Sweden Launches National Aviation and Maritime Plan to Bridge Sustainable Fuel Supply Gap

The Swedish government’s latest investigation report issues a clear warning: starting in the 2030s, the EU’s production capacity for sustainable aviation fuel (SAF) and sustainable maritime fuel (SMF) is likely to fall short of increasingly stringent regulatory requirements. This shortfall will leave Europe heavily reliant on imports, exposing it to sharp price volatility and supply security risks.

To address this urgent challenge, the report recommends that the Swedish government adopt a series of proactive measures, including green credit guarantees, public risk-sharing instruments, and targeted production support policies, to unlock investment and enthusiasm from businesses and capital in the sustainable fuels sector. According to the report, Sweden — with its abundant fossil-free electricity, rich biomass resources, and bio-based CO₂ foundation — is well positioned to become a major sustainable fuels production hub in the Nordic region.

Following the submission of its national action plan for domestic production and supply, Sweden is preparing to play a more proactive role in Europe’s race to scale up sustainable fuels. The report focuses on the development prospects of sustainable aviation fuel and sustainable maritime fuel. The EU is currently reshaping fuel market demand through regulations such as ReFuelEU Aviation, FuelEU Maritime, and the EU Emissions Trading System (EU ETS).

The report’s core conclusion points directly to the pain point: without rapid expansion of domestic production capacity, the EU will struggle to meet the mandatory fuel-blending targets set for the 2030s, ultimately forcing large-scale imports. This will not only create cost uncertainty for airlines and shipping companies but also amplify geopolitical risks.

In the maritime sector, the report notes that there is still some buffer space in the short term. Measures such as liquefied natural gas (LNG), shore power, and improvements in ship energy efficiency can help shipping operators meet greenhouse gas intensity requirements around 2035. The pooling compliance mechanism under FuelEU Maritime also provides flexibility for fleet-level management.

However, uncertainties remain significant. From 2030 onward, the EU will enforce a 1% sub-target for non-biological renewable fuels. The report warns that existing EU production capacity may not be sufficient to meet this goal. If supply shortages persist, the European Commission may even suspend the target, which would severely undermine investor confidence in advanced fuel projects such as e-fuels.

Sweden’s Industrial Opportunity and Strategic Positioning

The investigation shows that Sweden possesses unique advantages to become a major European sustainable fuels production base. The country benefits from stable fossil-free electricity supply, abundant biomass feedstock, bio-based CO₂ resources, and a mature innovation ecosystem.

Sweden has already accumulated early practical experience in this field. In 2024, sustainable aviation fuel accounted for 5.09% of fuel delivered at Swedish airports — roughly eight times the EU average. This achievement stems from Sweden’s pioneering mandatory blending requirement introduced in 2021 and industry voluntary cooperation programs.

Therefore, this transition represents both a climate responsibility and a significant industrial opportunity. Strengthening domestic production will enhance national energy security, reduce import dependence, and create export capacity for the broader European market, forming a new economic growth driver.

Financing Bottleneck Is the Biggest Obstacle

The report candidly states that the fuel transition faces a classic market failure. Producers need long-term purchase agreements of 10 to 15 years to secure project financing, while airlines and shipping companies, due to fuel price volatility, are usually only willing to sign short-term contracts of one or two years.

To break this bottleneck, the investigation proposes several policy recommendations: Sweden should actively participate in and co-fund synthetic aviation fuel pilot auctions under the EU e-SAF Early Movers Coalition. This bilateral auction mechanism can effectively match producers with buyers while reducing both price and volume risks. Germany has already committed €2 billion for the period 2030–2039 and plans to launch the first auction by the end of 2026 or early 2027. Eight EU member states have already joined the coalition.

In addition, the report suggests establishing a time-limited national risk-sharing mechanism for bio-based SAF and SMF produced from solid biomass. This would help projects utilizing forest residues move quickly from pilot to commercial scale. According to estimates, an investment of SEK 10 billion (approximately RMB 6.5 billion) could support about 140,000 tonnes of e-SAF capacity — equivalent to half of the demand at Sweden’s hub airports between 2030 and 2039.

Green Credit Guarantees Expected to Resume

The investigation also strongly calls on the Swedish National Debt Office to promptly restore the green credit guarantee scheme. This tool has previously supported several large-scale green industrial projects, including refinery upgrades for renewable fuel production. The scheme is currently effectively suspended because the government has not applied for new authorization for 2026.

The report further recommends that Sweden ensure all support measures comply with EU state aid rules, so as to better leverage external funding from programs such as the EU Innovation Fund and InvestEU. It also proposes establishing a multi-stakeholder forum that brings together producers, feedstock suppliers, transport buyers, public authorities, academia, end users, and defense agencies to strengthen collaboration.

Policy Stability Is Key to Investment

With upcoming EU regulatory reviews approaching — the EU ETS review in July 2026, the ReFuelEU Aviation review in January 2027, and the FuelEU Maritime review in December 2027 — the report urges Sweden to firmly uphold the current level of climate ambition while seeking room for administrative simplification and greater regulatory flexibility, provided that the targets remain achievable.

Sweden’s position is clear: targets should not be lowered to accommodate high costs; instead, the transition should be advanced through supply-side policy support. The report also supports electrification and energy efficiency improvements in the transport sector, advocating the maintenance of EU new road vehicle CO₂ standards and accelerated deployment of shore power infrastructure in ports.

On the international stage, Sweden should continue to promote the International Maritime Organization (IMO) net-zero framework and actively participate in International Civil Aviation Organization (ICAO) climate negotiations, particularly regarding the recognition of sustainable aviation fuel feedstocks. This will directly affect the prospects for utilizing Nordic forest residues.

Key Insights for Industry Stakeholders

The report sends a clear signal: European sustainable fuels policy is shifting from “setting targets” to “ensuring delivery.” Future success will depend on project bankability, reliable long-term offtake commitments, public risk-sharing mechanisms, and a stable regulatory environment.

Some measures, such as green credit guarantees and new mandates for the Swedish Energy Agency, can be implemented relatively quickly, while others will require EU-level coordination and detailed national aid schemes. The core conclusion is unmistakable: demand-side mandates alone cannot achieve scale-up; supply-side efforts must advance in parallel.

Sweden is striving to carve out its position at this critical juncture. If the relevant plans successfully pass consultation and are implemented, the country is poised to become an indispensable key fuel supplier in Europe’s aviation and maritime decarbonization process.