e-Fuels – The Fuel of the Future?

Energy security, climate change and cost of energy are three of the top issues affecting everyone from top government officials to the average household.

While electric vehicles are taking off and the charging infrastructure is finally starting to emerge to support vehicle sales, some parts of the mobility industry cannot be electrified so easily, such as the off-highway and aviation segment. There is also the wider vehicle parc to consider, with an estimated 1 billion vehicles in the parc as of 2023. Enabling significant CO2 reduction within these vehicles is challenging with electrification due to cost/benefit of the retrofit technology and consumer financing of the vehicle stock. It’s also clear as the worlds transport needs and energy demands continue to climb, and prices for lithium for batteries continue to soar, there needs to be more than one way to address carbon neutrality in the transport and energy sector.

e-Fuels are touted by some as next in line to be the fuel of the future. As the “e” suggests, these fuels are produced electrically. But they have little to do with batteries and are in fact liquid in nature and are direct drop in replacements for gasoline and diesel. They are chemically very similar to their fossil fuel counterparts, but instead of being derived and refined from crude oil, they are produced electrically from water and carbon dioxide (or biomass). They even have some advantages over their fossil fuel counterparts, such as being notably much lower in sulphur and other contaminants.

e-Fuels are produced by electrically splitting water into its molecular components – hydrogen and oxygen. This electrolysis can even be done using green electricity from solar or wind power, for example. This green hydrogen is reacted in a Fischer Tropsch reaction with captured carbon dioxide or carbon monoxide to produce e-gasoline, e-diesel, e-jet fuel and e-heating fuels. The carbon dioxide can be taken from the atmosphere or captured from the outputs of industrial units, further helping take carbon out of the atmosphere.

Fischer Tropsch synthesis is a very old chemical transformation developed in the 1920’s. Indeed very little is new in the fundamental field of chemical synthesis and a lot of “new” processes are advancements, tweaks and industrialisation of long known chemical reactions. e-Fuels is one such example.

Fischer Tropsch synthesis has been used in the petrochemical industry before however, most notably in Gas to liquid (GTL) plants, such as those operated by Sasol and Shell to make fuels and lubricants. This process takes (undesirable) natural gas and converts it to more desirable liquid fuels. Many other carbon products can be gasified to produce liquid fuels too, such as coal to liquid (CTL) technology. Biomass can also be gasified and converted to liquids too, as showcased by Finnish company UPM. The groundbreaking fundamental shift in e-fuels however is the use of green electrical energy to produce green hydrogen as the feedstock and the removal of all fossil feedstock components in the synthesis by using carbon dioxide as the carbon source. There are other methods to produce e-fuel too, such as direct electrolysis of carbon dioxide, microbial electrosynthesis, photoelectric synthesis and plasma based conversion. But the Fischer Tropsch synthesis is by far the most industrialised and well known process.

Of course the feedstock hydrogen used in e-fuel production could be used directly as a fuel in its own right. A whole industry is emerging around hydrogen fuel cell vehicles where the electrolysis of water is effectively reversed when stored hydrogen is reacted with oxygen (from the air) to produce electricity to power the car and water as an exhaust gas. But storage and transportation of hydrogen is an expensive and potentially risky business. Not to mention the energy density of hydrogen is low and thus requires very large fuel tanks that are not ideal for fitting into vehicles. Converting the hydrogen to a much more energy dense and safer e-gasoline is a desirable activity.

There are of course also people who resist change in the mobility sector. As a motorbike fan myself and an admirer of the roar from a grunty V8 engine, there is a part of me that is reluctant to part with the good old combustion engine. Although I want to be green. This way I can do both.

Currently the Fischer Tropsch e-fuel production process is being developed and optimised, with different catalysts being tested to produce the best results and most desirable mix of fuels. Currently the process leans in favour of e-kerosine production, rather than e-gasoline or e- diesel. Kerosine is the main component of jet fuel and thus the current e-fuels process is a good way of producing sustainable aviation fuels (SAF). e-Methanol and e-ammonia can also be produced and will also be key fuels for the energy and shipping sector.

The bottleneck to e-fuel production at the moment is the high price of green hydrogen. But massive hydrogen plants are being announced globally and large facilities are being put up in the Middle East. With the endless sunshine for solar electricity production and the financial resources at the disposal of Saudi Arabian oil giants it won’t be long until wholesale hydrogen prices decline drastically, much like EV battery prices have done over the last 5 years.

e-Fuels will not replace electric vehicles. But I believe they will certainly find their place in the fuel matrix in a number of sectors. At Markets and Markets we think this will start in off-highway and aviation and the biggest use of e-fuels will be in the power sector with the production of e-ammonia and e-methanol.

There are a lot of moving parts to the potential success of the e-fuel industry, namely the future price of hydrogen, government incentives and regulations, carbon abatement targets, auto OEM R&D strategy and shipping & logistics challenges. However, the growing hydrogen economy and its derivative products such as e-fuels will be an important part of the energy mix going forwards.