2025 European Transportation & Biofuels Spending Outlook
Video Language
In this episode of Navigating the Currents of Change, host Shaheen Chohan, VP of Market Analytics at Industrial Info Resources, joins Jean-Baptiste Mauduit, European Alt Fuels & Chemical Processing Research Manager, to explore how the energy transition is reshaping transportation and refining. They discuss the policies driving investment, the challenges of scaling green hydrogen and sustainable aviation fuels, and the evolving role of traditional refineries in a low-carbon future.
[Intro] (00:00):
If you've been trying to understand what is driving the current rise in biofuel spending across Europe, and whether the pace of this will continue going forward, certainly in a market that continues to be shaped by higher construction cost inflation and trade tariff uncertainty, then this conversation will help connect the dots.
Shaheen Chohan (00:36):
Welcome to Navigating the Currents of Change. My name is Shaheen Chohan, and I'm the Vice President of Market Analytics at Industrial Info Resources, a global provider of energy and industrial infrastructure market intelligence for more than 40 years. In our podcast, we will be taking a closer look at some of the key themes and trends being seen as Europe continues to forge ahead with its goal of decarbonizing the transportation sector. And to help me dissect some of these, I am delighted to be joined by Jean-Baptiste Mauduit, who leads our European research for alternative fuels and chemical processing. Welcome, Baptiste.
Jean-Baptiste Mauduit (01:18):
Happy to be here, Shaheen.
Shaheen Chohan (01:21):
Now, obviously, decarbonization of the transportation sector has been very much a focus across Europe now, I guess for a good number of years, as it is globally. Before we talk about some of the specific spending trends in your industry, maybe you could just share with us what are some of the specific types of commodities that you and your team are researching?
Jean-Baptiste Mauduit (01:45):
Our researchers are tracking a broad range of biomass biofuel. For example, we track at the moment over 100 sustainable aviation fuel projects, SAF. We track as well over 300 biomethane projects worth around $88 billion, and we track as well biodiesel, ethanol, methanol, for around $7 billion. But beyond that, we are tracking as well biodiesel pathways to give our clients a better view on their commodities. We as well go over — we are closely monitoring the green hydrogen market. Green hydrogen being one of the feedstocks for fuel, and we know that it is one of the solutions to decarbonize transportation.
Shaheen Chohan (02:36):
Now, Baptiste, with many other renewable markets and sectors, policy support obviously clearly plays a big role in certainly supporting capital investments moving forward, certainly at the early stages as these new technologies are being deployed. What are some of the main policies in place that are driving capital spending across Europe?
Jean-Baptiste Mauduit (02:55):
So we have several policies in Europe. We have the ETS, the Emission Trading System, that puts a penalty on companies that emit more CO2 than they are allowed to. One strong example in transportation is ReFuelEU Aviation. It's part of the EU Fit for 55, and it requires fuel suppliers at EU airports to start blending a set share of sustainable aviation fuel into jet fuel from 2025, with a share increasing over time up to 2050. And this is already driving major investment in SAF production plants and feedstock supply chains.
Shaheen Chohan (03:34):
Now, Baptiste, as you highlighted there, sustainable aviation fuel is certainly a major component of the broader transportation decarbonization story. What are some of the current targets? But more importantly, do you actually think they are achievable?
Jean-Baptiste Mauduit (03:47):
So starting from 2025, as we saw, fuel suppliers at EU airports must begin to blend some sustainable aviation fuel into their jet fuel — so it's 2% from 2025. By 2035 it will be 20%, but 6% of it must be synthetic aviation fuel. And what we mean by synthetic aviation fuel is green hydrogen and captured CO2 — so this is the feedstock. And by 2050 it will be 70%, and 35% of it must be synthetic aviation fuel — again, green hydrogen and CO2.
So you ask me if it's realistic. The answer is, at the moment in Europe, we see a lot of green hydrogen projects being postponed or canceled. And even though many sustainable aviation fuel plants are in the pipeline, not many are operational. But at IIR, we are closely monitoring all the green hydrogen projects. So reaching the goal by 2050 of 35% synthetic aviation fuel will require a major scale-up in investment, infrastructure and political support to turn ambition into delivery.
Shaheen Chohan (05:06):
Now, beyond sustainable aviation fuel, are there any new emerging pockets of capital investment that you are starting to see, which you think could really start to open up and provide a new kind of pipeline of spending opportunity into the future?
Jean-Baptiste Mauduit (05:19):
Yeah, Shaheen. At the moment, we see a very strong capital investment in biomethane. But in Europe, we have had biomethane since the early 2000s. What actually is biomethane? Biomethane — you have organic waste, especially coming from farms. They are put into a big tank — the tank is named an anaerobic biodigester. Then from there, the gas comes out, and the gas is upgraded into biomethane. And since the Ukraine war, we will see an increase of units around 50%.
Shaheen Chohan (06:04):
So, Baptiste, what makes biomethane so special and valuable?
Jean-Baptiste Mauduit (06:10):
For me, it also produces bio-fertilizer and CO2, but it's a biogenic CO2. The leftover residue from the digestion is called digestate — it can be turned into bio-fertilizer and sent back to the farmer. So we kind of close a loop — we use the residue from the farm to produce biomethane, then turn it into bio-fertilizer and send it back to the farmer. As well, from it, we are doing the process of cleaning up the gas before it's sent into the grid. We can capture the CO2 — it's a high-grade CO2, and it's called biogenic CO2. And the CO2 can be used afterwards for the food industry, or even to produce fuel as one of the two feedstocks.
I think in IIR we are tracking over 300 projects in Europe. But as well, I would like to highlight something — in IIR we are trying to see trends before even they happen. For example, at the moment I can see some project reports — two or three project reports about e-methanol that turn into jet fuel. So a plant that now will start to produce fuel, and we see some of them instead use green hydrogen and CO2 to produce synthetic aviation fuel — they will produce the methanol, especially used in maritime transport, and then use the methanol as a feedstock to produce sustainable aviation fuel — not synthetic aviation fuel, but sustainable aviation fuel. So from now on we will start to attract awareness to these projects.
Shaheen Chohan (07:47):
Now, Baptiste, we obviously can't talk about decarbonization without talking about green hydrogen, and you've already sort of highlighted a few little snippets around what you and your researchers are tracking, particularly in that space. Could you just give us a little bit more detail about the levels of capital spending that you are seeing are currently active, but also what is the future pipeline of planned spending going forward in Europe?
Jean-Baptiste Mauduit (08:01):
Across Europe, we are currently tracking around $120 billion in CapEx investments related to green hydrogen, with approximately 800 projects underway or planned. The EU Fit for 55 package sets ambitious targets — by 2030, at least 42% of hydrogen use in industry must be renewable, increasing to 60% by 2035. Additionally, as we saw, by 2050, 70% of aviation fuel must be sustainable, and 35% synthetic aviation fuel. However, despite all those targets, we are seeing a wave of projects delayed or canceled across Europe. Based on current trends, we expect a market correction in the next 12 to 18 months, after which only the most viable, well-supported projects are likely to move forward.
Shaheen Chohan (08:59):
Now, one area of the clean hydrogen space that I think often gets neglected is blue hydrogen. Can you explain a little bit, before we start looking at some of the specific trends, the difference between the green and the blue hydrogen? And do you expect to see any kind of differences in the trends and the size, the pace of spending between these two particular commodities?
Jean-Baptiste Mauduit (09:22):
So green hydrogen is typically produced with what you call a steam methane reformer, so it's coming from natural gas — it emits a lot of CO2. The blue hydrogen, the only difference, is we capture the CO2 from the process and we store it. But the green hydrogen is different — the hydrogen is made from splitting the water molecule via electrolysis. The electrolyzers are powered entirely by renewable fuels like wind or sun. So the result is zero net CO2 emissions. But there is a cost — at the moment, green hydrogen production costs around 3 to 4 times more than gray or blue hydrogen. So even if at the moment in Europe we track many more green hydrogen projects, we expect blue hydrogen to move forward much more than green hydrogen.
Shaheen Chohan (10:23):
So, Baptiste, does that mean that you and your researchers are starting to see more carbon-capture-related projects being announced and planned across Europe?
Jean-Baptiste Mauduit (10:29):
Yes, we do. Right now, we are tracking over 200 carbon capture projects in Europe, representing around $17 billion. This reflects a clear and accelerating growth. Major oil and gas companies are under legal requirement to deliver large CO2 storage capacity by 2030, and more facilities than ever are operational or underway. While challenges like cost and regulatory delays remain, the overall momentum behind CCS is robust and set to keep rising over the next few years.
Shaheen Chohan (11:05):
Now, Baptiste, let's look at the other side of decarbonizing the transportation sector. Europe is obviously one of those markets — a very strong market in terms of electric vehicle adoption. Will the EV market and the expected future growth of adoption — do you think that could possibly impact the viability or the feasibility of some of the biofuel projects that you are starting to see being announced?
Jean-Baptiste Mauduit (11:30):
Europe is clearly leading in electric vehicle adoption, especially the passenger car segment, but it doesn't mean that biofuels are pushed aside. In fact, both technologies are likely to coexist, because they serve different parts of the transportation sector. While electric vehicles are ideal for city commuter use, biofuels remain essential for areas harder to electrify, like aviation, shipping, and long-haul trucking. So rather than competing, electric vehicles and biofuel are part of a broader, complementary strategy to decarbonize transport across all sectors.
Shaheen Chohan (12:13):
And finally, I would like to get your thoughts on the outlook for traditional petroleum refineries. Obviously across Europe, refineries have really struggled — certainly over, as much as I think the last decade — certainly to try and compete with the newer, more complex refineries in the US, and certainly the Middle East, and even to some extent in Southeast Asia. Now, as the transportation sector starts to decarbonize, and clearly there is still a lot more pressure on European refiners from these big refining centers in the US and Middle East — what can the traditional refiners do to remain relevant in an increasingly low-carbon future outlook?
Jean-Baptiste Mauduit (12:55):
As you know, in Europe the traditional refining sector is shrinking fast. Grangemouth in Scotland shut down last spring, and major players like BP are selling off facilities in places like Germany. Now it's not all doom — some refineries are finding a way to adapt by mixing in renewable feedstock, like vegetable oil or used cooking oil, alongside crude in existing plants. Plus, I think we are around 26 refineries in Europe that produce sustainable aviation fuel to meet the EU mandates, showing that there is real momentum towards cleaner transportation fuels, even if it's a tough market.
Shaheen Chohan (13:41):
So that brings us to the conclusion of our podcast. A very big thanks to you for sharing your insights and perspectives today — very much appreciated, really enjoyed the discussion. And also a very big thanks to all of you who've tuned in. If any of you have any further questions about any of the points discussed today, then please do reach out to myself or to Baptiste via the contact details that you can see here. Thanks again for joining us. I hope we have helped you all better navigate some of those currents of change that we're seeing.
If you've been trying to understand what is driving the current rise in biofuel spending across Europe, and whether the pace of this will continue going forward, certainly in a market that continues to be shaped by higher construction cost inflation and trade tariff uncertainty, then this conversation will help connect the dots.
Shaheen Chohan (00:36):
Welcome to Navigating the Currents of Change. My name is Shaheen Chohan, and I'm the Vice President of Market Analytics at Industrial Info Resources, a global provider of energy and industrial infrastructure market intelligence for more than 40 years. In our podcast, we will be taking a closer look at some of the key themes and trends being seen as Europe continues to forge ahead with its goal of decarbonizing the transportation sector. And to help me dissect some of these, I am delighted to be joined by Jean-Baptiste Mauduit, who leads our European research for alternative fuels and chemical processing. Welcome, Baptiste.
Jean-Baptiste Mauduit (01:18):
Happy to be here, Shaheen.
Shaheen Chohan (01:21):
Now, obviously, decarbonization of the transportation sector has been very much a focus across Europe now, I guess for a good number of years, as it is globally. Before we talk about some of the specific spending trends in your industry, maybe you could just share with us what are some of the specific types of commodities that you and your team are researching?
Jean-Baptiste Mauduit (01:45):
Our researchers are tracking a broad range of biomass biofuel. For example, we track at the moment over 100 sustainable aviation fuel projects, SAF. We track as well over 300 biomethane projects worth around $88 billion, and we track as well biodiesel, ethanol, methanol, for around $7 billion. But beyond that, we are tracking as well biodiesel pathways to give our clients a better view on their commodities. We as well go over — we are closely monitoring the green hydrogen market. Green hydrogen being one of the feedstocks for fuel, and we know that it is one of the solutions to decarbonize transportation.
Shaheen Chohan (02:36):
Now, Baptiste, with many other renewable markets and sectors, policy support obviously clearly plays a big role in certainly supporting capital investments moving forward, certainly at the early stages as these new technologies are being deployed. What are some of the main policies in place that are driving capital spending across Europe?
Jean-Baptiste Mauduit (02:55):
So we have several policies in Europe. We have the ETS, the Emission Trading System, that puts a penalty on companies that emit more CO2 than they are allowed to. One strong example in transportation is ReFuelEU Aviation. It's part of the EU Fit for 55, and it requires fuel suppliers at EU airports to start blending a set share of sustainable aviation fuel into jet fuel from 2025, with a share increasing over time up to 2050. And this is already driving major investment in SAF production plants and feedstock supply chains.
Shaheen Chohan (03:34):
Now, Baptiste, as you highlighted there, sustainable aviation fuel is certainly a major component of the broader transportation decarbonization story. What are some of the current targets? But more importantly, do you actually think they are achievable?
Jean-Baptiste Mauduit (03:47):
So starting from 2025, as we saw, fuel suppliers at EU airports must begin to blend some sustainable aviation fuel into their jet fuel — so it's 2% from 2025. By 2035 it will be 20%, but 6% of it must be synthetic aviation fuel. And what we mean by synthetic aviation fuel is green hydrogen and captured CO2 — so this is the feedstock. And by 2050 it will be 70%, and 35% of it must be synthetic aviation fuel — again, green hydrogen and CO2.
So you ask me if it's realistic. The answer is, at the moment in Europe, we see a lot of green hydrogen projects being postponed or canceled. And even though many sustainable aviation fuel plants are in the pipeline, not many are operational. But at IIR, we are closely monitoring all the green hydrogen projects. So reaching the goal by 2050 of 35% synthetic aviation fuel will require a major scale-up in investment, infrastructure and political support to turn ambition into delivery.
Shaheen Chohan (05:06):
Now, beyond sustainable aviation fuel, are there any new emerging pockets of capital investment that you are starting to see, which you think could really start to open up and provide a new kind of pipeline of spending opportunity into the future?
Jean-Baptiste Mauduit (05:19):
Yeah, Shaheen. At the moment, we see a very strong capital investment in biomethane. But in Europe, we have had biomethane since the early 2000s. What actually is biomethane? Biomethane — you have organic waste, especially coming from farms. They are put into a big tank — the tank is named an anaerobic biodigester. Then from there, the gas comes out, and the gas is upgraded into biomethane. And since the Ukraine war, we will see an increase of units around 50%.
Shaheen Chohan (06:04):
So, Baptiste, what makes biomethane so special and valuable?
Jean-Baptiste Mauduit (06:10):
For me, it also produces bio-fertilizer and CO2, but it's a biogenic CO2. The leftover residue from the digestion is called digestate — it can be turned into bio-fertilizer and sent back to the farmer. So we kind of close a loop — we use the residue from the farm to produce biomethane, then turn it into bio-fertilizer and send it back to the farmer. As well, from it, we are doing the process of cleaning up the gas before it's sent into the grid. We can capture the CO2 — it's a high-grade CO2, and it's called biogenic CO2. And the CO2 can be used afterwards for the food industry, or even to produce fuel as one of the two feedstocks.
I think in IIR we are tracking over 300 projects in Europe. But as well, I would like to highlight something — in IIR we are trying to see trends before even they happen. For example, at the moment I can see some project reports — two or three project reports about e-methanol that turn into jet fuel. So a plant that now will start to produce fuel, and we see some of them instead use green hydrogen and CO2 to produce synthetic aviation fuel — they will produce the methanol, especially used in maritime transport, and then use the methanol as a feedstock to produce sustainable aviation fuel — not synthetic aviation fuel, but sustainable aviation fuel. So from now on we will start to attract awareness to these projects.
Shaheen Chohan (07:47):
Now, Baptiste, we obviously can't talk about decarbonization without talking about green hydrogen, and you've already sort of highlighted a few little snippets around what you and your researchers are tracking, particularly in that space. Could you just give us a little bit more detail about the levels of capital spending that you are seeing are currently active, but also what is the future pipeline of planned spending going forward in Europe?
Jean-Baptiste Mauduit (08:01):
Across Europe, we are currently tracking around $120 billion in CapEx investments related to green hydrogen, with approximately 800 projects underway or planned. The EU Fit for 55 package sets ambitious targets — by 2030, at least 42% of hydrogen use in industry must be renewable, increasing to 60% by 2035. Additionally, as we saw, by 2050, 70% of aviation fuel must be sustainable, and 35% synthetic aviation fuel. However, despite all those targets, we are seeing a wave of projects delayed or canceled across Europe. Based on current trends, we expect a market correction in the next 12 to 18 months, after which only the most viable, well-supported projects are likely to move forward.
Shaheen Chohan (08:59):
Now, one area of the clean hydrogen space that I think often gets neglected is blue hydrogen. Can you explain a little bit, before we start looking at some of the specific trends, the difference between the green and the blue hydrogen? And do you expect to see any kind of differences in the trends and the size, the pace of spending between these two particular commodities?
Jean-Baptiste Mauduit (09:22):
So green hydrogen is typically produced with what you call a steam methane reformer, so it's coming from natural gas — it emits a lot of CO2. The blue hydrogen, the only difference, is we capture the CO2 from the process and we store it. But the green hydrogen is different — the hydrogen is made from splitting the water molecule via electrolysis. The electrolyzers are powered entirely by renewable fuels like wind or sun. So the result is zero net CO2 emissions. But there is a cost — at the moment, green hydrogen production costs around 3 to 4 times more than gray or blue hydrogen. So even if at the moment in Europe we track many more green hydrogen projects, we expect blue hydrogen to move forward much more than green hydrogen.
Shaheen Chohan (10:23):
So, Baptiste, does that mean that you and your researchers are starting to see more carbon-capture-related projects being announced and planned across Europe?
Jean-Baptiste Mauduit (10:29):
Yes, we do. Right now, we are tracking over 200 carbon capture projects in Europe, representing around $17 billion. This reflects a clear and accelerating growth. Major oil and gas companies are under legal requirement to deliver large CO2 storage capacity by 2030, and more facilities than ever are operational or underway. While challenges like cost and regulatory delays remain, the overall momentum behind CCS is robust and set to keep rising over the next few years.
Shaheen Chohan (11:05):
Now, Baptiste, let's look at the other side of decarbonizing the transportation sector. Europe is obviously one of those markets — a very strong market in terms of electric vehicle adoption. Will the EV market and the expected future growth of adoption — do you think that could possibly impact the viability or the feasibility of some of the biofuel projects that you are starting to see being announced?
Jean-Baptiste Mauduit (11:30):
Europe is clearly leading in electric vehicle adoption, especially the passenger car segment, but it doesn't mean that biofuels are pushed aside. In fact, both technologies are likely to coexist, because they serve different parts of the transportation sector. While electric vehicles are ideal for city commuter use, biofuels remain essential for areas harder to electrify, like aviation, shipping, and long-haul trucking. So rather than competing, electric vehicles and biofuel are part of a broader, complementary strategy to decarbonize transport across all sectors.
Shaheen Chohan (12:13):
And finally, I would like to get your thoughts on the outlook for traditional petroleum refineries. Obviously across Europe, refineries have really struggled — certainly over, as much as I think the last decade — certainly to try and compete with the newer, more complex refineries in the US, and certainly the Middle East, and even to some extent in Southeast Asia. Now, as the transportation sector starts to decarbonize, and clearly there is still a lot more pressure on European refiners from these big refining centers in the US and Middle East — what can the traditional refiners do to remain relevant in an increasingly low-carbon future outlook?
Jean-Baptiste Mauduit (12:55):
As you know, in Europe the traditional refining sector is shrinking fast. Grangemouth in Scotland shut down last spring, and major players like BP are selling off facilities in places like Germany. Now it's not all doom — some refineries are finding a way to adapt by mixing in renewable feedstock, like vegetable oil or used cooking oil, alongside crude in existing plants. Plus, I think we are around 26 refineries in Europe that produce sustainable aviation fuel to meet the EU mandates, showing that there is real momentum towards cleaner transportation fuels, even if it's a tough market.
Shaheen Chohan (13:41):
So that brings us to the conclusion of our podcast. A very big thanks to you for sharing your insights and perspectives today — very much appreciated, really enjoyed the discussion. And also a very big thanks to all of you who've tuned in. If any of you have any further questions about any of the points discussed today, then please do reach out to myself or to Baptiste via the contact details that you can see here. Thanks again for joining us. I hope we have helped you all better navigate some of those currents of change that we're seeing.
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*This episode is brought to you by Industrial Info's Latin American Office in Argentina.