The transportation industry is one of the highest emitters of greenhouse gases — and among the most primed for change — but the journey to decarbonize remains complex. Stakeholder collaboration will be critical in making sustainable fuel mainstream in aviation and marine.
Key Takeaways
- Reaching net zero by 2050 demands more than ambition — it requires overcoming entrenched infrastructure, as well as regulatory and cost barriers.
- To accelerate the transition, organizations across the value chain, from producers to end users, need access to capital, confidence in long-term planning and protection against emerging risks.
- Insurance and risk management solutions can help create the conditions for progress, enabling innovation and investment at scale.
The race to net zero is on — and sustainable fuel has a critical role to play. With emission targets tightening, aviation and marine organizations are under pressure to reduce fossil fuel reliance, comply with evolving regulations and deliver on ambitious sustainability goals.
The sustainable fuel market has significant potential. Yet the technology and infrastructure required to scale cleaner fuel is in early development and vulnerable to fluctuations in government support. For producers and innovators, securing investment amid regulatory uncertainty is a persistent challenge.
Overcoming these barriers will require coordinated action across the sustainable fuel lifecycle. Insurance and risk solutions are key in this transition. By de-risking investment, protecting against volatility and enabling confidence in long-term planning, they can help unlock the capital and collaboration needed to move forward.
To explore how these challenges play out in practice and what’s needed to overcome them, Aon spoke with two leaders at the forefront of sustainable fuel innovation: Kwame Bekoe, CEO of AfriSAF, and Jimmy Samartzis, CEO of LanzaJet. Their insights offer a real-world view into the barriers facing producers and the opportunities that lie ahead.
Decarbonizing transportation continues to be a hot topic. Leaders are asking how risk can unlock — not block — the transition.
At the Source: Upstream Challenges in the Feedstock Industry
The foundation of sustainable fuel’s success lies upstream in the sourcing of feedstock, where risks and opportunities are tightly interwoven. Feedstock refers to the raw biological materials, such as agricultural waste, used cooking oil or energy crops, that are converted into sustainable fuel.
Land use disputes, volatility in feedstock prices and fragmentation in the feedstock supply chain are just some of the challenges facing this industry. Yet innovators like Kwame Bekoe, CEO of AfriSAF, have a keen sense of its potential. His company connects feedstock owners in Africa and buyers via a digital marketplace, reducing agricultural waste, generating new income streams for local farmers and supplying the key ingredient for sustainable aviation fuel (SAF).
AfriSAF’s ambitions extend beyond aggregation. Plans are underway to build production facilities and export sustainable fuels to global markets. Buy-in from investors and insurers will be essential for these plans to become reality.
One of the biggest problems has been insufficient data. “The smallhold farmers we work with are unbanked and operate in an informal sector,” explains Bekoe. “By integrating these farmers into the formal sector and leveraging satellite, drone and AI-driven data, we can help de-risk agricultural operations and reduce insurance premiums.”
De-Risking the Roots: Insuring Feedstock Resilience
Backed by data, solutions like crop insurance and parametric cover can help stabilize income for smallholders, unlock capital and strengthen resilience across the feedstock supply chain — supporting a more investable and scalable starting point for sustainable fuel.
“Insurers should accelerate the use of an increasing number of new data points and enhanced analytics to model emerging risks, rather than depending solely on historical data points.
Lee Meyrick Global Industry Specialty Leader, Transportation and Logistics, Chief Executive Officer, Global Marine
The Question of Cost: Financing the Future of Sustainable Fuel
The value of sustainable fuel is clear: It delivers cleaner combustion and higher energy density than its fossil equivalent. Its benefits extend beyond marine and aviation as organizations across sectors purchase the Scope 3 reductions as part of their own offsetting measures.
However, the price differential between conventional and sustainable fuel in marine1 and aviation2 can be significant. Subsidies, compliance costs, carbon pricing and private sector investment all play a role, but stakeholders face risk in terms of future revenue certainty and asset depreciation.
Scaling to the level required comes at a cost. “Capital is needed at every stage of development to support sustainable fuel infrastructure,” says Jimmy Samartzis, CEO of LanzaJet, a company that successfully pioneers alcohol-to-jet technology, transforming ethanol into SAF and renewable diesel.
While eight different technology platforms are certified for SAF production, many remain commercially immature. The steady flow of capital needed to advance these technologies is often inconsistent.
Funds like Breakthrough Energy have provided a blueprint for how risk-tolerant capital can accelerate clean energy innovation. But more investment channels must open.
“Some stakeholders will want projects to be fully de-risked before they deploy their capital, but in a new industry, you need investors that are willing to take more of a risk,” explains Samartzis. “We haven’t seen that balance yet, which is why companies like ours have taken on strategic investors who have a longer-term view and other motives for being in the industry.”
Insurance as a Bridge to Innovation Investment
By providing coverage for first-of-its-kind technologies and helping to stabilize risk profiles, insurers can enable early-stage investment and support commercialization. “There’s a real opportunity for the insurance industry to better understand what we’re building and to see the long-term upside,” Samartzis adds.
Financial sustainability is critical in the green transition. Aviation and marine organizations — and those outside these industries — won’t invest in sustainable technologies without a clear economic rationale.
Shifting Regulations Fuel Uncertainty
Policy frameworks governing emissions, fuel standards and reporting are evolving across regions.
Government mandates and incentive schemes can be effective in encouraging adoption. In its early stages, LanzaJet partnered with the U.S. Department of Energy to receive funding that helped progress its technology. Today, the Ghana-based AfriSAF benefits from government policies designed to increase biofuel use.
Delays, inconsistencies and policy changes can, however, hamper planning — particularly for multinational operators spanning multiple jurisdictions. Weak enforcement mechanisms can undermine investor confidence in expected long-term returns.
For example, at the global level, the International Civil Aviation Organization has set a 5% reduction target for CO2 emissions by 2030,3 while the International Maritime Organization is aiming for net-zero emissions by or around 2050.4 However, regional policy remains fragmented and fragile. Incentives introduced by one administration can be rolled back by the next.
To counter this, governments must design frameworks that are not only ambitious, but also durable. They should:
- Establish clear incentives to guide stakeholders toward desired outcomes.
- Set enforceable milestones to ensure consistent progress and accountability.
- Implement meaningful consequences for inaction to maintain momentum.
- Negotiate robust contractual structures that include appropriate penalty and break clauses, offering certainty in case of changes to government policy or regulatory approaches.
Policy Shifts and Protection: Insurance for Regulatory Risk
Insurance can be pivotal in reinforcing confidence. By offering protection against policy-related disruptions or delays, insurers can help stabilize investment conditions and support the long-term development of sustainable fuel infrastructure. As the industry matures, insurance solutions that address regulatory uncertainty will be essential to maintaining momentum.
Building Ecosystems for Universal Sustainability
Legacy fuel infrastructure maintains the status quo and is not built to accommodate new, sustainable fuels. Retrofitting ships, ensuring compatibility of alternative fuels with aircraft systems, updating supply chains and building distribution networks will all require significant capital and coordination.
As sustainable fuel growth unfolds unevenly across regions, key stakeholders must focus on scalable strategies that reinforce momentum and reduce fragmentation. The following stakeholder priorities reflect where positive developments are already underway and where targeted action can help amplify their impact.
“Decarbonization is not just about putting sustainable fuel into a vessel or aircraft. It’s about the mandated practices that exist across operations and industries to establish a shared responsibility in achieving sustainability and reducing the carbon footprint.
Chris Bhatt Head of Transportation and Logistics, Chief Commercial Officer, MENA Specialty
Insuring a Sustainable Future: From Insight to Action
Working toward universal sustainability will require collaboration among key industry stakeholders, including those producing and buying sustainable fuel. Governmental bodies and investors supporting the progress of the burgeoning industry will also be crucial.
Risk managers and insurance buyers need a new playbook — one that integrates risk insights into commercial and sustainability strategies from the outset. Insurance can be a key enabler throughout the sustainable fuel lifecycle. From crop insurance that supports upstream resilience, to risk transfer solutions that help fuel producers secure funding and coverage that empowers transport operators to adopt new technologies — the right insurance strategy can accelerate progress at every stage. Early engagement with expert insurance and risk advisors can tangibly improve project feasibility, stakeholder alignment and long-term value, turning today’s uncertainty into tomorrow’s competitive edge.
Whether you’re producing fuel, investing in infrastructure or navigating operational change, Aon can help you manage risk with confidence and unlock opportunity in your energy transition. Let’s talk about how we can support your journey toward a low-carbon future.
Source: Aon