IEA forecasts 60% rise in renewable transport energy as shipping fuel markets expand

Renewable energy use in transport is forecast to increase by 60% between 2025 and 2031, with shipping and aviation emerging as additional markets for lower-emission fuels, according to the International Energy Agency’s (IEA) Renewables 2026 report.

Published on 6 November, the report links growth to energy-security concerns, stronger fuel policies and efforts to reduce dependence on imported fossil fuels. Renewable sources are expected to supply 6% of global transport energy demand by 2031.

What is driving renewable fuel demand?

The IEA expects renewable transport energy consumption to rise from 5.5 exajoules in 2025 to nearly 9 exajoules in 2031. An exajoule is a unit used to measure large quantities of energy.

Renewable electricity consumed by electric vehicles accounts for approximately 45% of the increase. Liquid biofuels used in road transport contribute another 35%, while marine and aviation biofuels together account for around 10%.

Biomethane, renewable hydrogen and hydrogen-derived fuels provide the remaining growth. Their expansion starts from a relatively small base, with different policies and infrastructure conditions shaping adoption across markets.

How will shipping influence the fuel market?

The report identifies the European Union’s FuelEU Maritime regulation as the principal driver of growth in marine biofuel demand. Its long-term emissions requirements are encouraging fuel substitution, including demand in Asia-Pacific markets supplying vessels bound for Europe.

The IEA forecasts global liquid biofuel demand across transport to increase by nearly 30% by 2031. Shipping forms part of that expansion, although road transport remains the dominant market.

The agency stresses that growth must be supported by credible sustainability standards. Feedstock sourcing, land-use impacts and verifiable greenhouse gas accounting will influence whether producers can access expanding domestic and export markets.

Why is biomethane relevant to maritime decarbonisation?

Global biomethane production is projected to almost double between 2025 and 2031. Its compatibility with existing natural gas infrastructure allows it to serve multiple applications.

For shipping, liquefied biomethane, commonly called bio-LNG, can be used in compatible liquefied natural gas (LNG)-fuelled vessels. Existing tanks and bunkering systems provide an operational advantage, reducing the need for major equipment changes.

The IEA also identifies emerging bio-LNG projects in Southeast Asia, supported by marine fuel demand and potential exports to Singapore. However, collecting, aggregating and storing feedstocks at commercial scale remains a constraint on faster production growth.

Where does India feature in the outlook?

India is forecast to become the world’s second-largest market for renewable capacity growth after China during 2026–2031. Its biomethane production is projected to increase almost ninefold by 2031, albeit from a relatively small base.

The report identifies expanding gas-powered transport and fuel offtake arrangements among the drivers of Indian biomethane demand. This forecast covers the wider energy market and should not be interpreted as a projection of marine fuel availability alone.

Can electricity infrastructure keep pace?

The IEA projects almost 4,800 gigawatts of additional renewable electricity capacity during 2026–2031. However, annual installations are expected to decline by 11% in 2026, mainly because of slower solar deployment in China, before recovering.

Average annual additions over the six-year forecast period nevertheless approach 800 gigawatts, 57% above the previous six-year average.

Grid capacity and storage remain critical constraints. The agency warns that renewable generation lost through curtailment could exceed 800 terawatt-hours by 2031.

For ports and fuel developers, the implication is that additional renewable generation must be accompanied by usable connections, storage and dependable supply arrangements. National capacity growth alone does not establish electricity availability at a particular terminal or fuel-production site.