 2023
Energy storage growth is not sufficient to provide the flexibility a tripling of renewable energy capacity will need.
of global electricity generation is produced with fossil fuels.
– an amount the IEA says will have to fall below
by 2030 for the world to reach net-zero carbon emissions.
60%
30%
Provide resources to advance storage technologies.
Vast advances in energy storage are necessary for deployments of renewable energy to reach the scale required to make periods of 100-percent renewable electricity production more the norm than the exception.
Spain
9 hour
For a
stretch in May 2023, Spain’s electric grid ran entirely on renewable energy.
Government-industry collaboration and investment will help to tackle storage challenges. There are immediate steps stakeholders could pursue to help scale storage deployment.
Government-industry collaboration and investment will help to tackle storage challenges. There are other immediate steps that stakeholders should pursue to help scale storage deployment.
Tremendous advances in energy storage are necessary for deployments of renewable energy to reach the scale required to make periods of 100-percent renewable electricity production more the norm than the exception.
For
in May of 2023, Spain’s electric grid ran entirely on renewable energy.
9 hours
Despite the many challenges to renewables financing, the industry has significant underlying strength.
East Asia
Several East Asian strategics and financials are seeking to expand their capacity to serve their booming domestic markets by pursuing mergers and acquisitions (M&A) in Europe across renewable platforms and infrastructure providers.
Funding the energy transition requires an enormous amount of capital.
of renewable energy stakeholders surveyed say that access to investment capital poses a moderately significant barrier to scaling renewables.
48%
Strategic planning on grid connection to remove massive inefficiencies.
Targeted support to opening more markets for renewables.
Scaling floating offshore wind so the levelized cost of capital comes down.
Renewables need to integrate more with firm power and traded propositions to drive more value from electrons.
Governments are unlikely to return to flat subsidies, and instead should focus on specific areas, including:
People who feel their culture, economic livelihoods, local ecosystems, identities, and way-of-life are threatened by renewable energy projects will push back. This is especially true when they perceive that projects are being imposed on them by outsiders.
Australasia
guide for institutional investors.
Leveraging unique expertise, KPMG Banarra, Human Rights & Social Impact, partnered with the Responsible Investment Association Australasia to create a
A social license to operate that proactively engages communities is critical to ensure they receive their fair share of benefits and have agency to mitigate or eliminate negative impacts of renewable development.
of renewable energy stakeholders surveyed say that a social license to operate is a significant barrier to scaling renewables.
16%
A social license to operate requires early engagement and clear community benefits. Principles should guide the work of everyone seeking to rapidly scale renewable energy.
Make community partnership the goal.
Facilitate community engagement.
Proactively manage expectations.
Ensure benefits are shared.
This guide enables an innovative approach to assessing climate risks through the lens of human rights, thereby offering invaluable insights for the social license to operate strategy.
of renewable energy stakeholders surveyed agreed that addressing clean energy projects' nature and biodiversity impacts is a highly significant barrier to scaling renewables.
10%
There is an abundance of knowledge and a growing list of tools to enable rapid renewable development and conservation to progress in harmony.
Publicly declare a commitment to nature and biodiversity.
Prioritize nature and biodiversity at the beginning of projects.
As imperative as it is to accelerate the deployment of renewables, it’s also essential to acknowledge that clean energy development can negatively impact nature and biodiversity and even be counterproductive in limiting warming.
United States
In the United States, one organization developed a framework with six principles to guide solar siting and design to reduce impacts on nature, including avoiding
areas of high native biodiversity, preferencing the use of degraded lands, protecting water quality and avoiding erosion. The organization also works closely with state regulators and solar developers to locate projects on lands that aren’t critical to biodiversity.
Seven steps will play a critical role
Stakeholders can follow a seven step action plan to capitalize on the vast opportunity in emerging markets.
While the energy transition in developed economies describes a shift from fossil fuels to renewables, the ideal transition in many emerging economies is from little or no access to any energy whatsoever to the many economic, health, and educational benefits that flow from reliable supplies of clean energy.
Laser focused reforms, including regulatory, tax and public awareness.
Africa
Africa’s ample and consistent sunshine means:
of the world’s best solar resources, according to the IEA.
Despite that potential, the continent only has around one percent of global installed solar capacity.
It has
of renewable energy industry stakeholders surveyed cite emerging market risks as a moderately significant barrier to scaling renewables.
Facilitate increased private finance.
Leverage local partners to navigate uncertainty.
Enhance the roles of Multilateral Development Banks (MDBs).
Create a clear vision and supportive policies.
Develop a strategy to manage stranded assets.
Embrace the goal of shared prosperity.
According to the IEA, for example:
40
African countries currently have renewable targets in their Paris Agreement Nationally Determined Contributions (NDCs).
have a stated policy to reach universal electrification.
25
But only
Source: International Energy Agency (IEA), “Africa Energy Outlook 2022,” 2022
Despite that potential, the continent only has around one percent of installed solar capacity.
of renewable energy stakeholders surveyed cite emerging market risks as a highly significant barrier to scaling renewables.
Enhance the roles of multilateral development banks.
Shortening the time needed to move projects through mandatory approval processes is seen by leaders as an essential step towards scaling renewables sufficiently to meet 2030 greenhouse gas emissions reduction targets.
United Kingdom
Growing awareness about the need to reform renewables planning and permitting is translating into encouraging action:
As more nations and permitting jurisdictions consider reforms, their efforts can be guided and improved by certain principles.
Highlight new forms of incentive.
Loudly prioritize renewables.
Ensure simplicity and give decisionmakers the expertise they need.
Work together towards a clear target.
of renewable energy stakeholders surveyed believe that planning and permitting processes are a highly significant barrier to scaling renewables.
44%
In the UK, several recommendations to streamline permitting have been proposed to the nation’s National Grid Electricity Operator, Office of Gas and Electricity Markets (Ofgem), and other government agencies.
These include reforming the interconnection queue to prioritize the 330 gigawatts of renewables currently awaiting a grid connection to move forward.
Another proposal would amend the UK’s National Planning Policy Framework (NPPF) to allow onshore wind and solar projects that have garnered “sufficient” local support to move ahead.
There is an opportunity to reduce regulatory barriers that prevent critical grid infrastructure investments while also incentivizing the addition of renewables.
The Federal Energy Regulatory Commission (FERC), in the United States, implemented a series of regulations to incentivize the development of a more modern and resilient grid infrastructure.
FERC Order 841, for example, requires regional transmission organizations (RTOs) and independent system operators (ISOs) to establish rules for energy storage systems to participate in wholesale energy markets.
of renewable energy stakeholders surveyed believe that lack of new investment in grid infrastructure is a highly significant barrier to scaling renewables.
The following principles can guide grid investment rules, policies, and regulatory activities.
Embrace education.
Double down on energy efficiency.
Enlist customers in flexible demand response.
Foster innovation and new technologies to modernize grid infrastructure.
Commit to collaboration with other stakeholders in the energy system.
47%
Available quantities of raw materials and the capacity of mining companies to extract them are not the only challenges. Geopolitical and supply chain issues are also prevalent.
Australia
All hold dominant positions in mining materials like lithium, copper, graphite, nickel, platinum, iridium, and rare earth minerals.
Beyond innovations and improvements in mining operations to increase production, other solutions can help ensure that the energy transition has the raw materials it requires – but a more sustainable approach is needed.
Invest in everything.
Take advantage of existing circular economy frameworks and resources.
Design products to last longer and be recycled and reused.
Develop supply chains and business models a circular economy needs.
Invest in circular economy and new production.
Chile
China
The Democratic Republic of Congo
South Africa
Tripling the scale of renewable deployments depends on the success of one of the globe’s most extractive industries:
of renewable energy stakeholders surveyed agree that current market challenges are causing substantial delays and, in some cases, abandonment of renewable energy projects.
84%
mining
