There has been an ongoing discussion in Germany for months now about using climate-friendly e-fuels for road transport. Proponents of e-fuels argue that these can power cars and trucks with internal combustion engines in a climate-neutral way and achieve the ambitious climate targets in the transport sector at the same time. The German government has now made an official announcement in its recently published modernization package that it will support the production and use of climate-friendly e-fuels in road transport in the future and, at European level, has ensured that internal combustion engine vehicles running exclusively on e-fuels can be registered in the EU even after 2035.

But does the use of e-fuels in road transport make sense from an economic and environmental viewpoint? Fraunhofer ISI’s new discussion paper addresses these questions and aims to add to the controversial discussion on e-fuels by incorporating scientific research findings. It considers synthetic fuels that are produced based on renewable electricity.

The authors of the discussion paper conclude that the short- and medium-term use of electricity-based e-fuels in road transport makes little sense based on the current state of knowledge for the following reasons:

• Compared to today’s level, global renewable electricity production would have to almost double in order to achieve a global share of ten percent in green hydrogen and synthetic fuels including e-fuels in 2050 - implying the latter will therefore remain scarce and expensive for a long time to come.
  
• The use of green hydrogen and synthetic fuels should be concentrated on those applications for which there are no economical alternatives available to achieve greenhouse gas neutrality, such as the steel industry, basic chemicals, refineries and international aviation and shipping.  Around 15 percent of Germany’s final energy demand in 2045 will be in these applications alone. This means there would be hardly any usable quantities of synthetic fuels left for road transport.
• Large-scale use of e-fuels in cars and trucks is not economically viable. The conversion losses are huge and alternatives such as direct electrification are up to five times more efficient in terms of their electricity use. In comparison, e-fuels are expensive and low-income households will hardly be able to afford them in the future. Studies assume a price between 1.20 euros and 3.60 euros per liter for e-fuels in 2050, even after the achievement of significant cost reduction potentials - plus the costs for taxes, levies, profit margins, distribution expenses and research and development costs. Taxes and levies alone will probably increase the price per liter by one euro. For comparison: The liter price for fossil fuels without taxes and levies is currently around 0.60 to 0.70 euro per liter.
• If the costs for climate protection are evaluated, the CO₂ avoidance costs for cars with e-fuels in 2030 are about 1000 euros per tonne CO₂ and therefore much higher than those of electric mobility or other climate protection measures. This means there are very few reasons at present for the state to support e-fuels for cars and trucks as part of a climate protection strategy.
• The environmental footprint of e-fuels is problematic: they emit NO_x, carbon monoxide and particulates when burnt in an internal combustion engine. In addition, their overall efficiency is low and the energy demand for their production is high. The strong expansion of electricity generation capacities required for this is associated, among other things, with enormous requirements in terms of land and critical raw materials, which has a negative impact on the life cycle assessment of e-fuels.
• The short-term market introduction of e-fuels is not necessary from the viewpoint of technology openness. Today’s planning foresees that e-fuels comply with currently valid fuel standards so that no further developments are needed in the engines or fueling stations. It is therefore the production of synthetic fuels and production ramp-up that determine technology openness. However, as e-fuels will be needed for other applications, such as international air transport, it can be assumed that their development will progress independently of road transport. If, contrary to expectations, today’s scientific forecasts for e-fuels turn out to be too pessimistic, their use for road transport could still be considered later on.

Prof. Dr. Martin Wietschel, head of the Competence Center Energy Technology and Energy Systems at Fraunhofer ISI and coauthor of the discussion paper, also points out possible threats to the overall transformation of the transport sector: »From the viewpoint of today’s studies, the support for e-fuels in road transport could have a negative impact on the transformation of the transport sector, as their use and availability do not currently help to achieve environmental or economic targets. From the viewpoint of innovation, supporting e-fuels could slow down essential initiatives in the direction of electric mobility or other alternative forms of mobility, because clear signals as well as planning and expectation certainty are needed for successful transformation of the transport sector.«

The Fraunhofer Institute for Systems and Innovation Research ISI analyzes the origins and impacts of innovations. We research the short- and long-term developments of innovation processes and the impacts of new technologies and services on society. On this basis, we are able to provide our clients from industry, politics and science with recommendations for action and perspectives for key decisions. Our expertise is founded on our scientific competence as well as an interdisciplinary and systemic research approach.