Alternative Fuels

In the future, electricity and other alternative fuels will power zero-emission vehicles. Which fuel is used will depend on its associated costs and level of public acceptance.

The clean-energy transition in the transport sector depends on the adoption of vehicles that run on carbon-neutral energy instead of petroleum fuels. Right now, only a small fraction of vehicles on the road use electricity, but things won’t remain this way for long. At the same time, the decarbonisation of the transport sector will require enormous amounts of energy from wind and solar power. It is important to project exactly how much power will be needed so policy-makers can calculate the costs and gauge the public response ahead of time. Among other things, future power demand will depend on the options available for the configuration of future transport systems as well as on the drivetrains and fuel types that dominate tomorrow’s markets.

From a purely technical standpoint, other alternative energies can be used to power vehicles, including bio fuels, carbon-neutral synthetic fuels and natural gas. But all alternative fuels raise questions regarding infrastructure requirements, technology subsidies, potential production capacities and economic costs. These questions must be analysed with an eye to climate-friendly transport. It is crucial to identify systematic strategies that minimise the costs of switching to carbon-neutral energies while nevertheless meeting sustainability targets.

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Core results

  1. 1

    Synthetic fuels will play an important role in decarbonising the chemicals sector, the industrial sector, and parts of the transport sector.

    Synthetic fuels will play an important role in decarbonising the chemicals sector, the industrial sector, and parts of the transport sector. Synthetic fuel production technologies can be used to manufacture chemical precursors, produce high-temperature process heat, as well as to power air, sea and possibly road transport. Because synthetic fuels are more expensive than the direct use of electricity, their eventual importance in other sectors is still uncertain.

  2. 2

    To be economically efficient, power-to-gas and power-to-liquid facilities require inexpensive renewable electricity and high full load hours. Excess renewable power will not be enough to cover the power demands of synthetic fuel production.

    Instead, renewable power plants must be built explicity for the purpose of producing synthetic fuels, either in Germany (i.e. as offshore wind) or in North Africa and the Middle East (i.e. as onshore wind and/or PV). The development of synthetic fuel plants in oil- and gas-exporting countries would provide those nations with a post-fossil business model.

  3. 3

    In the beginning, synthetic methane and oil will cost between 20 and 30 cents per kilowatt hour in Europe. Costs can fall to 10 cents per kilowatt hour by 2050 if global Power-to-Gas (PtG) and Power-­to-Liquid (PtL) capacity reaches around 100 gigawatts.

    The aimed-for cost reductions require considerable, early and continuous investments in electrolysers and CO2 absorbers. Without political intervention or high CO2 pricing, however, this is unlikely, because the cost of producing synthetic fuels will remain greater than the cost of extracting conventional fossil fuels.

  4. 4

    We need a political consensus on the future of oil and gas that commits to the phase-out of fossil fuels, prioritises efficient replacement technologies, introduces sustainability regulations, and creates incentives for synthetic fuel production.

    Electricity-based fuels are not an alternative to fossil fuels but they can supplement technologies with lower conversion losses, such as electric vehicles and heat pumps. Application-specific adoption targets and binding sustainability regulations can help to ensure that PtG and PtL fuels benefit the climate while also providing a reliable foundation for long-term planning.

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