Clean or low-carbon fuels require mandates and subsidies to cope with higher costs relative to conventional fuels, global commodity trading house Trafigura’s chief executive Richard Holtum said at the World Economic Forum on Wednesday.
“They will only exist if people are willing to pay two to three times what they are willing to pay for fuel today, so the only way that works in the marketplace is either things like sustainable aviation fuel (SAF), where there are mandates, or in hydrogen, where there are subsidies,” he said during a panel discussion at the forum in Davos, Switzerland.
Trafigura announced a binding six-year offtake agreement to purchase SAF in Uruguay on Tuesday from Syzygy Plasmonics, covering the entire volume of Syzygy’s biogas-to-SAF project which expects first deliveries in 2028.
Holtum added that coal-to-gas switching to cut carbon emissions today is more valuable than potential carbon emission savings in longer-term projects.
“That carbon removed today is much more valuable than the carbon you’re going to remove in 10 years,” he said.
Any excess renewable power should be put into electricity grids rather than used to produce fuels, to help accelerate the push away from coal, he said.
