The roll-out of low-carbon, synthetically-derived alternatives to fossil fuels, e-fuels, depends on the successful deployment of new technologies to a large extent. Unfortunately, many of these are still at a nascent stage, and expensive. A recent report from Wood Mackenzie emphasises the need for further development of green hydrogen and CO₂ capture, for example. The result of this lag in development could mean that the e-fuels opportunity ‘won’t fully materialise until after 2030’, the market analyst suggests.

Although different conversion technologies are used to produce e-fuels, it is renewable electricity, particularly solar power, which offers the best hope of lowering costs and improving efficiencies. Solar power can already be used to produce a range of e-products, including e-ammonia, e-methanol, e-jet fuel, e-diesel, e-petrol and e-methane, via the production of green hydrogen.

Governments incentivise e-fuels
A raft of government policies across Europe and the US are expected to provide the necessary stick and carrot to incentivise the production of e-fuels.

The UK is committed to increasing the ratio of e-fuels in aviation and has pledged to have at least five commercial sustainable aviation fuel (SAF) plants under construction by 2025. In April 2024, it confirmed that its power-to-liquid obligation would start in 2028 at 0.2% of jet fuel demand. This will reach 3.5% by 2040.

In August, OXCCU, a leading converter of CO₂ into fuels, chemicals and plastics, announced the launch of its first SAF demonstration plant, OX1, at Oxford Airport. The plant claims to be the world’s first sustainable SAF production facility. It showcases a groundbreaking one-step process that bypasses the need for CO₂ to first be converted to carbon monoxide (CO). The process converts CO₂ and hydrogen directly into long-chain hydrocarbons. The OX•EFUEL produced through this patented single-step process, promises to provide a cost-effective and scalable solution for aviation fuel production, says the company.

The first-of-a-kind Oxford Airport facility is scheduled to produce 1 kg/d (~1.2 l/d) of liquid fuel from September 2024. Work at the demonstration facility is planned to provide key data that will lead to the development of a full-scale OX2 facility at Saltend Chemical Park, Hull. This will produce 160 kg/d (200 l/d) shortly after it starts operating in 2026, paving the way for further commercial plants that will supply the UK and elsewhere with SAF.

According to Andrew Symes, CEO of OXCCU: ‘The fuel we’ve already made in a single step from CO₂ in the lab has created great excitement with its potential to massively reduce the cost of SAF. But the scale-up is key and this plant will generate the data and litres of fuel we need.’

OXCCU and its partner px Group, an integrated infrastructure solutions provider for high hazard environments in the UK, owns the Saltend Chemicals Park and will collaborate in the OX2 venture. The px Group will provide the engineering design and construction of the outside battery limits (OSBL) support facilities as well as operations and maintenance when the plant is up and running.

Geoff Holmes, CEO of px Group, says: ‘This groundbreaking project with OXCCU demonstrates the confidence in Saltend as a pioneering centre for industrial decarbonisation projects.’

Humberside is fast becoming a key location for sustainable industries in the UK government’s green energy strategy. The OXCCU project follows hot on the heels of the Equinor Hydrogen-to-Humber H2H decarbonisation project, also in Saltend, that was recently granted planning permission. The Equinor project comprises a 600 MW low-carbon hydrogen production plant with carbon capture. It is one of the first of its kind and scale to be granted planning permission in the UK, and has helped to establish the Humber as an international hub for low-carbon hydrogen whilst significantly reducing carbon emissions.

‘In the aviation sector, specifically where the constraints of battery range and weight pose challenges, the development of sustainable electric aviation fuels suitable for current aircraft and distribution infrastructure plays an important role in reducing the use of fossil fuels.’ – Dietmar Huber, Vice President of Innovation Business Platform Power-to-X at Neste

Approach to e-crack ammonia
Meanwhile, Syzygy Plasmonics of the US has pioneered a new technology that harnesses the energy from ultra-high efficiency artificial lighting to e-crack ammonia, removing the need for combustion. In January 2024, the company announced that its experimental light-powered reactor cell for industrial chemical reactions – the world’s first – has met initial performance targets. The product is now available in stacks designed to produce up to 5 t/d of hydrogen.

’Testing of the 200 kg/d light-powered ammonia e-cracking cell began in late-2023 and is ongoing at our Houston facility. We’re ready to deliver 5 t/d of hydrogen. In 2025 we’ll be ready for 10 t/d installations, and then for 100 t/d projects in late 2026,’ said Syzygy CEO Trevor Best.

Chevron says state and federal support crucial
Also in the US, Chevron New Energies announced in February 2024 that it is developing a 5 MW hydrogen production project in California’s Central Valley. The plant also aims to create lower-carbon energy by utilising solar power. Low-carbon intensity (LCI) electrolytic hydrogen will be produced through electrolysis. The facility will produce 2 t/d of LCI hydrogen, with the goal of supporting an expanding hydrogen refuelling network. Chevron already offers lower-carbon fuels like SAF, renewable diesel and others.

However, the start of commercial operations will depend on several factors. These include flexible and supportive legislative and regulatory energy policies, timely permitting, final engineering design and obtaining the necessary materials.

Austin Knight, Vice President for Hydrogen at Chevron New Energies, stressed the need for support from state and federal government to enable Chevron to meet growing hydrogen demand and build the necessary hydrogen fuelling infrastructure to a commercial scale.

EU directives driving e-fuels
But Europe is leading the way with targets, incentives and penalties to support e-fuels. 

European legislation that is supportive of e-fuel adoption includes Renewable Energy Directive (RED) III, ReFuelEU Aviation and FuelEU Maritime. The RED III, adopted in October 2023, aims to increase the share of renewable energy in the European Union’s (EU) overall energy consumption to 42.5% by 2030, with a further indicative target of 2.5%. The RefuelEU aviation initiative aims to increase both demand for and supply of SAF, and seeks to put air transport on the trajectory of the EU’s climate targets for 2030 and 2050. Penalties will be applied where SAF and renewable liquid and gaseous fuels of non-biological origin (RFNBO) fail to meet targets. The FuelEU Maritime legislation aims to make e-methanol and e-ammonia compete without subsidies from 2040.

Neste puts Finland in pole position
In January 2024, Neste Corporation announced that, together with a project consortium comprising 15 partners, it had concluded a three-year e-fuel research project. It said the joint e-fuel project ‘demonstrated high temperature electrolysis (SOEC), carbon capture and hydrocarbon synthesis technologies and accelerated the development of synthetic e-fuels towards commercial-scale production by generating hundreds of kilogrammes of synthetic hydrocarbons’.

The project was funded by Business Finland and 15 consortium partners, and was coordinated by VTT. The work done by the partners covered all parts of the value chain, including CO₂ capture, green hydrogen, fuel production and logistics, as well as users of the transportation fuels in the aviation, road and marine sectors. The hydrocarbons were refined by Neste mainly into carbon-neutral synthetic e-diesel, which was tested on a diesel-powered tractor in late 2023.

Dietmar Huber, Vice President of Innovation Business Platform Power-to-X at Neste, said: ‘The research and development of power-to-x technologies is one of our key focus areas. [E-fuels] offer a way to expand the carbon-neutral transport fuel pool beyond biomass-based renewable fuels to replace fossil fuels. In the aviation sector, specifically where the constraints of battery range and weight pose challenges, the development of sustainable electric aviation fuels suitable for current aircraft and distribution infrastructure plays an important role in reducing the use of fossil fuels.’

VTT Research Professor, Juha Lehtonen, Project Leader, added: ‘VTT, together with industrial partners, developed further technologies for green hydrogen production, CO₂ capture and e-fuels synthesis, and successfully demonstrated the integration of these process parts and the production of e-fuels. Furthermore, we were able to demonstrate the high quality of the produced paraffinic e-fuel with low emissions in the field test. We also gathered and developed valuable information on the profitability and sustainability of e-fuels production.’

Looking ahead – need for nimble players
Although the e-fuels opportunity may well not materialise until after 2030, companies will need to avoid complacency by acting fast and seizing the opportunities as and when they become available.

As Wood Mackenzie makes clear, it is only those companies that are positioning themselves now that will be able to improve their chances of future success. However, there are reasons to believe that the winners of tomorrow could well be niche players today. As the company’s analysis points out: ‘The complexity of e-fuels from production through to marketing suggests that only the best capitalised and most sophisticated players are best capable of delivering success. But several smaller, nimbler and more focused players are now emerging in this space with the potential to disrupt.’

Nonetheless, at the moment commercial viability remains the key challenge in e-fuel production, as green hydrogen production and CO₂ capture costs are stubbornly high. The one bright spot on the horizon, however, is solar power. Because although inflationary pressures have increased the costs for renewable generation in recent years, solar costs, by contrast, are declining and in the last year alone have fallen by 14%.

• Further reading: ‘Competing in the net zero race’. In the race to net zero, the oil and gas sector has a significant role to play using its extensive experience for the transition to renewable power.
• Europe’s refining industry, battered by a growing number of global headwinds, is struggling to stay afloat and keep abreast of the decarbonisation measures that are required as part of the energy transition.