E-fuels offer long-term solution to key energy transition transport sectors, but journey needs to start now
June 20 2024 - 4:45AM
E-fuels offer long-term solution to key energy transition transport
sectors, but journey needs to start now
LONDON, 20 June, 2024 – The
widespread development and use of synthetic fuels is still at least
a decade away and depends on the successful deployment of other
technologies, but companies that position themselves now are best
positioned for success according to the latest Horizons report
by data and analytics company Wood Mackenzie.
The report: ‘Adding fire to e-fuels’ states that
e-fuels are a synthetic alternative to fossil fuels and can
decarbonise difficult to electrify sectors without the need for the
early scrapping of long-life equipment. This means e-fuels can
offer a solution to power critical segments of transportation such
as ships, long-haul aircraft and heavy-duty commercial
vehicles.
The report states that e-fuels, which are also
known as electrofuels, eFuels, synthetic fuels, Power-to-X (PtX),
Power-to-Liquids (PtL) and renewable fuels of non-biological origin
(RFNBOs), are produced by combining electrolytic (green) hydrogen,
made by electrolysing water using renewable electricity, with
captured carbon or nitrogen. An e-fuel can be considered carbon
neutral if the emissions released into the atmosphere during its
combustion are equal to (or less than) the captured CO₂ used to
produce it.
“Identifying pathways from legacy fuels into
low-carbon alternatives is a perennial challenge for incumbent
energy players,” says Murray Douglas, Vice President of Hydrogen
Research at Wood Mackenzie. “E-fuels offer companies an intriguing
prospect at the intersection of electrons and molecules and the
potential to capitalise on existing technical, commercial and
marketing capabilities makes it an appealing, if challenging,
opportunity for many.”
Challenges abound for large-scale
deployment
The report also states that commercial viability
is the key challenge in scaling up e-fuel production with green
hydrogen production and CO₂ capture costs both high. The subsequent
conversion process to the final e-fuel product is both energy and
capital intensive – and delivery costs must also be considered.
“There is no shortage of offtakers seeking
low-carbon fuels, but the gap between cost of production and
willingness to pay is sizeable,” Douglas says. “Each e-fuel has an
incumbent fuel it aims to displace, all of which are much cheaper
and this means their success will be dictated by policy to mandate
volumes, place a cost on emissions and lower production costs.”
Douglas adds that current conversion
technologies differ depending on the final e-fuel desired, but the
key challenge for all of them is in integrating green hydrogen,
carbon or nitrogen, and their subsequent conversion in a
large-scale commercial e-fuel production facility.
Policy makers will need to wield
both carrot and stick
The report states that currently most e-fuel
proposals aim to source CO₂ from a variety of feedstocks with
biogenic sources with a low cost of capture, such as biogas and
ethanol plants, dominating. But as the production of e-fuels grows
the available molecules from such facilities will become scarcer
and more dispersed. Costs will rise as e-fuel producers scour for
feedstock while looking to scale.
This means that in the long-term global policy
makers will have to set the standards for where e-fuel producers
source CO₂. In Europe, point-source CO₂ capture from fossil-fuel
power generation will only be permitted until 2036 and from other
fossil-fuel industries until 2041. Consequently, large volumes from
net carbon dioxide removal (CDR) technologies – direct air capture
(DAC) and bioenergy with carbon capture (BECC) – will be
required.
“Globally, governments are going to have to take
a holistic approach where incentives and penalties are introduced
to ensure e-fuel production will be able to ramp up to a scale that
will be required,” Douglas says.
The report concludes that producers who can pair
low-cost renewables and biogenic CO₂ sources will have first mover
advantage. However, putting this type of complex and
technology-heavy production model in place is a lengthy process
that must start now for large-scale production to be in place by
the mid-2030’s.
“E-fuels are undoubtedly one of the longer-term plays in the
energy transition,” says Douglas. “However, companies that set a
strategic direction quickest can position themselves to capture the
most attractive elements of the value chain and take those
learnings forward.”
ENDS
Editor’s note
About Horizons As the energy transition
accelerates e-fuels look certain to play a critical role power
critical segment of transportation such as shipping, aviation and
road haulage. This month’s Horizons looks at the challenges and
opportunities in the e-fuels sector and gives analysis and insight
into what needs to be done to become a major player in the coming
decades. This Horizons is essential reading for investors,
companies and policymakers looking to gain a competitive position
in the burgeoning global synthetic fuel industry. You can read the
report here.
For further information please contact Wood Mackenzie’s media
relations team:
Kevin Baxter +44 330 124
9400Kevin.Baxter@woodmac.com
Vivien Lebbon+44 330 174
7486Vivien.lebbon@woodmac.com Hla Myat
Mon+65 8533 8860Hla.MyatMon@woodmac.com
The Big Partnership (UK PR
agency)woodmac@bigpartnership.co.uk
About Wood Mackenzie
Wood Mackenzie is the global insight business
for renewables, energy and natural resources. Driven by data.
Powered by people. In the middle of an energy revolution,
businesses and governments need reliable and actionable insight to
lead the transition to a sustainable future. That’s why we cover
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when it matters most. For more information, visit
woodmac.com.
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