Are e-fuels a solution for decarbonising air and sea transport?

1. Why are aviation and maritime transport difficult to decarbonise?

Heavy transport, whether by air, sea or even road, requires a great deal of energy to be carried on board the vehicle in order to achieve the required range and power. Today, the advantage of liquid fossil fuels (diesel, kerosene, heavy fuel oil, etc.) in terms of energy density is immense compared with electrified transport. For example, the energy content of a 550-litre semi-trailer truck tank (i.e. 400 kg of diesel) is around 5 MWh. To transport the same energy in the form of liquefied natural gas (LNG), you need a much larger tank of 850 litres (350 kg of LNG). And the same energy stored in Li-Ion batteries would require 20 tonnes of batteries occupying a volume of 10,000 litres!

The current energy density of Li-ion batteries clearly limits their use to light transport. Hydrogen compressed to 350 bars may be a good technical solution for heavy goods vehicles, or even ships (apart from cost considerations), but the volume it occupies means it cannot be used as propulsion energy for aircraft (the volume of current kerosene tanks would have to be tripled!).

Decarbonising aviation and maritime transport therefore requires other solutions. Biofuels are one, but not on the scale of the problem, given the lack of biomass resources. The use of e-fuels opens up new prospects. In the case of air transport, this is e-kerosene. For maritime transport, the two e-fuels being considered are e-methanol and e-ammonia.

2. The limits to Biofuel

In 2022, global biofuel production amounted to 4.3 exajoules (EJ), or 1,120 TWh, representing less than 4% of global fuel demand for road transport alone. The vast majority, around 90%, of these fuels were produced from sugar cane, maize, soya oil, rapeseed oil and palm oil. The remaining 10% were produced from waste and residues such as used cooking oil and animal fats.

According to the IEA (ref /1/), demand for biofuels is set to rise to 5.3 EJ (1470 TWh), or 6% of the forecast energy demand for road transport alone in 2030, as a result of the policies and additional projects planned. And this demand will continue to grow thereafter, driven in particular by air transport, depending on countries’ decarbonisation policies. As a reminder, in Europe, under the RefuelEU regulations, airlines will have to incorporate an increasing quantity of “sustainable aviation fuels” (SAFs): 2% by 2025, 6% by 2030, 20% by 2035 and gradually rising to 70% by 2050.

The biomass resources available to manufacture biofuels will clearly not be sufficient.

As a matter of fact, the most readily available feedstocks for liquid biofuels include vegetable oils, sugars, starches and fat and oil residues. These feedstocks are already widely used today and can be processed using existing technologies. But resources of this type are relatively limited, both for physical reasons and because some biomass resources, such as energy crops, are unsustainable. What’s more, the same biomass resources are often in competition for different energy uses (competition between biogas and biofuels, for example). Under these conditions, according to the IEA (ref /1/), the maximum potential could be increased to 9 EJ (2500 TWh) of biofuels by 2030, which allows very little flexibility to address both the decarbonisation needs of road transport and those of air and sea transport. It should be remembered that the annual energy requirements of the transport sector as a whole are currently around 120 EJ.

Hence the imperative need to find other solutions, such as e-fuels.

3. What is e-fuel?

E-fuels are synthetic fuels obtained from hydrogen produced by electrolysis of water. They can be of different types depending on the other elements that make them up.

Combining hydrogen with nitrogen produces ammonia, a gaseous chemical that is used today mainly as a fertiliser precursor, but also has potential applications as a fuel. Combining hydrogen with carbon produces a wide range of synthetic products, from alcohols to ethers and from hydrocarbon fuels to lubricants.

E-fuels can be classified according to their ease of use. Ready-to-use e-fuels such as e-kerosene, e-gasoil and e-gasoline are compatible with existing refuelling infrastructures and can be blended with petroleum-derived equivalents, subject to certain constraints. On the other hand, alternative e-fuels such as e-ammonia and e-methanol require investment in distribution infrastructure and the vehicles themselves (ships, HGVs, etc.) to enable them to be used in the transport sector.

There are four main stages in the production of e-fuels: the production of hydrogen (by electrolysis of water), the capture of nitrogen from the air (N₂) or carbon dioxide (CO₂), conversion into new synthetic molecules (by thermochemical processes) and finally the final recovery of the raw product.

The main process building blocks for the manufacture of e-fuels already exist on a large scale, but their efficiency still needs to be improved, and their integration into an operational production unit still lacks technological maturity. Existing or planned facilities are still at the pilot or industrial demonstrator stage.

Broadly speaking, the principle of e-fuel synthesis is as follows:

It is important to note that e-fuels can only be considered as “low-carbon” fuels if the hydrogen is produced using decarbonised electricity (renewable or nuclear electricity) and if any carbon input (in the form of CO2) is obtained with low lifecycle GHG emissions. This is the case when the CO2 is captured directly from the air (Direct Air Capture – DAC) or comes from a biological process; this is known as “biogenic CO2“. Biogenic CO2 is considered neutral for climate change because it is captured from the atmosphere by the growth of plants or wood and not extracted from the subsoil. A variant is to use CO2 captured at the end of an industrial process (e.g. a cement plant); this is not biogenic, but in the end it is used twice before being released into the atmosphere, which is a significant improvement on the use of fossil fuels. In cases where the CO2 used to synthesise the e-fuel molecule is of fossil origin, the European taxonomy has yet to recognise the green status of e-fuels. But this does not prevent industrial demonstrators from being set up, in particular to use CO2 from sectors that are very difficult to decarbonise, such as cement or steel, under specific authorisations.

Ultimately, the major difference between e-fuels and fossil fuels lies in their life cycle: while fossil fuels release CO2 stored underground, the synthesis of e-fuels from decarbonised energy requires either extracting nitrogen from the air or capturing CO2 for reuse. In this way, no new emissions are released into the atmosphere.

4. The availability and cost of resources to produce e-fuels on a large scale

4.a. A technology that requires a lot of electricity and electrolysis infrastructure

The energy efficiency of e-fuel production processes is relatively low. The energy requirements for e-fuel production are shown below:

Various studies have been published to assess the amount of electricity needed to produce e-fuels (see references). Depending on the source, between 28 and 37 MWh of electricity are needed to produce one tonne of e-kerosene, which itself has an energy content of around 12 MWh/tonne. The gross energy yield is therefore between 32 and 43%. This figure can be improved by recovering waste energy in the form of heat (particularly in the thermochemical conversion of hydrogen into e-fuel, where the waste heat is at high temperature and therefore easily recoverable), and by improving electrolyser technologies.

But even with the use of more efficient technologies, converting low-carbon electricity into e-fuels will remain energy-intensive and will have to be reserved for transport sectors that cannot be directly electrified. This is why the deployment of e-fuels in the IEA’s NetZero scenario (ref /4/) is very gradual in only two priority sectors: firstly, maritime transport, via e-ammonia, to complement biofuels and pure hydrogen; and secondly, air transport, via e-kerosene when there are insufficient resources to meet the demand for biofuels (see figure below). The logic is to avoid the costs of converting from one energy vector to another when other solutions are possible.

Finally, it should be noted that the massive development of e-fuels will also pose the problem of manufacturing electrolysers in large quantities. According to the IEA, achieving a 10% share of e-fuels in aviation and maritime transport would require more than 400 GW of electrolyser capacity, equivalent to the total size of the current global portfolio of electrolyser projects by 2030.

4.b. Where to find CO2 and at what cost?

For the manufacture of e-fuels containing carbon (e-kerosene, e-gasoil, etc.), the origin of the CO2 used has a major impact on GHG emissions over the fuel’s life cycle, as well as on its cost.

Ideally, biogenic CO2 should be recovered from a fermentation process, for example in a biomethane production unit. In this type of plant, the carbon dioxide is available as a nearly 100% pure stream that only requires drying and compression before it can be used. Under such conditions, CO₂ can be captured more cheaply, at around €20-30/t CO₂ (ref /1/). E-fuel plants can also source CO₂ from biomass combustion plants. However, the concentration of CO₂ is much lower in the flue gas (10-20 vol%) compared to fermentation processes, increasing capture costs to around €60-80/t CO₂.

When large quantities of fatal CO2 are available, it may be worth capturing it to avoid emitting it into the atmosphere. In industrial installations where the flue gases emitted have a concentration of 5 to 20%, the capture costs are still reasonable. This is the case, for example, with the Reuze Project near the industrial and port area of Dunkirk, supported by Engie and Infinium, which aims to transform and recover 300 kt of CO₂ per year from the emissions of ArcelorMittal’s steelworks in the immediate vicinity, with a view to producing more than 100 kt of e-fuels per year in the long term. In the case of this project, we have both the conditions for mass production of green hydrogen and access to large quantities of waste CO2 within the same geographical area, as part of a local circular economy.

Finally, if biogenic or fatal point sources are not available for use on the production site, e-fuel plants could consider sourcing CO₂ from the atmosphere with direct capture (DAC) technologies. But as CO2 concentrations in the outside air are very low (typically 250-400 ppm), capture costs are exorbitant (€400-670/t CO₂ according to the IEA).

Access to CO₂ is therefore a significant constraint for low-emission carbon-containing e-fuels (which is not the case for e-ammonia). In addition, the best wind and solar resources needed to produce green hydrogen are not always located close to large biogenic or fatal CO2 resources, which can impose additional constraints on the siting of e-fuel production projects, if CO2 transport infrastructure needs to be built (by pipeline, for example). This is technically feasible, but will involve additional costs and time.

5. The production costs of e-fuels

Given the technical characteristics of e-fuel production facilities (low yields, so the need for large quantities of decarbonised energy, electrolysers that are still expensive, CO2 capture that is sometimes costly, the need in some cases for CO2 transport infrastructure, pilot production facilities that are not yet optimised, etc.), low-emission e-fuels are currently expensive to produce. But given the many ways in which costs can be reduced, coupled with a certain volume effect once their production becomes widespread, the cost differential with fossil fuels could be reduced as early as 2030.

It is difficult to make reliable projections given the number of parameters involved: the rate at which the cost of electrolysers is falling, the average cost of green electricity in different regions of the world by 2030, the progress of new technologies and process optimisation, etc.

According to the IEA (ref /1/), by the end of the decade, thanks to the cost reductions made possible by the completion of the electrolyser projects announced worldwide, the exploitation of sites with high-quality renewable resources and optimised project design, the cost of low-carbon e-kerosene could be reduced to around €45/GJ (€1,955/t) by 2030, enabling it to compete with sustainable biomass-based aviation fuels. The price of e-ammonia at €27/GJ (€500/t), which would make it comparable to the highest prices for fossil ammonia over the period 2010-2020 as a chemical product, and would pave the way for its use as a low-carbon fuel for maritime transport. In addition, the production of e-kerosene for aviation also results in the production of a significant amount of e-gasoline as a by-product, reducing its net production cost.

Using a different set of assumptions, the Académie des Technologies (French institution that provides expertise and promotes innovation in science and technology for societal and policy development, (see ref /2/) arrives at production costs for 2030 in France of between €1,800 and €2,500/tonne of e-kerosene, with a central scenario of €2,034/tonne. The latter is based on very optimistic assumptions, namely: electricity at €30/MWh, widespread use of high-temperature SOEC electrolysers (a technology that is not yet on the market), a CO2 capture cost of €150/tonne, and an overall energy yield of 55% (obtained thanks to the high efficiency of SOEC electrolysis and full optimisation of the thermochemical processes). The sensitivity of the production cost to the assumptions made is shown in the figure below:

These production costs should be compared with the price of fossil kerosene in 2030. According to the Académie des Technologies, a reasonable value for this price would be €1,200/t (i.e. twice the current price of fossil kerosene).

If we assume an optimistic production cost of €2,200/tonne of e-kerosene by 2030, this will be almost twice the estimated price of fossil kerosene by 2030 and 4 times the current price.

But it is important to note that this increase in the cost of kerosene, although it may seem high, will have only a limited impact on the price of air travel. The IEA estimates that with a 10% incorporation of e-kerosene in air fuel by 2030, at a price of €2,200/tonne, the increase in ticket price will be only 5%.

The IEA has used the same reasoning and made the same projections with e-ammonia for maritime transport up to 2030. Its conclusions are that its production cost will be much lower than that of e-kerosene, but on the other hand, ships and port infrastructures will have to be adapted to allow this new fuel to be used, resulting in high investment costs. Overall, the cost of owning a container ship powered 100% by e-ammonia or e-methanol would be 75% higher than that of a conventional container ship running on fossil fuels. Although this is a substantial increase, the additional cost would represent only 1 to 2% of the typical value of goods transported in containers.

6. E-fuels – many projects already underway

Despite the uncertainties and difficulties mentioned above, e-fuels appear to be an essential solution for achieving the objectives of the Paris Agreement. Without their contribution, we will not be able to sufficiently decarbonise sea and air transport.

This is why more than 200 demonstration projects are currently underway around the world (most of which are still at an early stage), supported by the political will of the countries concerned, the subsidies that accompany them… and the fear of sanctions for airlines that fail to comply with SAF quotas. By way of example, a non-exhaustive list of e-fuel and e-ammonia production projects identified by EVOLEN (ref /3/) can be found in the appendix.

7. Conclusions and outlook

Decarbonising heavy transport over the next decade will require massive deployment of sustainable liquid fuels, particularly for aviation and shipping. These needs cannot be met entirely by biofuels, as biomass resources will be largely insufficient.

Fuels made from electrolytic hydrogen, or e-fuels, could be a viable solution and, according to the IEA, “will develop rapidly by 2030, supported by a massive expansion of cheaper renewable electricity and anticipated cost reductions in electrolysers“.

By 2030, the cost of these e-fuels will still be high, but the impact of the additional costs on the price of plane tickets or transported goods will remain moderate.

Spurred on by changes in air transport regulations, but also by a trend in the market for new ships to consider alternative fuels, many players are already on the move.

The massive development of these new technologies will require major infrastructure: significantly increased electrolyser production capacity, adapted ships, new refuelling infrastructure in ports, etc. Not to mention massive capacities for recovering biogenic or fatal CO2. This CO2 will no longer be a waste product, but will become a precious resource for the synthesis of e-fuels, particularly e-kerosene.

The road to the massive development of e-fuels is still long, and there are many grey areas. But as this solution will be crucial over the next decade if we are to achieve the objectives of the Paris Agreement, we need to start preparing for it now. Through R&D to improve technologies, through pilots and demonstrators to test technologies and business models, through the planning of the necessary infrastructures, and through the widespread recovery of biogenic CO2 emitted by biomethane production facilities or other biological processes.

References :

/1/ : The role of e-fuels in decarbonizing Transport – International Energy Agency Report – 2024

/2/ : Decarbonising the aviation sector by producing sustainable fuels – Report by the Académie des Technologies, February 2023.

/3/ : EVOLEN – Briefing note on electrofuels – EVOLEN e-fuels working group – February 2023

/4/: Net Zero by 2050 – A roadmap for the global energy sector – IEA document – rev 4, October 2021

Appendix: examples of e-fuel production projects (source: Evolen).

 Authors :

• The Energy Transition Management Team – Private Credit Expertise, Sienna Investment Managers

• Bernard Blez, Senior Consultant – former R&D Director at Engie