John Eichberger |
May 2025
I am incredibly optimistic about the future of the transportation energy sector. Over the days following the conclusion of TEI25, I have reflected on the conversations we had about the transportation energy markets and the people with whom we had those conversations, and I am encouraged by what I heard and learned while in San Antonio. The market will always experience volatility, whether that be from supply and demand imbalances or policy fluctuations, but it is a resilient market that will find its path forward and deliver improved value for all stakeholders in the long run. At least, that is the mindset with which I left the conference.
Our primary goal for the conference was to help the audience step back from the ups and downs of headlines and policy announcements to take a more global (and local) look at market conditions and trends. Despite the heavy weight of uncertainty surrounding tariffs hanging over our heads, the conference successfully cut through the rhetoric and provided much needed perspective about the vitality and durability of the transportation sector.
For those who have joined us at our annual events, you know that we operate under Chatham House Rules, which means no one (including TEI staff) can quote or attribute a comment to anyone without permission. This provides speakers and attendees with additional freedom to share their real thoughts about what is happening in the market, a comfort many speakers took advantage of while on stage to help attendees better understand the nuances that are affecting the market.
That said, we can talk about what we learned. Here are some of the key findings from the proceedings. I am encouraged to share that none of this is really different from what we have been hearing for months:
- Despite the headlines, there is little indication that the market is speeding towards a dramatic repositioning from its trajectory over the past several years. The transportation sector is a very large entity and those charting its path forward are focused on 10 – 20 years ahead. Political winds shift every few years and, while the proclivities of leaders may affect short-term performance considerations, they currently are not viewed as significantly influential to long-term strategic planning.
- Global policies do not seem to be aligning behind the significant shift in priorities witnessed in Washington, DC, providing global market players with some consistency in expectations going forward. Meanwhile, states continue to pursue their own policy objectives, although California may be facing some uphill battles in their efforts to address carbon emissions, and non-government organizations are not changing their goals of reduced emissions from the transportation sector. Consequently, many of the external factors that influence business decisions in this market have not changed, and leaders are weighing all of these inputs when deciding their business plans.
- Electrification of the market is taking longer than some projected a few years ago, but it continues to move forward and expand. Domestic policies might affect the speed with which consumers adopt the new technology, but globally there does not appear to be much change expected in policy support for the technology. Meanwhile, manufacturers are delivering more options at competitive prices with enhanced capabilities. And in the next few years, a significant number of electric vehicles will be coming off lease and entering the used vehicle market, providing more insights into the long-term viability of these vehicles for a broader share of the consumer market. That said, trade policies, tariffs and the state of the public charging market will all influence the pace of market expansion.
- Policy uncertainty is having a significant impact on the biofuels market, including the set rule and renewable volume obligations of the Renewable Fuel Standard, the implementation of the 45Z credits, the future of the low carbon fuel standard and trade policies. Ethanol is well positioned to maintain its role in the market, with potential expansion should the regulatory constraints limiting the marketability of E15 be removed. Biomass-based diesel is most susceptible to policy volatility and could yield market share to sustainable aviation fuel if the current uncertainty is not resolved.
- Energy supply and demand are facing a reality check, with the unrelenting drumbeat of carbon emissions reduction coming up against the concerns of producing enough energy to support the expansion of global demand for energy, spawned by needs for overall computing power, rapid growth of artificial intelligence and population growth in developing regions. Already it has become clear that different regions and jurisdictions will take a different approach to balancing these objectives, which opens an opportunity for market-based solutions to play a material role in going forward.
There was an overwhelming amount of data presented at the conference, but these were some of the key themes I took away from the conversations. Included beyond these top-level ideas was the affordability of transportation, the charging and refueling infrastructure required to support the motoring public, the future of emissions reductions across the industry, and the undisputed need to be honest about the challenges the market is facing and the viable paths to provide a transportation sector characterized by affordability and lower emissions.
In general, the mood of attendees was optimistic with a focus on the long-term opportunities that are developing for the transportation sector. It is clear that demand for liquid fuels will continue while the demand for electrification expands, providing all stakeholders with the time necessary to adjust go-to-market strategies that best serve the needs of the ultimate consumer. Meanwhile, the pursuit of lower emissions sources of energy is not going away, with states, NGOs, business leaders and markets continuing to focus on this long-term goal and seeking the best ways to achieve environmental and public health objectives in an economically sustainable way.
TEI’s research agenda has and will continue to support the evolution of the transportation sector. The TEI Board of Advisors met at the end of the conference and re-emphasized the need to deliver insights to help market leaders reach informed decisions about how to best serve consumers and insights which help guide investments going forward. Stay tuned for new research and insights from TEI over the next several years and keep an eye open for information about how you can join us next year for TEI26!
