- Article
The first generation of sustainable fuels has proven that sustained demand exists. Now, the challenge for the global market and political conditions is to ensure next generation technology pathways can deliver project viability at commercial scale. Hybrid gasification is emerging as one of the strongest candidates to bridge the gap between technological promise, sustained demand and commercial reality.
“The warming world desperately needs sustainable fuels to decarbonize the transport, aviation and shipping industries. The challenge isn't whether the technologies exist: it's proving them at a commercial scale that can satisfy investor returns with acceptable project risk profiles,” says David Longden, Business Development Director of Gasification and Sustainable Fuels at Sumitomo SHI FW.
There's lots of will, need, and understanding across these industries. But in terms of actually getting the projects over the line, there’s a huge amount of inertia because of increasingly polarized market and policy approaches to climate action around the world.
While governments continue to set ambitious decarbonization targets for aviation and shipping, the sustainable fuels market has faced some headwinds. High-profile project setbacks in 2024 and 2025, ever-evolving policy frameworks, and slower-than-expected investment decisions have tempered some of the industry's early optimism.
Yet the long-term direction remains unchanged. Demand for sustainable fuels continues to grow, driven by tightening emissions regulations, energy security concerns, and the need to decarbonize sectors where direct electrification is not a viable option.
Rather than asking whether sustainable fuels are needed, the conversation has shifted to a more practical question: which production pathways can deliver them at commercial scale and at a cost that enables widespread adoption?
From First-Generation Biofuels to the Next Wave of Sustainable Fuels
Today, most Sustainable Aviation Fuel (SAF) is produced using the HEFA (Hydroprocessed Esters and Fatty Acids) process, which converts waste oils and fats into fuel. It is a proven and commercially successful technology, but one that depends on a limited supply of sustainable feedstocks.
“HEFA is already a viable and attractive pathway,” says Riitta Ståhl, Senior Manager of Strategy and Business Analysis at Sumitomo SHI FW.
But forecasts suggest there will simply not be enough sustainable feedstocks, such as used cooking oil, to meet future demand.
Another pathway attracting significant interest is Power-to-X, or e-fuels, where renewable electricity is used to produce hydrogen through electrolysis before combining it with captured carbon dioxide to create synthetic fuels. While the concept offers significant long-term potential, producing every molecule this way requires large amounts of renewable electricity.
“Hydrogen doesn't grow on trees, and we see that the markets have become more aligned to this understanding in the last year” says Longden.
“Producing hydrogen through electrolysis is still expensive, particularly when relying entirely on renewable electricity. Costs can rise further in regions with less favorable conditions for renewable energy production or where extensive transmission infrastructure is needed.”
This has prompted the industry to look for ways to reduce its dependence on renewable hydrogen without compromising the production of sustainable fuels. One of the most promising approaches is gasification. Rather than producing every molecule from electricity, gasification converts biomass or waste into syngas, a gas rich in hydrogen and carbon monoxide that can be used to produce methanol, biodiesel, kerosene, RNG, and ammonia for sustainable transport, aviation and marine fuels.
“HEFA project capacity continues to increase with more projects being announced and e-fuels will certainly have their place, but for now, their costs remain difficult to justify at scale,” says Longden.
So, what comes next?
“At SFW, we believe that gasification, with supplementary hydrogen from electrolysis for producing sustainable fuels, is the next technology pathway ready for commercial deployment.”
Gasification – A Smarter Way to Produce Sustainable Fuels
Efficient production of hydrogen and carbon monoxide is the foundation of every sustainable fuel pathway. By converting biomass or waste into syngas, gasification provides both of these essential building blocks in a single process. Adding electrolytic hydrogen can further increase biorefinery yields and revenues, helping make projects financially viable at scale.
“Gasification turns solid waste and biomass feedstocks directly into a synthetic gas containing hydrogen and carbon monoxide,” says Longden.
“It provides those molecules far more cost-effectively for downstream fuel production than the alternatives.”
This changes the economics of sustainable fuel production. Unlike fully synthetic e-fuel pathways, where hydrogen must first be produced through electrolysis using renewable electricity, gasification already provides much of the hydrogen and carbon monoxide needed for fuel synthesis. That means lower electricity demand, lower production costs and, ultimately, bringing sustainable fuels closer to cost parity with conventional fossil-derived fuels – one of the biggest hurdles to wider adoption.
At the same time, the industry's view of syngas is changing. For many years, it was primarily seen as something to burn for industrial heat and power applications. Today, it is increasingly valued as a feedstock for producing sustainable fuels. Rather than being the end product, syngas has become the starting point for creating higher-value renewable fuels required for the energy transition in order for us to decarbonize our economies.
The Future is Hybrid
According to Longden, the future of sustainable fuels is not about choosing between gasification and e-fuels, but about combining the strengths of both.
“Our view is not ‘gasification versus Electrolysis and Reverse Water Gas Shift (RWGS) reactors’, but gasification plus electrolysis where it adds value. Targeted investment in electrolysis can increase product yields and help make these projects bankable,” he explains.
In this hybrid approach, gasification supplies most of the hydrogen and carbon monoxide needed to produce sustainable fuels, while electrolysis provides additional renewable hydrogen where it creates real value. The electrolysis capacity can be optimized based on the process’s oxygen demand and the hydrogen-to-carbon monoxide ratio required for fuel synthesis. This can also reduce or eliminate the need for separate Water Gas Shift (WGS) reactors.
“We're cherry-picking an element of e-fuels and adding it to the gasification and biorefinery process design, at a capacity which makes best sense to do so, supplementing the inherent benefits of syngas production technology,” says Longden.
“These two technology genres can really complement each other when sensibly deployed within the constraints of any particular project situation.”
The result is a production pathway that reduces the need for renewable electricity while retaining the benefits of green hydrogen. Instead of relying entirely on electrolysis or RWGS reactors, both of which are very energy intensive, projects can optimize how much renewable hydrogen they need to produce, improving both resource efficiency, end product yields and project economics.
The hybrid approach is already moving beyond theory. Projects such as Flying Forest at Iisalmi in Finland and Capwatt at Mangualde in Portugal are combining gasification and electrolysis to produce renewable fuels.
“We see this as the most sensible next step, bringing sustainable fuels closer to commercial reality,” says Longden.
Turning Potential into Projects
Technology alone won't drive the transition to sustainable fuels. To move projects from concept to commercial operation, the industry also needs stable policy frameworks, long-term offtake agreements, and the confidence to invest.
“Many of the technologies are already available and proven in the oil and gas industries,” says Ståhl.
“Now, we need the right policy frameworks and market conditions with political consensus and commitment to drive projects forward.”
Aviation blending mandates, shipping decarbonization targets, and long-term fuel purchase agreements all help create the certainty investors need. Together, they reduce investment risk and make it easier for projects to reach final investment decisions. In some countries, energy security is another important driver, particularly where fossil fuel supply chains are vulnerable to global conflicts.
At the same time, project developers are looking for partners with proven industrial experience. As facilities grow in size and complexity, reliable design and execution, operational know-how and long-term service support become just as important as the technology itself.
“What sets Sumitomo SHI FW apart is the combination of science and industrial experience,” says Longden.
“You need both. Great science alone isn't enough if you can't design, deliver, build and operate industrial-scale plants reliably.”
The company's gasification technology is built on decades of circulating fluidized bed (CFB) gasification expertise, supported by collaboration with research partners such as VTT in syngas cleaning and conditioning. Backed by experience from more than 800 fluidized bed combustion boiler projects worldwide, SFW combines research-based innovation with proven industrial execution. Its experience spans applications ranging from tens to thousands of megawatts across the industrial heat and power sectors.
“The challenge is no longer inventing the technology,” says Longden.
“It's bringing together the science, the industrial experience and the right commercial conditions to make these projects succeed.”