Takeaways

• Sweden has introduced a national plan to boost domestic production of sustainable aviation and maritime fuels as EU climate rules tighten.
• The report warns that Europe may struggle to produce enough low-carbon fuel to meet future demand, increasing dependence on imports.
• Sweden is proposing financial support, risk-sharing tools, and stable regulations to attract investment in sustainable fuel projects.

The Swedish government is preparing to take a stronger role in expanding the country’s sustainable fuel supply, after a new national inquiry outlined plans to increase domestic production for the aviation and shipping sectors.

The report focuses on sustainable aviation fuel (SAF) and sustainable maritime fuel as Europe moves toward stricter climate regulations under ReFuelEU Aviation, FuelEU Maritime, and the EU Emissions Trading System.

Officials behind the inquiry warned that current European fuel production capacity may not be enough to meet mandatory climate targets from the 2030s onward. If supply remains limited, airlines and shipping companies could become heavily dependent on imported fuels, leaving them exposed to volatile prices and geopolitical risks.

The report noted that the maritime industry has slightly more flexibility in the short term. Shipping companies may still meet emissions targets through the use of LNG, onshore power systems, and improved energy efficiency measures until around 2035. FuelEU Maritime’s fleet pooling mechanism could also help operators manage compliance more effectively.

Read More: Delta Sustainability Push Accelerates with New Tech, Fuel Savings, and SAF Growth

However, uncertainty continues around renewable fuels of non-biological origin, including e-fuels. The European Union plans to introduce a 1% requirement for these fuels from 2030, but the report cautioned that EU production may not be ready in time. If supply shortages continue, the European Commission could reconsider the target, creating uncertainty for investors and developers.

The inquiry argues that Sweden is well-positioned to become a major producer of sustainable fuels. The country already has access to renewable electricity, biomass resources, and biogenic carbon dioxide, along with a strong industrial and innovation base.

Sweden has also gained an early advantage in sustainable aviation fuel adoption. In 2024, SAF made up 5.09% of fuel supplied at Swedish airports, significantly higher than the EU average. The report linked this progress to Sweden’s early blending mandate introduced in 2021, along with voluntary industry initiatives.

According to the inquiry, expanding local production could improve energy security, reduce reliance on imports, and create export opportunities for the wider European market.

Financing, however, remains one of the biggest obstacles.

Fuel producers typically require long-term purchase agreements lasting between 10 and 15 years before projects can secure financing. Airlines and shipping firms, meanwhile, are often unwilling to commit beyond one or two years due to uncertain fuel prices.

To address the gap, the report proposes production support schemes and public risk-sharing mechanisms.

One recommendation calls for Sweden to participate in the European Commission’s e-SAF Early Movers Coalition, which uses a double-sided auction system to connect fuel producers with buyers while reducing pricing risks. Germany has already committed €2 billion toward the initiative for the 2030–2039 period.

The inquiry also proposed a temporary national support system for bio-based SAF and maritime fuels produced from forest residues and other biomass sources. Officials believe this could help move projects from pilot stages into full commercial production.

In addition, the report urged Sweden’s National Debt Office to restart green credit guarantees that previously supported large renewable fuel and refinery projects.

The inquiry stressed that policy stability will be critical for future investment decisions. Sweden is expected to support existing EU climate targets during upcoming regulatory reviews rather than push for weaker rules.

Also Read: Global Carriers Unite in Fund to Expand Sustainable Jet Fuel Supply

The report also backed wider transport electrification, energy efficiency measures, and expanded onshore power infrastructure at ports.

For investors, airlines, shipping operators, and fuel developers, the message is becoming increasingly clear: Europe’s sustainable fuel market will require more than climate mandates alone. Long-term financing, government support, reliable buyers, and stable regulation will all be needed to scale production.

If Sweden’s proposals move forward after consultations, the country could emerge as a major supplier in Europe’s aviation and maritime decarbonization efforts.

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Source: ESG NEWS