The market for synthetic fuels - Italy

1.2 Worldwide expansion

The global synthetic fuels market was valued at $*.* billion in **** and is expected to reach $**.* billion by ****, growing at a CAGR of **.* percent from **** to ****.

The market value of synthetic fuels World, ****-****, US$ billion alliedmarketresearch

The market data, even though the market is still composed of a very limited number of players worldwide, are significant, both in terms of current value, given the relative newness of the industry, and projected growth.

Growth is driven by the potential role of these fuels in the transition to a zero-emission transportation system. While electrification and BEVs (***), and rare and potentially planet-damaging materials during disposal [***]. These issues are likely to be solved by technological development in the coming decades. Nonetheless, in the meantime, they prevent widespread adoption of electric cars and, even when such adoption did occur, it would result in some environmental issues remaining.

In this scenario, synthetic fuels are proposed as a mainly transitional solution that would reduce emissions from existing and circulating vehicles without the need for any new infrastructure. In addition to this, there are sectors (***), for which the use of electric technology is unthinkable, and for which the use of both biofuels and hydrogen-derived fuels seems to be the ...

1.3 The NZE (Net Zero Emissions) scenario by 2050 in the transportation sector

The exponential increase in global CO* emissions in recent history has led to serious consequences for our planet. This rapid increase in greenhouse gas emissions, largely due to fossil fuel use and deforestation, has had a significant impact on climate change, causing sea level rise, extreme weather events, and loss of biodiversity. These consequences threaten the survival of delicate ecosystems and the stability of world economies. Yearly CO* emissions World, ****-****, in billions of tons Ourworldindata For these very reasons, the Net Zero Emissions by **** Scenario (***), consistent with reductions assessed by the IPCC in its Sixth Assessment Report.[***] The transportation sector is the second most polluting sector, responsible for **% of greenhouse gas emissions. Greenhouse gas emissions by sector World, ****, % Iea To align the transport sector with the International Energy Agency's Net Zero Emissions scenario, it is necessary to implement a broad set of policies to encourage model shifts toward less carbon-intensive travel options and operational and technical energy efficiency measures to reduce the carbon intensity of all transport modes. For this, the NZE sets a target of reducing transport sector emissions by about ** percent to fall to less than * gigatonnes by ****. [***]    

2.1 The demand: road transport

While the use of synthetic kerosene and synthetic ammonia in air and sea transport is generally accepted, mainly due to the absence of realistic alternatives, the use of e-petrol and e-diesel in road transport is particularly debated [***].

To offer an unbiased perspective on the topic we will include both the assumptions made by the E-fuel Alliance, the body created to promote their adoption, and the views of organizations opposed to their widespread use, such as Transport&Enviroment.

The position of pro-synthetic fuel organizations [***]:

The issue:

There are currently more than *** million motor vehicles (***). Even in the case of the high uptake of electric vehicles battery in the coming years, the current vehicle fleet will continue to form the basis for mobility in the coming decades, and millions of internal combustion engine-powered cars will still be on European roads until **** and beyond. A holistic strategy is needed to address both new cars and existing vehicle fleets.

Solution:

The introduction of a "crediting" system: An agreement among car manufacturers whereby participants would have the option to purchase certain quantities of alternative fuels, which should be additional to existing quantities and should help manufacturers meet the sustainability criteria of RED II (***). Fuel suppliers would ...

2.2 The question: aviation

In ****, aviation accounted for more than * percent of global energy-related CO* emissions, growing faster in recent decades than roads, railways, or shipping. With countries returning from Covid-** lockdowns in ****, aviation emissions reached about *** Mt, recovering nearly a third of the decline from **** levels seen in ****. Numerous technical measures related to low-emission fuels, improvements in aircraft and engines, operational optimization, and demand restraint solutions are needed to achieve the Net Zero Emissions Scenario by **** - to curb the growth of emissions and ultimately reduce them in this decade. [***]

Direct CO* emissions from aviation in the Net Zero Emissions Scenario World, ****-****, Mt Iea

Fuel (***) consumption by this sector has been steadily increasing in the years leading up to Covid, and with the return to normalcy after the crisis period, it is back on the same trend, increasing by *.* percent in **** and *.* percent in *****.

Total fuel consumption by aviation World, ****-*****, billion gallons Iata Even considering **** consumption levels, which are still well below pre-pandemic levels, the fuel demand accounts for *** billion liters (***) in this sector.

In this scenario, synthetic kerosene is seen as the best option to decarbonize the sector. The International Energy Agency itself, which handles the progress of various sectors toward ...

2.3 The demand: maritime transport

In ****, international shipping accounted for about * percent of global energy-related CO* emissions. In the same year, emissions from the international shipping sector grew by * percent, recovering from the sharp decline in **** to reach **** levels. To adhere to the Net Zero Emissions Scenario by ****, total emissions will need to remain stable until ****, despite an expected increase in activity, and then begin to decline by *% per year until **** (***). [***]

Direct CO* emissions from shipping in the Zero Net Emissions Scenario World, ****-*****, Mt Iea

Technological innovation, supportive policies, and collaboration throughout the value chain are needed to promote the adoption of low- or zero-emission fuels for ocean vessels.[***]

In ****, all the energy needed to move ships came from fossil fuels; by ****, ** percent must be low-emission fuels, for a total power output of *.* EJ.

Energy consumption in international shipping by fuel type in the Net Zero Emissions Scenario World, ****-****, EJ Iea

2.4 General interest in e-fuels

Google trends searches can give us a hint about the public's interest in efuels technology. To perform this analysis, after checking if similar terms (***) show a similar trend, the terms "efuels" were chosen for the worldwide analysis and "synthetic fuels" for the Italian-level analysis.

The analysis confirms the previously stated hypothesis that this topic has become of general interest as a result of the European Commission's decision to allow the production of internal combustion engine cars after **** through the use of these fuels, first announced via a post on the Twitter profile of European Commission Vice President Frans Timmermans on March **, ****.

Globally, the peak of searches occurred just in the week of March **-**, ****, thereafter, interest seems to have declined rather rapidly.

Interest in research on "efuels" World, ****-****, in index Google Trends

It must be pointed out that, globally, interest in the topic is particularly concentrated in Germany; Austria, second in the ranking, accounts for just over half as many searches as the German state.

Research interest in "efuels" by country World, ****, in index Google Trends

Italy, on the other hand, ranks tenth, but this could also be due to a greater tendency to call efuels by the Italian term ...

3.1 A market in its infancy

As mentioned earlier, synthetic fuel production plants, either already in existence or under construction, are located mainly in Germany, although the first one to go into operation - in **** - is located in Iceland.

Most of the projects that are emerging and will emerge in the coming years are spin-offs of companies operating in complementary sectors or seeking to diversify their offerings. Below are all the projects recognized as of April **** with the companies involved [***]:

Germany:

Synhelion Solar Fuels: Synhelion INERATEC Pioneer Plant: Ineratec CAC Synfuel Plant: Chemieanlagenbau Chemnitz GmbH (***) Next GATE: H&R Group, Mabanaft GmbH & Co. KG, P*X-Europe GmbH & Co. KG, Ineratec GmbH Atmosfair Fairfuel: Atmosfair, Siemens, Ineratec, EWE, EnergyLink

Spain:

Bilbao Decarbonization Hub: Aramco, Petronor, Repsol, Johnson Matthey, Johnson Matthey-BP Synhelion Solar Fuels Spain: Synhelion

France:

ReuZe Project: Engie, Infinium, ArcelorMittal

Sweden:

FlagshipONE: Liquid Wind, Siemens Energy, Worley, Carbon clean, Haldor Topsoe, Ørsted

Norway:

Norsk e-Fuel Alpha: Norsk e-Fuel, Sunfire, Paul Wurth, Climeworks, Valinor, Lux Airport Nordic Electrofuel - Plant *: Nordic Electrofuel AS

Denmark:

Arcadia eFuels: Arcadia eFuels, Topsoe, Sasol, Technip Energies

Iceland:

George Olah Renewable Methanol Plant. Carbon Recycling International (***)

Saudi Arabia:

NEOM Green Hydrogen Project: NEOM Green Hydrogen Company, Air Products, ACWA Power

America:

HIF ...

3.2 The value chain

3.3 Distribution, one of the strengths of synthetic fuels

Among the obstacles to the development of electric vehicles, there is certainly the lack of infrastructure needed to charge them. Currently, charging of electric vehicles takes place mainly in homes and workplaces, but consumers increasingly expect similar services, simplicity and autonomy to those offered by traditional vehicles.

In Europe, there are **,*** fast public charging points in ****. Besides that, slow public charging points are another ***,***.

Charging points for electric vehicles Europe, ****-****, in thousands Iea

Globally, about *.* million public charging points were installed in ****, one-third of which were fast charging stations. During the year, nearly ***,*** charging points were added, a higher number than the total available in ****. The number of public charging stations grew by ** percent in ****, a lower growth rate than in **** (***). China is the world leader in the number of public charging points, as it has been for years, holding about ** percent of fast charging stations and ** percent of slow charging stations. This reflects China's commitment to electric vehicles and its densely populated urban areas.[***]

Therefore the infrastructure is certainly growing, but it is still far from being able to meet the demand for a fully electric fleet.

Instead, e-Fuels could be distributed directly from existing gas stations. There are ...

4.1 An alternative fuel

Fuels are materials that react with other substances to release energy. That energy can be released through heat or workforce. Fuels can also be used as raw materials or reagents in various industries, such as fossil fuels in the chemical industry. The rapid cost reduction of solar and wind technologies has stimulated interest in the electrification of end sectors. This is now seen as a pathway to decarbonize the global economy. Despite direct electrification being difficult for some sectors, indirect electrification could be achieved through the electrolysis of water to produce hydrogen and the synthesis of storable and transportable fuels. EFuels, which can be gaseous, liquid, or solid, are a subset of "Power-to-X" concepts and are considered a means of integrating large amounts of variable renewable energy such as solar and wind. Electro-fuel production could take place in areas with an abundance of renewable resources.[***]

Production:

Through the process of electrolysis, electrical energy is converted into hydrogen, allowing energy to be separated from the electrical sector for use in other sectors. Hydrogen can be used directly as a fuel, or it can react with CO* or nitrogen to produce a range of different gaseous or liquid fuels. One can distinguish power-to-liquids ...

4.2 The prices

Currently, the production cost of efuels is around **€/l, about *** times higher than regular gasoline prices. This cost is due to the current limited production and the high cost of energy, especially if it is renewable [***]. However, this could change:

As more eFuels are gradually added to conventional fuels and production costs are reduced through economies of scale, eFuels will be affordable for consumers at every stage of market expansion. While it is estimated that in **** production costs for a liter of eFuel with a * percent blending rate with conventional fuels will be between €*.** and €*.**, by **** they could fall to values between €*.** and €*.** per liter of eFuel with a *** percent blending rate. This means that, in ****, eDiesel will cost between *.** and *.** euros (***).[***]

Final eFuels price forecast World, *****, €/l e-Fuel Alliance

4.3 The actual emissions

After the European Commission decided to allow the production of ICE cars even after ****, the year by which it had previously set a stop for them, a debate has been fueled as heated as it had been regarding the stop itself.

Transport&Enviroment commissioned a study to verify the true properties of e-fuels. They considered three different types of efuels:

E-fuel * is composed of *** percent paraffinic hydrocarbons, which is a mixture of hydrocarbon chains without ring compounds such as benzene (***). Future e-fuels are likely to be primarily paraffinic blends since these are the chemical compounds produced during the Fischer-Tropsch process. This e-fuel blend ensures efficient combustion and is representative of a basic e-fuel blend that could be introduced to the EU market. E-fuel * is composed of **% paraffinic e-fuel and **% aromatic e-fuel. The addition of aromatic compounds could improve the fuel's combustion properties, so this blend is being tested to assess the impact of this potential addition on pollutant emissions. E-fuel * is composed of **% paraffinic e-fuel and **% second-generation ethanol. Fuel producers could consider using these blends to reduce costs and increase the overall availability of renewable fuels in the market.

The car used for testing was a Mercedes Class A***.

Some of ...

5.1 The regulation

In Europe, the law that defined a stop to the sale of cars with internal combustion engines by **** is ****/****. A few days after the law passed it was announced that an agreement had been reached with Germany to continue the sale of these cars with the introduction of the use of synthetic fuels; however, this agreement is not yet official and will have to go through the normal legislative process to become operational.

In America, the states that have passed similar legislation to stop sales of ICE cars are California, Maryland, Massachusetts, New Jersey, New York, Oregon, and Washington. [***]

Other laws affecting the eFuels market are:

Europe COM/****/***: Presents a comprehensive strategy for alternative fuels, explaining how they can be applied to all forms of transportation. The strategy covers technological developments, investments in the use of new fuels, and ways to explain the benefits to the public. Directive ****/**/EC: Revises the Fuel Quality Directive (***). It amends several elements, including fuel specifications, and introduces a mechanism to monitor and reduce greenhouse gas emissions and ensure the sustainability of biofuels. Regulation EC No ***/****: Establishes the European Energy Recovery Program (***) to finance projects in key energy sectors such as gas and electricity infrastructure, offshore ...

6.1 Segmentation

Startups and companies specializing in the production of eFuels:

Large international companies investing in plants:

• Synhelion
• Ineratec
• Chemieanlagenbau Chemnitz GmbH (CAC)
• H&R GmbH & Co KgaA
• Atmosfair
• Aramco
• ArcelorMittal
• Engie
• Repsol
• Infinium
• Liquid Wind
• Norsk e-Fuel
• Nordic Electrofuel AS
• Siemens
• Arcadia eFuels
• Carbon Recycling International
• NEOM Green Hydrogen Company
• HIF Global
• Abel Energy
• ThyssenKrupp
• Porsche
• Enel green power S.p.a.
• Johnson Matthey Group