The Promise of Synthetic Fuels: Driving towards a Just and Sustainable Transportation


Until recently, the idea of a carbon-neutral combustion engine seemed like a distant dream. However, emerging technologies and innovations are bringing us closer to making this dream a reality. The key lies in the development of synthetic or carbon-neutral fuels, which not only power our vehicles but also capture carbon dioxide (CO₂) during their manufacturing process. This breakthrough offers a significant contribution to mitigating global warming and achieving critical climate targets.

The Urgency of Reducing CO₂ Emissions

To meet global climate targets, it is imperative to reduce CO₂ emissions from the transportation sector significantly. Over the next four decades, we need to reduce traffic-related emissions by 50 percent worldwide and by at least 85 percent in advanced economies. While electric vehicles have gained traction in the passenger car market, other modes of transportation, such as aircraft, ships, and trucks, still primarily rely on traditional fuels. Carbon-neutral combustion engines powered by synthetic fuels offer a promising solution for decarbonizing these sectors, making them a crucial avenue to explore.

2.8 gigatons of CO₂ could be saved by 2050 with the use of synthetic fuels.

Synthetic Fuels: Turning Greenhouse Gas into a Resource

The innovative aspect of synthetic fuels lies in their ability to capture CO₂ during the manufacturing process, effectively turning a potent greenhouse gas into a valuable raw material. Using electricity from renewable sources, hydrogen is first produced from water, and then carbon is added to create liquid fuels like gasoline, diesel, and substitute natural gas. What's more, these synthetic fuels can seamlessly integrate with the existing filling-station network, ensuring a smooth transition to cleaner energy sources.

Cost-Effectiveness and Viability

Despite the potential of synthetic fuels, there are still significant challenges to overcome. The production facilities are currently expensive, and only a few test plants exist. To facilitate their widespread adoption, governments and industries must invest in research, development, and scaling up production facilities. Additionally, falling prices for renewable electricity can further enhance the economic feasibility of synthetic fuels.

In terms of cost-effectiveness, Bosch has conducted calculations indicating that the total cost of ownership for a hybrid vehicle running on synthetic fuel could be lower than that of a long-range electric car, especially when considering the type of renewable energy used. This suggests that synthetic fuels can offer a competitive alternative to electrification, at least in the short to medium term.

Key Considerations for Synthetic Fuels

1. Production Process: Synthetic fuels are produced solely with the help of renewable energy sources, making them a clean and sustainable option.
2. Cost: While the production of synthetic fuels is currently complex and expensive, scaling up production and favorable electricity prices could lead to significant cost reductions in the future.
3. Price Range: Present estimates suggest that synthetic fuels, excluding excise duties, could cost between 1.00 and 1.40 euros per liter in the long run.
4. Volume Limitations: Unlike biofuels, synthetic fuels do not compete for land resources, making them a viable option for large-scale production.

E-Fuels: A Path to Cutting CO₂ Emissions

E-fuels, a subset of synthetic fuels, are not yet produced at scale but hold great potential. The world's first commercial e-fuel plant in Chile, backed by Porsche, aims to produce 550 million liters per year. Other plants, like Norway's Norsk e-Fuel, are in the pipeline, with a focus on aviation fuel. E-fuels can be used in existing internal combustion engine (ICE) vehicles and can be transported via existing fossil fuel logistics networks, which is beneficial for both ICE component manufacturers and fuel transport companies.

‘Whilst commercial production is not a turn key solution, internal combustion fuel engines are ready to roll’

Supporters of e-fuels argue that they offer a means to reduce the CO₂ emissions of the existing passenger car fleet without the need to replace every vehicle with an electric one. However, critics highlight that manufacturing e-fuels is currently very expensive and energy-intensive. It requires about five times more renewable electricity to power an ICE vehicle with e-fuels compared to a battery-electric vehicle.

Governmental and Regulatory Position on E-Fuels

The European Union recently passed a landmark law aiming to end sales of CO₂-emitting cars by 2035. However, Germany and several other countries have opposed this law, demanding that new cars with internal combustion engines running on e-fuels be allowed after 2035. This opposition has temporarily halted the implementation of this ambitious climate policy.

In response to this opposition, the European Commission has proposed a compromise that would allow carmakers to register new cars in the EU only if they can run on climate-neutral e-fuels. The draft proposal also includes requirements for technology that prevents the use of non-carbon-neutral fuels, emphasizing the importance of decarbonizing the transportation sector.

Industry Support for E-Fuels

Major players in the automotive industry, including Bosch, ZF, Mahle, and carmakers like Porsche, Piech, and Mazda, have shown support for e-fuels. These companies are members of the eFuel Alliance, an industry lobby group, demonstrating their commitment to exploring and developing this technology. Porsche, for instance, has invested in e-fuel producer HIF Global, emphasizing the potential of e-fuels as a sustainable solution for transportation.

Conclusion: Driving Toward a Sustainable Future

In conclusion, while electric vehicles undoubtedly offer inherent efficiency advantages over combustion engines powered by synthetic or e-fuels, it is crucial to acknowledge that a significant number of internal combustion vehicles will still be on the road after 2030. E-fuels have the potential to make these vehicles greener, bridging the gap during the transition to fully electric transportation.

Dr. Karl Dums, Porsche's head of e-fuels, believes that economies of scale and technological advancements could make e-fuels competitive with fossil fuels by the end of the decade. Additionally, e-fuels offer a means to store surplus renewable energy and facilitate its export using existing infrastructure. This is especially relevant in regions like Chile, where renewable energy production can exceed demand.

Ultimately, consumers are driven by the desire for sustainable outcomes while recognizing the need for a just transition that is pragmatic rather than tumultuous. Synthetic fuels, including e-fuels, have the potential to serve as a bridge in this journey toward a more sustainable and affordable future for all.

Information is based on our current understanding of taxation legislation and regulations. Any levels and bases of, and reliefs from, taxation are subject to change. Tax treatment is based on individual circumstances and may be subject to change in the future. Although endeavours have been made to provide accurate and timely information, we cannot guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No individual or company should act upon such information without receiving appropriate professional advice after a thorough review of their particular situation. We cannot accept responsibility for any loss as a result of acts or omissions.


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