E-Fuels: A Realistic Solution to Decarbonise Transport?

Transportation is a significant contributor to global CO₂ emissions, accounting for 25 to 30% of the total emissions in the world. Within this sector, road transport is the largest source, responsible for nearly three-quarters of the emissions due to its heavy reliance on fossil fuels like gasoline and diesel. Maritime transport, though more efficient per ton of cargo, contributes to approximately 10% of global transport CO₂ emissions due to the sheer volume of goods transported across oceans. Aviation, while accounting for a smaller share of total transport CO₂ emissions (approximately 11-12%, Source: Global Energy Data, Enerdata) has a disproportionately high impact per passenger-mile because of the intensive fuel consumption of aircraft. Two main solutions are currently being implemented to reduce emissions in the transport sector, battery electric vehicles and biofuels. An emerging solution called electro-fuels, also known as e-fuels, has the potential so secure a share of this market.

By 2030, according to company announcements, e-fuels annual production could exceed 80 million tonnes (Mt) (Source: Synthetic fuel projects database, Enerdata – Request a sample). However, taking a step back, one realises that this would represent around 30% of current jet fuel production (jet fuel production of 259 Mt in 2022). Furthermore, less than 20% of announced e-fuels projects are currently under construction. The remaining 80% have not reached a final investment decision yet. There is therefore a significant uncertainty regarding the development of these 80 Mt.

In this brief, we place these announcements in the broader context of decarbonising the transport sector, we will explore the various technologies involved, and we will take a closer look at the key projects and players evolving into these markets. Our analysis will primarily rely on the investigations conducted by Enerdata, including a comprehensive database of 182 major e-fuel production projects worldwide.

There are numerous e-fuel definitions in the literature. In this article, we will focus on liquid synthetic fuels made from renewable electrical energy, water, and CO₂ or with nitrogen for ammonia. Therefore, we will not consider biomass-based fuels, which are better known as biofuels. Synthetic fuels should primarily replace aircraft kerosene, marine heavy fuels, and gasoline/diesel for cars.

Road Sector

For road transport, decarbonisation is on path to be mainly achieved through electrification and battery vehicles. By 2050, electric vehicles are expected to comprise between 32% and 71% of the global vehicle stock, depending on the decarbonisation scenario (Source: Enerfuture, Enerdata) In this scenario, the number of Internal Combustion Engine (ICE) cars on the roads worldwide is set to decline over time as the number of electric cars grows. Vehicles powered by alternative fuels, particularly e-fuels, have an overall energy efficiency of 4 to 5 times lower than battery-powered vehicles (source: Research Center for Energy Networks and energy storage). They are likely to be physically limited to niche applications such as Sport Cars, as illustrated by the Haru Oni e-fuel project in Chile for Porsche. We will therefore focus our analysis on maritime and aviation transport.

Maritime Sector

There are two main decarbonisation regulations for the maritime sector that set emissions reductions goals. One international from the International Maritime Organisation (IMO) and the other for European Union from the European Commission. FuelEU Maritime¹is a regulation adopted by the EU in July 2023.

FuelEU Maritime applies to ships with a gross tonnage of 5,000 or above, regardless of their flag, when they operate within EU jurisdiction. The regulation aims for an average carbon intensity reduction of 80% by 2050.

IMO regulation is technology-neutral and sets objectives on Well-to-Wake GHG intensities of marine fuels. The goal is to cut GHG emissions by 50% by 2050 compared to 2008 levels for international shipping (source: IMO Strategy 2018).

Aviation Sector

There are no international regulations for e-Fuel in aviation except for one in Europe. 

ReFuelEU Aviation² is a regulation adopted by the EU in October 2023. It promotes the use of Sustainable Aviation Fuels (SAF).

The regulation requires aviation fuel suppliers to gradually increase the share of SAF blended into conventional aviation fuel at EU airports with several deadlines:

• 2% share of SAF in EU Fuel suppliers mix offer by 2025
• 6% share of SAF in EU Fuel suppliers mix offer by 2030
• 70% share of SAF in EU Fuel suppliers mix offer by 2050

SAF includes synthetic aviation fuels, advanced and other aviation biofuels, as well as recycled carbon aviation fuels.

So-called e-fuels are molecules that are produced by combining renewable hydrogen, obtained by water electrolysis using low-carbon electricity, and a carbon-containing molecule most of the time (carbon dioxide or monoxide), or nitrogen in the case of e-ammonia. E-fuels is therefore a generic term encompassing synthetic alkanes such as e-diesel, e-gasoline, e-kerosene (which have nearly the same properties as oil-based molecules), and other hydrogen derivatives such as e-ammonia or e-methanol, both of which will be presented below. E-fuels do not share a single, standardised chemical formula or energy density value.

Three primary technologies dominate the production landscape: Power-to-Liquid (PtL), Power-to-Methanol (PtM), and Power-to-Ammonia.

Main Production Technologies:

PtL: Power-to-Liquid main technology involves the electrolysis of water to produce hydrogen, which is then combined with carbon dioxide captured from the atmosphere or industrial processes to produce syngas. Then by employing the Fischer-Tropsch synthesis (or other synthesis process), the syngas is transformed into synthetic hydrocarbons such as synthetic gasoline, diesel, or kerosene. The Fischer-Tropsch process is the most mature technological building block among these conversion processes (TRL 9). Therefore, the maturity level of the entire conversion chain is determined by the maturity of the process for obtaining syngas. We observe two main syngas technologies:

• Reverse Water Gas Shift (RWGS)
• Co-Electrolysis

There is another approach for PtL that relies on the conversion of alcohols into synthetic fuels (Alcohol-to-Jet) using Methanol-to-Gasoline and Methanol-to-Kerosene technologies.

PtM: Power-to-Methanol involves the reaction of CO₂ with hydrogen. Various processes are currently under investigation for methanol production from CO₂, with different levels of technological maturity:

• Catalytic synthesis
• Electro-catalytic synthesis
• Direct electro-catalytic synthesis³.

PtA: Power-to-Ammonia involves the reaction of nitrogen (N2) with hydrogen. Currently the main process used for this reaction is the Haber-Bosch process.

Characteristics and Applications:

These technologies enable the production of four main types of fuels: e-methanol, e-ammonia, e-gasoline, and e-kerosene. These fuels are compared in the table below.

Figure 1: Comparison of e-fuels

Source: Source: Enerdata

Geographic Distribution and Project Scale

The development of e-fuels projects is gaining momentum across the globe, with various countries and companies investing in this technology. Projects can vary in size, from small-scale pilot initiatives to large industrial installations. But the main countries for e-fuel projects are India (12 % of announced capacity), China (11%), Australia (11%), following by Morocco, Egypt and the USA with respectively 7 % each. Most of these projects have annual production capacities ranging from 50 to 1,000 000 tonnes. This analysis considers announced projects and highlights two main trends. Some countries, such as India, Morocco, and Egypt, have announced one or two mega-projects for ammonia and methanol production, placing them at the top of the rankings. Conversely, countries like China and Australia have numerous medium-sized projects. Furthermore, it is observed that some countries, such as Egypt and Morocco, have positioned themselves entirely toward exporting their production. This is not the case for China.

Figure 2: E-fuels production capacity distribution (tons/year)

Source: Enerdata, Synth Fuel Database

Application

Enerdata has compiled a database of the key e-fuels projects globally (182 projects identified as of June 2024). This database shows two interesting aspects:

• Given the low maturity of e-fuel projects, most of them have not yet determined their intended application. Additionally, some of these projects are focused on export, leaving their specific use undefined.
• Among the projects that have defined the applications to which they are dedicated, two main ones stand out: maritime and aviation (see below).

Figure 3: Application of main projects of e-fuels in the world (non-exhaustive)

Source: Enerdata, 05/2024

Key Projects in Maritime:

E-methanol and E-ammonia emerge as the primary fuel of choice for this application.

The largest ongoing initiative in this field is spearheaded by shipowner Maersk, involving the construction of 25 vessels equipped to utilise methanol (the first one completed in November). Most of its ships are dual-fuel, with a second engine running on heavy fuel (Low Sulphur or Very Low Sulphur oil). Notably, this endeavour also incorporates the utilisation of bio-methanol derived from waste biomass⁴. To refuel its ships, Maersk has announced several projects in Asia, America, Africa, and Europe. The largest project currently under development within this initiative is being led by Maersk's subsidiary, C2X, in partnership with the Egyptian government. It involves a $3 billion investment and aims to produce nearly 300,000 tonnes of e-methanol annually⁵.

Key Projects in Aviation:

Aviation projects seem less mature than maritime ones. No large-scale projects (specifically dedicated to aviation) are expected to start before at least 2026, and the economic balance has to be found (prices 4 to 8 times more expensive than fossil kerosene⁶). Moreover, some of the most significant announced projects, such as Synkero, led by KLM, SkyNRG, and Schiphol Airport, have recently been put on hold⁷.

One of the most promising projects is the Norwegian Norsk e-Fuel project, supported by Norwegian Airlines and with technology providers like Sunfire or Carbon Centric⁸. They have announced, a production capacity of 200 000 tons in 2030 by establishing three industrial-scale e-Fuel production plants in Norway. Norwegian, the passenger airline, and Cargolux, the cargo airline, have pledged to purchase e-SAF for over 140,000 tons of fuel supply.

Key Players in these Projects:

By analysing the project database we were able to highlight the three main types of players in this market:

• Mature large companies from the petrochemicals sector such as Total, Shell, or Exxon, that are project developers and/or technology providers.
• Small pure-player innovation companies with specific expertise in CCUS or e-Fuel production technologies like HIF Global, Synhelion, Infinium, or Carbon Recycling International.
• And last but not least, the operators of aircraft and ships fleets (e.g. Maersk, Lufthansa, KLM …) that are off-takers of the projects.

These three types of companies are complementary, and most new projects are based on partnerships between these entities. Large-scale companies position themselves in the upstream and/or downstream parts of projects, for example by supplying the infrastructure and energy needed for a project, or by ensuring an economic outlet for production.

The development of these projects raises 3 key questions and challenges:

• The availability of low-cost green hydrogen (which depends on access to price competitive electricity).
• The availability of biogenic CO₂, which is complicated due to competing uses for carbon capture and storage and the availability of low-cost CO₂ from Direct Air Capture.
• The maturity of certain production processes, particularly those for e-SAFs.

The cost issue is the critical factor for the development of these projects. According to the ICCT’s cost projections for e-kerosene in 2050 (Source: ICCT Working paper, 2022), even under optimistic assumptions regarding reductions in CO₂ costs, electrolyser expenses, and renewable energy prices, e-kerosene would still be 1.5 times more expensive in the US (and 2.5 times more expensive in Europe) than conventional kerosene.

Similarly, projections for e-methanol by IRENA, also optimistic, suggest that by 2050 its price could drop to around $250 per tonne (Source: Renewable Methanol Outlook, 2021). Achieving this price would require green hydrogen costs to fall to approximately $1/kg and CO₂ costs to about $100/tonne. Despite these reductions, e-methanol would still remain more expensive than currently produced grey methanol. Thus, achieving competitiveness for major e-fuels against fossil fuels appears highly challenging, even in the long term (2050).

In conclusion, achieving the decarbonisation targets set by the EU for the aviation and maritime sectors, as well as those established by the IMO for the maritime sector, will be a significant challenge. This is largely due to the fact that many announced e-fuel (mainly e-methanol, e-kerosene, and e-ammonia) production projects face the risk of not materialising.

However, it is clear that in the short term—by 2030—and as long as the aforementioned challenges remain unresolved, e-fuels are unlikely to make a substantial contribution to reducing CO₂ emissions in the transport sector. This situation raises critical questions about the efficiency and future use of these transport methods.

In contrast, the decarbonisation of road transport, especially for light vehicles, appears to be far more technologically advanced and mature.

Notes:

1. transport.ec.europa.eu/transport-modes/maritime/decarbonising-maritime-transport-fueleu-maritime_en
2. consilium.europa.eu/en/press/press-releases/2023/10/09/refueleu-aviation-initiative-council-adopts-new-law-to-decarbonise-the-aviation-sector/
3. evolen.org/wp-content/uploads/2023/03/15-03-2023-EVOLEN-Note-de-synthese-sur-les-e-fuels.pdf
4. maersk.com/news/articles/2023/06/26/maersk-orders-six-methanol-powered-vessels
5. renewablesnow.com/news/maersks-c2x-plans-usd-3bn-green-methanol-plant-in-egypt-835924/
6. corporate.airfrance.com/fr/les-carburants-daviation-durable
7. skynrg.com/producing-saf/saf-production-plant-in-the-port-of-amsterdam/
8. norsk-e-fuel.com/partners