Blending mandates: How Europe can decarbonize without losing its industry

As Europe steers toward a greener future, the new Commission and Member States face crucial challenges. Balancing the implementation of the European Green Deal with the need to safeguard European industry’s competitiveness — in the context of the return of Trump-era policies and the ongoing Ukrainian war — will be no small feat.

Striking a balance between competing priorities requires both pragmatism and the full exploitation of existing solutions. RFNBOs (Renewable Fuels of Non-Biological Origin) — gaseous and liquid renewable fuels that do not rely on biomass like e-NG (electric natural gas) — are a prime example that can circumvent the problem of needing new infrastructure.

Blending mandates are emerging as a strategic tool to facilitate Europe’s decarbonization.

Blending mandates are policies or regulations that require a certain percentage of renewable or alternative fuels to be mixed with conventional fuels before reaching consumers. They are often introduced by governments or regulatory bodies with the aim of reducing greenhouse gas emissions, lowering dependency on fossil fuels and encouraging the development of cleaner energy sources. By setting specific targets for fuel mixtures—such as blending a given percentage of e-NG, which is an electrically produced synthetic natural gas, with conventional natural gas — these mandates help drive innovation, investment and market growth in more sustainable energy options.

In the European economy, the use of blending mandates not only supports the decarbonization of critical sectors, including transportation and heavy industry, but also aligns with the European Green Deal's objectives of enhancing energy efficiency and reducing greenhouse gas emissions. By integrating RFNBOs into blending mandates within policy frameworks — similar to Europe's approach with biofuels and biogases — the bloc can establish a clear pathway to progressively reduce the carbon footprint of its industries.

Think of global energy consumption like a pie: currently, electricity takes up a 20% slice. The rest of the pie, a whopping 80%, comes from energy sources like gas, coal, oil and biomass – these are molecules that produce heat, power and energy; essentially movement. While electrification is expected to account for over 50% of final energy consumption by 2050, according to the IEA, sectors relying on high-temperature heat face significant challenges in transitioning to electricity. Globally, there is simply not enough renewable planned capacity and investments so far to satisfy all future energy needs through electrification alone. Green molecules, not just green electrons, are needed.

The future decarbonized energy system hinges on ensuring affordable and easy-to-implement solutions that support EU industrial competitiveness pragmatically. This is where RFNBOs such as the drop-in fuel e-NG come into play, seamlessly integrating with existing infrastructure and processes.

e-NG is a drop-in RFNBO produced by combining green hydrogen, generated through electrolysis using renewable electricity, with biogenic or recycled CO2. This technology, created by Paul Sabatier in 1912, offers a competitive advantage as it leverages existing gas infrastructure — pipelines, LNG carriers, storage — and minimises CAPEX.

The widespread adoption of RFNBOs such as e-NG hinges on the development of the electrolyser sector. This also presents an opportunity for Europe to lead in industrial innovation. By building demand for these drop-in fuels made with locally sourced electrolysers, Europe can compete with other manufacturing giants in this technological race. As advocated in the Draghi report, incentivizing the use of specific EU clean technologies will allow decarbonization to become a growth opportunity rather than a risk to Europe's industry. As hydrogen markets mature, RFNBO production could scale rapidly, reducing costs and creating scalable value chains. With economic and policy support, RFNBOs could rapidly become more competitive with fossil fuels.

The Renewable Energy Directives (RED II & III) are set to significantly boost RFNBO demand across multiple sectors, with over 250 TWh mandated by 2030. These directives include ambitious targets, such as 1% RFNBO in maritime, 1-5.5% RFNBO in transportation, and more than 42% of grey hydrogen replaced by RFNBO in industrial sectors.

Europe and Member States can leverage gas blending mandates for RFNBOs. By integrating these blending mandates, gas suppliers can promote the adoption of sustainable solutions from the outset.

Blending mandates are already emerging as a practical and effective strategy to decarbonize key sectors such as industry and transportation. By integrating RFNBOs like e-NG into existing gas supplies, regions such as Québec and Japan have demonstrated early success. Similarly, SAF and e-SAF blending mandates, which started with small volumes within current infrastructure, are paving the way for broader adoption. These initiatives are already making projects more bankable, helping to secure Final Investment Decisions. By implementing blending mandates, costs are shared across the value chain, reducing the reliance on government funding. This approach not only stimulates domestic industries but also drives the growth of demand for green technologies. It provides a pragmatic and scalable pathway to achieving decarbonization targets while fostering economic resilience and energy security.

The growing regulatory momentum at the national level presents an opportunity for the EU to strengthen its coordinated approach. By aligning Member States with the Commission's recent guidance, including the integration of blending mandates into national strategies, Europe can ensure a unified pathway that simplifies implementation for industry and amplifies the EU-wide impact. This alignment will help Member States achieve their national goals effectively in the coming year while fostering cohesion across the union.