Transport is the largest oil-consuming sector today, it accounts for a fifth of global energy demand and the sector is responsible for a quarter of energy-related CO₂ emissions. More than 95 per cent of transport sector emissions come from oil, and transport demand is projected to increase significantly through to 2040 as a result of both population and economic growth.


Road transport

Road transport accounts for nearly half of today’s global oil demand and 75 per cent of emissions from the transport sector.

No wonder we’re focusing so intently on cutting emissions from road transport – there’s much to do here.

The three main tools for cutting transport emissions have been biofuels, electrification and efficiency improvements. And they’ll all continue to play an important role. A further diversification of powertrain solutions, for example battery electric vehicles and plug-in hybrids, will continue to be developed alongside further improvements in conventional powertrain technologies. However, biofuels, electrification and efficiency improvements will not alone be enough if we are to decarbonise sufficiently in the transport sector.

When considering biofuels and electric vehicles, there are two very important points to remember. First and foremost, both battery-stored electricity and biofuels can – and should – play a role in reducing emissions from the transport sector. Secondly, both forms of energy have their limitations. Biofuel production will in many cases compete with other forms of land use, and it’s unrealistic and even unwise to work toward a transport sector fuelled solely with bioenergy. The use of battery-stored electricity in the transport sector is limited by factors like weight, distance and too slow and cumbersome charging solutions. The flexibility and energy density offered by liquid fuels is unmatched, and the more energy-demanding segments of the transport sector will need liquid energy in the unforeseeable future. This is where other low-carbon liquid fuels like synthetic fuels can play an important role.

Consumer choices & SUVs: Consumer choice plays a big role in how future road transport will develop. Many factors influence the decisions people make about buying a car, and what type. Recently there’s been a marked rise in sales of sports utility vehicles, which on average consume around 25 per cent more fuel than medium-size cars. They can also be challenging to electrify fully because of power and battery size requirements. Additionally, the recharging infrastructure plays an important role in how fast electric mobility grows.

Electric vehicles are best suited to urban and densely populated areas and light- to mid-duty freight. On the other hand, renewable fuels work best in replacing liquid fossil fuels in long-distance and heavy-duty vehicles. Heavy duty vehicles are most difficult to electrify, especially in the Nordics, where the vehicles are large, the distances long and the temperatures low.


In aviation, the number of flight passengers is expected to grow 4 per cent annually during the next 20 years, from 4.2 billion in 2018 to 10 billion passengers in 2040. That amounts to some 90 million departures. Energy efficiency is expected to improve more slowly than transportation need, meaning that if we continue on the current path, the fuel demand is estimated to grow with 200 per cent over the next 30 years. For now, fossil jet fuel remains the only energy solution for commercial air travel.

Cutting emissions in the aviation sector is a huge challenge, and one we’ve not solved.

The distillation curve challenge explained in chapter 5, illustrates that the growing demand for jet fuel increases the overall demand for crude oil, which in turn leads to an increased supply and production of other petroleum products.

In the coming decade, decarbonisation in the aviation sector will happen through energy efficiency improvements and the use of biofuels and synthetic fuels. Despite recent hype, electrification of aviation is very challenging and not deemed a likely pathway for reducing emissions before 2030. Biofuels for aviation have the same feedstock limitations as biofuels in other sectors, meaning that all sectors using biofuels to reduce emissions compete over a limited solution.

St1 believes that it would be wise to prioritise the use of biofuels in those segments of the transport sector that:

  • Do not have other options to decarbonise;
  • Drive up the overall demand for crude oil, i.e. the distillation curve challenge (see chapter5)


Maritime shipping represents 80–90 per cent of international trade, and virtually all commercial shipping activities are powered by fossil fuels. International shipping is responsible for 2–3 per cent of all global greenhouse gas emissions and roughly 10 per cent of the transport sector emissions. As global GDP is expected to grow, the demand for shipping will grow at a similar rate.

In 2018, the International Maritime Organisation (IMO) adopted a comprehensive and ambitious strategy for emission reduction, with the aim of halving emissions by 2050. The stated policies and the currently available solutions therefore leave us with a large emission gap.

A global sulphur cap was introduced on the 1st of January 2020, banning the use of marine fuel with a high sulphur content, but this is far from enough to achieve the IMO stated goal of a 50 per cent emissions reduction by 2050. Decarbonisation of the deep-sea segment is particularly challenging, and it generates 80 per cent of the global fleet’s CO₂ emissions.

Global sulphur cap: The sulphur cap is expected to have a major impact on the fuels market in 2020 – not only in the marine sector. There are conflicting views whether the global refining capacity will be sufficient in 2020 to supply enough low sulphur products. Most vessels are expected to either switch to low-sulphur fuel oils, LNG, or retrofit scrubbing systems to reduce sulphur dioxide emissions.

The future marine sector will be characterised by an increasing diversity in fuel choices. A wider range of alternative and carbon-neutral fuels will find its place alongside traditional bunker fuels and more established alternatives like LNG. The alternatives include biofuels and synthetic fuels such as ammonia, methanol and hydrogen. Electric ships powered by batteries are viable for short distances, like ferries travelling up to 100 km.


The global transport sector is dominated by fossil fuels, and biofuels only account for around 3.5 per cent of global transport fuel demand. The global car fleet consists of less than 1 per cent electric vehicles, and the main fuels in the road sector are gasoline and diesel. Low quality residual fuels dominate the maritime sector, and conventional kerosene the aviation sector. To reach the goal of having 10 per cent of global transport fuel demand covered by biofuels, the current production must be tripled to 280 Mtoe by 2030. Global biofuel production is not increasing fast enough to meet this goal.

Most biofuels are produced by using conventional production methods and feedstocks. Feedstocks used in biofuels are often the same as those used in agricultural food production, and the limits of arable land naturally limits the scalability of biofuels as a comprehensive solution for the transport sector.

Advanced Biofuels

So called advanced biofuels are getting more interesting, as they can help us avoid the concerns mentioned above. Advanced biofuels are produced from non-food feedstocks that don’t compete with food and feed crops for agricultural land. Commercial scale deployment of advanced technologies is crucial in enabling wider feedstock pool in otherwise limited feedstock availability. However, additionality of biomass must be ensured before utilization.

Technologies to produce biodiesel and hydrotreated vegetable oil from waste oils and animal fats are technically mature, and production is growing. However, competition for waste oil and animal fat feedstock is intensifying, elevating their cost. The supply of these feedstocks could be increased, but their availability is ultimately limited.

Cellulosic biofuels and biomass-to-liquid fuels can be produced from less expensive feedstocks with a higher availability, such as municipal solid waste, forestry and agricultural residues. Cellulosic ethanol offers significant CO₂ emission reductions compared with fossil-based transport fuels. It’s suitable for passenger vehicles, as well as trucks and buses when used as 95 per cent ethanol fuel (ED95).  

Although regular vehicles can use ethanol at low blend rates, CO₂ emissions reductions are maximised when the ethanol is used at high blend shares or unblended in flexible-fuel vehicles. Traditional vehicles can be converted to use E85 with conversion kits.

The main advantage of biofuels is their compatibility with existing vehicles and fuelling infrastructure at low blending levels.

To displace a greater portion of the crude oil demand with biofuels will either require a greater consumption of unblended biofuels or higher biofuel blend shares. Of these options, higher-rate biofuel blending is more challenging, because it would require expanding the fleet of suitable vehicles and changes in the fuelling infrastructure.

Biofuels are used primarily in road transport with passenger cars accounting for most of the consumption. The use of biofuels in aviation is still marginal, and even more so in maritime transport. Given the difficulties of electrification in these segments, a higher share of biofuels is an attractive pathway for reducing emissions. Biodiesel is one of a few viable options for long-distance road freight transport, and biokerosene for the aviation sector. For the marine sector, ammonia, biodiesel, hydrogen, and methanol are possible pathways, with biodiesel being the only one that can be properly implemented today.


All transport sectors need additional solutions in order to meet global climate obligations. This goes for road transport, aviation and marine. In all of these segments, new alternatives and more efficient powertrains will come about, but the transformation takes time. A car or truck bought today will most likely be in use well beyond 2030, and a ship or an airplane built today will be in use beyond 2045.

As discussed in earlier chapters, electrification is an incredibly important tool in our efforts to reduce emissions, but where some sectors and segments can be electrified directly, others must be electrified indirectly. Synthetic fuels are a potential alternative for fossil fuels and best suited for heavy-duty road transport, shipping and aviation – these are the most difficult to electrify directly. In these segments of the transport sectors, biofuels will also play an important role for many years. But the limited availability of biofuels has to be kept in mind and thus the limited role biofuels can play in our decarbonisation efforts. Biofuels should be prioritised in those segments where direct electrification proves most difficult, i.e. heavy-duty road transport, shipping and aviation.

There are other elements which will shape the future of mobility. Ride sharing, vehicle digitalisation and automation and better public transportation are other factors that will determine how many, and how much, cars will be used in the future.