Can E-Fuels Save the Combustion Engine?

Source: By Julia Petron and Dieter Holger, Wall Street Journal • Posted: Sunday, May 16, 2021

Proponents say they should be part of a low-carbon future. But cost and efficiency remain hurdles.

Synthetic fuels that are virtually carbon-neutral versions of gasoline, diesel and kerosene could extend the life of combustion engine technology. Photo: WSJ

Maybe the combustion engine isn’t dead after all. Synthetic fuels are attracting growing interest as a way to make industries ranging from jets to ships to cars greener without having to rethink or replace their traditional engines.

Known as electrofuels or e-fuels, these synthetics are made by mixing hydrogen derived from renewable sources usually with captured carbon dioxide to create a virtually carbon-neutral version of fuels such as gasoline, diesel and kerosene.

Some airlines, cargo shippers and oil companies already have pilot projects under way to produce e-fuels, or are experimenting with blends of e-fuels and conventional fuels. Auto makers also are investing in the technology, with some saying e-fuels could be a way to keep older passenger cars on the road, alongside electric and hybrid vehicles, as a cleaner form of transportation.

Cost hurdles

The technology underlying e-fuels isn’t new. Nearly a century ago, German scientists Franz Fischer and Hans Tropsch invented a method, known as Fischer-Tropsch synthesis, that mixes carbon monoxide with hydrogen to create synthetic petroleum.

Synthetic fuels have many advantages, according to supporters: They can be blended with conventional fuels—density and quality are similar—or replace them completely without altering existing pipelines, refilling stations and engines. They also can be easily transported and stored for extended periods.

Cost, however, remains a big hurdle.

E-fuels are getting a fresh look because renewable-energy prices have fallen to record lows, and governments and companies world-wide are increasing investments in green hydrogen and carbon-capture technology—the elements needed to make e-fuels. But at this early stage of development, e-fuels are still four to six times as expensive to produce as conventional fuels before taxes, according to the eFuel Alliance trade group.

Many say the future of e-fuels could hang on whether governments adopt or increase taxes on greenhouse-gas emissions—which would make conventional fuel more expensive—and encourage green-hydrogen production through government funding and subsidies.

If they do, oil-and-gas firms should be able to supply enough captured CO2 to make e-fuels. Fossil fuels are expected to account for a big part of the world’s energy mix even in 2050, and by building out carbon-capture technology, big oil companies could continue to produce fossil fuels while responding to calls to address climate change.

Some oil giants are making bets already. In Spain, Repsol SA is investing 60 million euros, equivalent to about $72 million, building a synthetic-fuels plant that uses CO2 captured from a nearby oil refinery in Bilbao. The plant, expected to go online in 2023, will produce 50 barrels of e-fuel a day during the pilot phase, then eventually scale up for commercial distribution of e-fuels for the transportation sector.

U.S. oil-and-gas giant Exxon Mobil Corp. also sees an opportunity in e-fuels. This year, it pledged to invest $3 billion through 2025—roughly 3% to 4% of its planned annual capital expenditure—on lower-emission technologies such as carbon capture and storage. The oil giant also began working with Porsche this year to test e-fuels for cars.

“E-fuels have an enormous potential,” says Andrew Madden, vice president of strategy and planning for Exxon Mobil Fuels & Lubricants. “As we get the [carbon capture] technology matured, we can tie them together where it makes sense.”

How E-Fuels Are Made

E-fuels are synthetic fuels manufactured using hydrogen from renewable sources and usually captured carbon dioxide or other sources of carbon. They include a wide range of low-carbon fuels.

Renewable electricity such as wind and solar enters the grid to power the electrolyzer.

The electrolysis process, which splits water into oxygen and hydrogen, allows the production of green hydrogen—hydrogen created from renewable sources.

Green hydrogen is combined with captured carbon dioxide through usually one of two methods—called Fischer Tropsch or methanol synthesis— which use a series of chemical reactions to convert the mixture into liquid hydrocarbons or e-methanol, respectively. CO2 can be captured from industrial processes, power generation or directly from the air.

Ships and planes

In the near term, aviation and maritime shipping companies may be the most likely buyers of synthetic fuels because their businesses are carbon-intensive and hard to fully electrify. The high energy density of e-fuel also could make it a good decarbonization solution for heavy-duty trucks that haul cargo over long distances, proponents say.

In January, KLM Royal Dutch Airlines powered a commercial flight from Amsterdam to Madrid with synthetic fuel, a world first. The aircraft used regular fuel mixed with 500 liters of synthetic kerosene produced by Royal Dutch Shell PLC. Airbus SE, too, is looking at synthetic fuel as it seeks to develop the world’s first zero-emissions commercial aircraft, which could be in service by 2035.

In 2019, German airline Deutsche Lufthansa AG signed a deal for the Heide Refinery in Germany to produce and supply the Hamburg airport with synthetic kerosene. The aim is to replace 5% of the fossil-based kerosene used to fuel jets at the airport with synthetic kerosene as early as 2024 through wind energy generated locally.

The chief executive of the refinery sees applications for e-fuels in the chemical industry, too, saying e-fuels could slash the carbon footprint of the plastics industry and the emissions generated from producing goods ranging from smartphones and laptops to shampoo bottles and toys.

“The application of them is just so vast and basically in all the materials we are using day-to-day,” says Jürgen Wollschläger, Heide’s CEO.

Shipping giant A.P. Moller Maersk A/S, meanwhile, sees e-methanol and e-ammonia as a promising way to power its fleet in the future and says customers have indicated they would be willing to pay more for green shipping as they seek to reduce emissions in their supply chains.

“The dialogue we’re having with our customers is promising,” says Morten Bo Christiansen, vice president and head of decarbonization at Maersk. “The technology is proven, mature and it can be scaled. There’s a huge investment cycle in front of us.”

Maersk has said that it will have its first carbon-neutral vessel in operation by 2023 and is exploring e-methanol to power it. The company also is collaborating with the investment firm Copenhagen Infrastructure Partners and some Danish companies to build Europe’s largest green ammonia facility in Esbjerg, on the Danish west coast.

How green is it?

Much of the recent buzz around e-fuels has centered on autos, with some car makers looking at e-fuels as an additional route to environmentally friendly travel, along with electric and hybrid technologies.

Porsche said last year that it is investing roughly 20 million euros in a synthetic-fuels plant in southern Chile, where wind power is naturally abundant. It plans to test the fuels first in its racing fleet and later in sports cars like the 911.

The company predicts the big cost gap between e-fuels and fossil fuels could narrow significantly in the next five years, depending on government taxes and subsidies. A tax on carbon would raise the cost of fossil fuels and drive an increase in renewable energy, which is needed to produce the green hydrogen used in e-fuels.

“If regulators put a cost on carbon emissions, e-fuels can potentially be a very competitive way to decarbonize,” says Michael Steiner, member of the executive board for research and development at Porsche.

Mr. Steiner says the liquid nature of e-fuels makes them easy to store and transport to cities and regions where renewable energy is scarce, or where grid accessibility challenges the development of electric vehicles on a large scale.

Some point out that EVs aren’t without environmental concerns of their own, including mining to extract lithium for batteries, as well as battery waste in the absence of highly developed recycling systems.

Christian Schultze, director of research and operations at Mazda Motor Europe’s R&D center, says synthetic fuels could make older vehicles cleaner, significantly speeding up the reduction of CO2 emissions.

“The problem with emissions isn’t on the engine side; it’s on the fuel side,” he says. “Why do you want to scrap the internal combustion engine if I tell you we can make it extremely clean?”

Critics, however, say vehicles running on e-fuels will never be as green as electric vehicles, partly because a great amount of energy gets lost during the process of converting electricity into liquid or gaseous fuels.

“There is little chance that burning e-fuels in an inefficient internal combustion engine could be a cheaper or more practical transport decarbonization solution than electric vehicles,” says Stephanie Searle, fuels program director at the International Council on Clean Transportation.

Moreover, because renewable energy is the essential prerequisite for low-carbon e-fuels, there needs to be a substantial increase in renewable production to make e-fuels a reality on a larger scale.

For now, capacity of e-fuels is very limited.

Geert Decock, electricity and energy manager at Transport & Environment, a nonprofit promoting sustainable transportation in Europe, says the firm recently wanted to test e-fuels in a combustion-engine vehicle, but couldn’t buy 500 liters (132 gallons) of it.

The first step to making the technology a reality is to scale up refueling infrastructure, he says. “Get ports ready. Hydrogen hubs. Ammonia storage facilities,” he says. “That’s the kind of focus we want in the next decades, to roll out some of the infrastructure and get the costs down.”

Ms. Petroni and Mr. Holger are reporters for The Wall Street Journal in Barcelona. Email them at giulia.petroni@wsj.com and dieter.holger@wsj.com.