The market for synthetic fuels - Italy

1.1 Introduction and purpose of the study

Some of the most controversial and debated topics nowadays are about the transition to a zero-emission world, especially about dealing with the means and the ways to achieve this transition.

In the world of transportation, electricity is now almost universally recognized as the main road to achieving the goals set by the 2015 Paris Agreement. This technology, however very useful, like all radical innovations, has its limits, related to the materials used, the production of the vehicles, the infrastructure required for their use, their real environmental impact, etc.

These limits will likely be overcome by technological innovations, given the massive investments that are now driving its development, but in the meantime, the climate situation continues to worsen and the world needs more immediate solutions.

Synthetic fuels are being presented precisely this way, as an outcome that can be deployed right away in existing and circulating vehicles, without the need to change either the existing infrastructure or the vehicles. Consequently, the efficient value chain that companies have created over the decades that internal combustion engines have been in use. In addition, synthetic fuels are also a solution for the kinds of transportation for which electrification is unthinkable (ex. air transport).

Despite this, even for this technology, there is no shortage of sticking points. In this case, they are related to the cost of production, lower energy efficiency, and the need for more renewable energy sources to make their use actually sustainable.

These points are fueling an increasingly heated debate, particularly since the European Commission announced that starting in 2035, not only electric and hydrogen cars will be sold, but also those that run only on e-fuel, with BEV proponents seeing e-fuel as a technology developed specifically by the oil lobby to slow down the electrification transition.

This report will provide an unbiased overview of the market and characteristics of e-fuel, based only on verified data, to uncover the real potential, and limitations, of this debated technology.

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 ...

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 ...

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 ...

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 ...

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 ...

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 ...

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 ...

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 ...

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 ...

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 ...

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 ...

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 ...

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