E-fuels: Separating the substance from the hype

At the same time, they are expensive and less energy efficient, and, in all likelihood, will only be available in very limited quantities over the next few decades. Accordingly, e-fuels must be produced and used in a targeted manner. More specifically, they should be prioritized for segments of the transport sector that lack battery-electric alternatives, mainly aviation and maritime transport.

Far from relying on individual measures, policymakers should strive to adopt comprehensive regulatory packages that target actors throughout the fuel supply chain. The coordinated introduction of such measures in numerous countries would help to reduce the risk of market fragmentation and carbon leakage. Accordingly, international cooperation on e-fuel investment and regulatory policy is essential.

The following principles should apply to international cooperation, standards, and certification systems: (1) The supply of renewable electricity to the domestic economy and population should have priority over the production of e-fuels for export; (2) e-fuel projects should rely exclusively on additional renewable energy capacity that is developed as a supplement to domestic renewable needs; (3) such supplemental capacity should be developed in a manner that supports local infrastructure expansion and economic development; and (4) renewable electricity should be used as efficiently as possible in e-fuel production countries, with priority given to direct electric applications, such as electric vehicles.

An effective strategy for ramping up e-fuel production must consider not just the need to secure ample renewables generation but also the sustainable sourcing of carbon as well as viable models for project financing. Attention must also be given to steering the production and use of e-fuels in a manner that serves climate policy goals. The establishment of robust international standards will play an important role in this regard.

Projected global e-SAF production in 2030 correspond to around 3% of the EU’s current jet fuel demand, while projected e-methanol production in 2030 is equivalent to 5% of European marine fuel demand. Accordingly, for meaningful decarbonization in the subsectors of aviation and maritime transport, it is necessary not only to realize all currently announced projects but also significantly expand the number of large-scale projects in the development pipeline.