KUALA LUMPUR (June 21): The widespread development and use of synthetic fuels is still at least a decade away and depends on the successful deployment of other technologies, according to the latest Horizons report by data and analytics company Wood Mackenzie (WoodMac).

In a statement on Thursday, WoodMac stated that e-fuels are a synthetic alternative to fossil fuels, and can decarbonise difficult to electrify sectors without the need for the early scrapping of long-life equipment.

It said this means e-fuels can offer a solution to power critical segments of transportation, such as ships, long-haul aircraft and heavy-duty commercial vehicles.

WoodMac’s Horizon report states that e-fuels, which are also known as electrofuels, synthetic fuels, Power-to-X (PtX), Power-to-Liquids (PtL) and renewable fuels of non-biological origin (RFNBOs), are produced by combining electrolytic (green) hydrogen, made by electrolysing water using renewable electricity, with captured carbon or nitrogen.

It said an e-fuel can be considered carbon neutral if the emissions released into the atmosphere during its combustion are equal to (or less than) the captured CO2 used to produce it.

WoodMac vice-president of hydrogen research Murray Douglas said identifying pathways from legacy fuels into low-carbon alternatives is a perennial challenge for incumbent energy players.

“E-fuels offer companies an intriguing prospect at the intersection of electrons and molecules, and the potential to capitalise on existing technical, commercial and marketing capabilities makes it an appealing, if challenging, opportunity for many,” he said.

WoodMac’s report also stated that commercial viability is the key challenge in scaling up e-fuel production, with green hydrogen production and CO2 capture costs both high.

It said the subsequent conversion process to the final e-fuel product is both energy and capital intensive, and delivery costs must also be considered.

Douglas said there is no shortage of offtakers seeking low-carbon fuels, but the gap between cost of production and willingness to pay is sizeable.

“Each e-fuel has an incumbent fuel it aims to displace, all of which are much cheaper, and this means their success will be dictated by policy to mandate volumes, place a cost on emissions and lower production costs,” he said.

Douglas added that current conversion technologies differ depending on the final e-fuel desired, but the key challenge for all of them is in integrating green hydrogen, carbon or nitrogen, and their subsequent conversion in a large-scale commercial e-fuel production facility.

He said e-fuels are undoubtedly one of the longer-term plays in the energy transition.

“However, companies that set a strategic direction quickest can position themselves to capture the most attractive elements of the value chain, and take those learnings forward,” said Douglas.