The development and commercialisation of powerfuels is in its very early stages. Powerfuels are synthetic gaseous and liquid fuels produced from green electricity. The plan is to use them when there is no viable alternative, like aviation and shipping. The big hurdle is cost, currently in the range of €3-5/litre, or five to ten times the price of fossil fuels. Dolf Gielen and Gabriel Castellanos at IRENA and Kilian Crone at the German Energy Agency (dena) review what needs to be done to get that down to €1-1.5/litre by 2030. To meet such a challenge policy support, as always, will be key along with industry buy-in and further technical progress. Crucially, it will need the large scale production of clean, low cost hydrogen and CO2. Good news for an increasingly ambitious hydrogen sector, as well as solar and wind (it’s their excess capacity that would be used to power the powerfuels manufacture). The authors reference the projects under development in Norway, Germany, Morocco and Canada.

IRENA and the German Energy Agency dena organised a first joint workshop that convened players in aviation, shipping and fuel supply to discuss synfuels on 23 March. The global energy sector is changing rapidly because of the energy transition.

More and more countries and companies are looking for zero carbon solutions for example in aviation and shipping. Synthetic fuels produced from green hydrogen and CO₂ have recently received a lot of attention.

There are a number of reasons for this interest:

• The falling cost of green hydrogen, nitrogen and CO₂, the feedstocks for powerfuel production
• Rapidly rising shares of solar and wind lead to periodic surpluses that can be used for hydrogen and synfuel production
• Efficiency, biofuels, battery electric or direct hydrogen use can deliver only partial solutions
• Local air pollution regulations require alternatives for polluting fuels such as shipping bunker fuel

Still very small scale

Currently, quantities are still small. In aviation, demand for alternative jet fuel amounted to 30 million litres or less than 0.01% of total demand in 2019. All of this was biofuel. At present there is even less use of biofuels in shipping.

Whereas powerfuels can also be applied in cars or in trucks, the competition with battery-electric drivetrains or hydrogen solutions leaves the future share of synfuels in this market segment unclear. Other applications of powerfuels, such as in the chemical and industrial sector, are similarly in very early stages of commercial application.

Climate benefits depend on availability of clean, low-cost H2 and CO2

In the aviation sector, the chemical composition of any powerfuel is already clearly specified: it must be similar to the existing kerosene, such that it can be blended in and used with the existing aircraft. The shipping sector is also looking at other powerfuels, including ammonia and methanol. Around fifteen methanol fuelled ships are in operation, and more will follow. One ammonia fuelled tanker is currently under construction and a share of ammonia can also be added in existing ship engines with limited modifications. Both fuels can be produced from hydrogen, in the case of ammonia through reaction with nitrogen and in the case of methanol through reaction with CO₂. The practical application hinges on availability of clean and low-cost hydrogen and CO₂.

However the climate benefits of hydrocarbon synfuels depend critically on the CO₂ source. Current discussions are focused on allocation of fossil CO₂ to the primary product and synfuel. On a system level, these discussions can seem misguided: what matters in the end is the amount of fossil CO₂ that ends up in the atmosphere, and the net reduction compared to the reference case. In the absence of other restrictions, if fossil CO₂ is captured and used once for synfuels and subsequently emitted, emissions are in principle halved. In practice the benefit will often be smaller – around 35% – because of conversion energy needs.

In spite of the limited gain, and although cheaper decarbonisation options may exist on a system level, it is important to scale powerfuels in the 2030-2040 timeframe to transition to climate neutral CO₂ from direct air capture (DAC) in the period from 2050 onward when full climate neutrality is needed.

Biomass, and biomass combustion constitutes another climate neutral CO₂ supply option. These processes tend to be smaller in scale than large fossil fuel-based facilities but capture cost are typically still moderate at USD 40-80 per tonne CO₂. In Europe a potential of several hundred Mt biomass climate neutral CO₂ has been identified. Also lime and cement kilns could be considered, as their process emissions cannot be avoided, and notably if they use biomass and waste as fuel. Hydrogen and CO₂ sourcing could have implications for the location choice of future synfuel plants.

Project initiatives

Various players are developing projects. To name a few: Norsk E-Fuel is building a syncrude plant in Norway, set to produce 100 million litres per year from 2025. The German Westküste 100 project aims to get a 700MW green-hydrogen plant powered by a dedicated offshore wind farm up and running by 2030 at the Heide oil refinery. Investment decision is still pending and subject to government subsidies. Also outside Europe activities exist: IRESEN is planning a 100 MW plant in Morocco, to be operational by 2023. The SAF+ Consortium in Canada is North America’s 1st planned Project on Converting Industrial Emissions to SAF (Sustainable Aviation Fuel), aiming for a 4 million litres/yr plant in 2025.

Challenging economic outlook

Yet currently, the economics are still challenging. Today’s production cost are in the range of 3-5 EUR/l, five to tenfold the price of fossil fuels. However, cost for hydrogen and CO₂ are expected to drop in the coming decades. Under certain cost related premises for hydrogen and CO₂, a zero carbon synfuel production cost of 1-1.5 EUR/litre could be achieved by 2030.

Figure 1: Economics of synfuel production 2030

Global initiatives

To further foster the understanding and development of the issue, several global initiatives have been formed. The Global Alliance Powerfuels was initiated by the German Energy Agency (dena) together with 16 corporate partners as founding members. The strategic objective of the Alliance is to foster the development of a global market for powerfuels across sectors.

The Getting to Zero Coalition aims for commercially viable zero emission vessels (ZEVs) operating along deepsea trade routes by 2030. The 50 Coalition members across the maritime value chain commit to the target of reducing emissions from shipping by at least 50 percent by 2050. IRENA is a knowledge partner in this initiative. To reach the target ZEVs must start entering the global fleet by 2030, with numbers to be radically scaled up through the 2030s and 2040s. A fuels working group is currently assessing various fuel options and developing a decision tool for investors.

Under the Carbon Offsetting Scheme for International Aviation (Corsia) airlines can reduce their offsetting obligation through the purchasing of “Corsia eligible fuels”, alternative fuels which have lower associated GHG emissions. As targets are based on the 2020 reference year, the ongoing COVID-19 crisis may result in stringent targets for the future, an unforeseen effect. In theory this may boost synfuel deployment efforts, but before Corsia efforts can have any effect on powerfuels, existing frameworks must be adapted. Currently powerfuels are not eligble within Corsia.

Policy perspectives

Synfuels constitute a comparatively high cost future CO₂ reduction option. However, if the policy goal is full decarbonisation, they have a role to play. There is a need to establish sustainability criteria for what counts as a “renewable” CO₂ neutral fuel. Fuel supply industries need to start thinking of cooperation with CO₂ providers such as biomass industries and cement kilns. The G20 under the Saudi Presidency has a focus on the carbon economy including CO2 capture and use. Taking the necessary actions at a technical and policy level could results in a competitive cost for synfuels by 2030 and beyond.

An opportunity for Green Hydrogen

A transition to synfuels could create a huge market for green hydrogen. Supplying powerfuels for just half of today’s aviation and shipping fuel demand would require 200 billion Mt of hydrogen, nearly twice the current global hydrogen production. This is only possible if production takes place at locations with availability of large amounts of low-cost renewable electricity. Between 1,000 and 6,000 GW of additional solar or wind power would be needed for 1.5 Gt CO₂ deployment.

Figure 4. Feedstock requirements and renewable energy deployment needed for the production of 500 billion litres of synfuel

Given the current high cost, markets need to be created through regulation or fiscal measures. There is a need to act on both R&D and infrastructure support. Synthetic fuels in aviation looks like a promising first market, and policy initiatives are already underway. The European Union will propose measures for increasing the use of Sustainable Aviation Fuel (SAF) by end of this year. In Norway, a drop-in mandate for SAF is currently set at 0.5 %, creating a market of approximately 6 million litres per year. The goal is to raise the mandate to 30% in 2030. Also, other European countries are considering SAF mandates, with discussions ongoing in the Netherlands, Sweden, Finland, Spain, France and Germany.

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Dolf Gielen is the Director of the Innovation and Technology Center in Bonn, IRENA

Gabriel Castellanos is an Associate Programme Officer at IRENA

Kilian Crone is the Team Lead International Cooperation Hydrogen & Powerfuels, German Energy Agency (dena)