Synthetic Fuels: Enabling Transition to Sustainable Transportation

Synthetic Fuels

Authors:

Jyotiroop Das, Prerna Yadav

Introduction

The world is facing an imperative to achieve net zero greenhouse gas emissions after the noticeable enormity of climate changes observed in the past two decades. After a brief respite due to the COVID-19 pandemic in 2020, global CO2 emissions from fossil fuel consumption increased by 5.3% in 2021, reaching pre pandemic levels. In the EU alone, one of the most environmentally conscious regions in the world, total fossil CO2 emissions increased by 6.5%.

The transport sector remains the second largest contributor to global emissions, accounting for 20.2% of the total emissions last year. Additionally, the sector has the highest reliance on the use of fossil fuels as an energy source and accounted for just under 40% of CO2 emissions from the end user sectors. Within the industry, environmental efforts to decarbonize have primarily included electrification, with rapid progress being made in certain modes of transport within some regions. However, heavy-duty vehicles, aircraft, and shipping, still require high density fuel and energy options, the needs of which cannot yet be fulfilled by electricity. Considering the slow speed at which the industry is transitioning into sustainable energy, there is an unequivocal need for stop gap measures that assist in this complete transition to non-fossil fuel energy.

This white paper will look at bridging this gap through the sustainable production and use of carbon-based synthetic fuels. Synthetic fuels can be utilized in existing petrol and diesel engines for the common consumer, as well as modified compatibly to alternate fuel engines. It is possible to produce synthetic jet fuel, diesel, or gasoline for conventional planes, ships, trucks, and cars.

As a result, there is a case to be made for the application of synthetic fuels as a technology that could enable the transition to reach net zero in the transportation sector. Of course, there is a need for further scientific research to improve the fundamentals of catalysis, produce cheap green hydrogen at scale, and create sources of competitively priced low-carbon energy. These developments could lead synthetic fuels to offer a pathway to achieving net-zero carbon for transport in the long term.

Synthetic Fuel Production: A Step towards Sustainability

Synthetic fuels are liquid fuels that generally have the exact same properties as traditional fossil fuels like petrol and diesel. They can also be synthesized into different alternate fuels. This is because they are produced artificially through a variety of chemical processes powered by renewable energy sources. These fuels also differ at the source by the way in which the necessary carbon molecules for the production are captured. Biofuels use biomass as its base carbon source, whereas E-fuels typically capture their carbon molecules from both traditional sources like tar sand, coal, oil shale, natural gas, natural gas hydrates, as well as industrial exhausts from the crop, wood, and landfill industries.

The main difference between synthetic and traditional fuels is how they are produced: traditional fuels are formed underground at high pressures over millions of years through a process where organic matter is compressed into coal, natural gas, or oil. Synthetic fuels are synthesized by essentially mimicking these natural processes using renewable sources of energy.

The key intermediate molecule in the production of synthetic fuels is syngas, which is a mixture of hydrogen (H) and carbon monoxide (CO). Once syngas can be produced, there are already established industrial processes which turn syngas into the desired hydrocarbon fuel molecule. The primary reason for the lack of adoption of synthetic fuels into everyday life so far has been the fact that industrial production processes for syngas have typically used coal and natural gas as feedstocks, which is of course not sustainable. Therefore, the sustainable production of syngas becomes the primary challenge in the establishment of synthesis processes for synthetic fuels.

The production of syngas requires a large amount of energy along with a source of carbon. The energy for syngas production needs to come from renewable sources such as biomass, solar, wind, or hydro power. Syngas is then further processed in refineries and passed through chemical processes to obtain e-gasoline, e-diesel, or e-kerosene — e-fuel.

Figure 1: The Sustainable Carbon Cycle

The recycling of carbon, shown in the image above, is an important step in meeting emission standards. The process enables a replacement of the need to extract and burn fossil fuels, whilst creating a pathway to the longer-term options that would completely remove carbon dioxide emissions. It also reduces the extent of carbon dioxide capture and storage required to meet net-zero carbon emissions.

Within the industrial context, terms like “biofuel”, “synfuel”, and “e-fuel” are often used interchangeably. There are, however, fundamental differences between the types of synthetic fuels in the way that they are produced, their scalability and the sustainability of the individual processes. The decarbonization effort in the transport industry will require the substitution of energy dense fossil fuels (diesel, aviation, bunker fuel) with low or net-zero carbon, sustainable synthetic fuels. The two major types of synthetic fuels and their specific production processes are covered below.

Synthetic Electrofuels (E-fuels)

A plethora of e-fuels can be produced via variations of the synthesis processes used, but hydrogen and carbon (in the form of CO2) are essential raw components. The processes can therefore be segregated as follows:

a. Hydrogen Production

There are several methods to produce low-carbon emission hydrogen at scale. Some of these methods have already been incorporated at an industrial scale. The most commonplace H2 generation process is steam methane reforming, a process which utilizes natural gas, and gives off CO2 as a by-product. Similarly low carbon footprint hydrogen can also be generated by electrolysing water using renewable forms of energy. With the declining costs of electrolysers and as a result, of sustainable electricity, electrolysis is expected to become the most commercially viable process for hydrogen generation. It is important to note that H2 costs will be affected by the type of renewable energy used (Wind energy will lead to more expensive H2 due to the higher costs associated with the electricity production cycle).

b. Carbon Dioxide Capture

All e-fuels are the product of a chemical or thermal restructuring of the carbon molecule, captured in the form of oxide or dioxide. Presently, there are two ways to capture carbon dioxide: Direct Air Catch (DAC) and Carbon Capture and Storage (CCS).

DAC is an innovative technology that catches carbon dioxide using specific chemical reactions that eliminate CO2 from the air and captures it inside the reaction compounds. These reaction compounds can be fluid solvents or strong sorbents and can be stored underground or utilized in further chemical processes.

Carbon Capture and Storage (or CCS) involves capturing CO2 molecules from the exhausts of industrial and energy production sources. Since industrial exhausts typically tend to have enormous concentrations of CO2, CCS produces high quality CO2 while reducing emissions at the source.

Both carbon capture processes mentioned above are expensive processes and require further research and innovation to make implementation at scale sustainable.

c. Synthesis

The final step of e-fuel production involves taking the mixture of hydrogen and carbon dioxide for e-fuel synthesis. There are three major processes which accomplish the above and have already been implemented in many large-scale operations in plants across the globe.

Gasification is the conversion of a solid or liquid into gas at high temperatures in a controlled amount of oxygen. The feedstock is evaporated by heating in the presence of catalysts to form syngas. Gasification is a more efficient energy conversion process than the direct combustion of the original fuel source.

The Fischer-Tropsch process is a catalysed chemical reaction in which carbon monoxide and hydrogen are converted into liquid hydrocarbons of various forms. Part of the issue with the process is that it produces a mixture of hydrocarbons, many of which are not useful as fuel. Innovation in catalysts in recent years has led to the discovery and use of molecularly specific catalysts which convert undesirable hydrocarbons into specific liquid fuels.

Methanol synthesis is the process of synthesis of methanol using CO2 and hydrogen in the presence of high thermal energy. The by products from the synthesis reaction can be controlled to produce synthetic e-fuels.

Figure 2: E-Fuel Production Process

Synthetic Biofuels

Synthetic biofuels are fuels derived from biomass. Biomass refers to (a) energy crops grown specifically to be used as fuel, such as wood or various grasses, (b) agricultural residues and by-products, such as straw, sugarcane fiber, rice hulls animal waste, and © residues from forestry, construction, and other wood-processing industries.

In the process of gasification, biomass gets thermally decomposed with oxidants such as pure oxygen or oxygen-enriched air to yield syngas, which is post treated by steam-reforming or partial oxidation, to convert the hydrocarbons produced by gasification into hydrogen and carbon monoxide. Anaerobic digestion is a type of fermentation that results in methane and CO2, which can then be further synthesized into different biofuels. The intermediate molecule in both these processes is syngas, which is treated with the same set of processes as the ones for e-fuels to produce biofuels.

Biomass is biochemically converted through alcoholic fermentation to produce liquid fuels and anaerobic digestion or fermentation, resulting in biogas, also known as biosyn. There is significant stored energy loss in this form of bioconversion.

Thermochemical conversion offers a more effective means for the recovery or conversion of the energy content of wood and other types of biomasses. Processes such as pyrolysis convert the feedstock into solid, liquid, or gaseous fuels.

Figure 3: Biofuel Production Process

Benefits

The advantages of sustainable synthetic fuels are:

Direct Traditional Fuel Replacement

As mentioned earlier, synthetic fuels can be synthesized according to the specific molecular structure required from the specific fuels being used for specific tasks. This means that synthetic fuels can be modified to adapt to different environments and utilities. The figure below shows the gaps in utility of non-traditional fuels, and the utility of synthetic fuels in all possible scenarios.

Figure 4: Synthetic Fuel Compatibility

High volume and Energy Density

Currently available alternative low-carbon fuel options have a much lower energy density than fossil fuels. Synthetic fuels, along with the traditional fuels like petrol, diesel and kerosene have energy densities of 8kWh/L and above, compared to the hydrogen and Lithium-ion batteries, which have energy densities under 2kWh/L. The inferiority of energy density parameters drastically reduces the flexibility of use of hydrogen and electricity as ubiquitous fuels.

Reduced Pollutants from Combustion

The control of the chemical structure of the fuel provided by the synthesis processes of synthetic fuels allows them to be designed to burn cleanly, reducing the pollutants such as particulates and nitrogen oxides. Pure electricity and hydrogen have a leaner carbon footprint compared to synthetic fuels since they don’t use the chemical structure and combustion processes associated with traditional and synthetic fuels. However theoretically, synthetic fuels could reduce combustion emissions by 85% compared to their traditional counterparts, proving their increased sustainable utility.

Compatibility with Existing Infrastructure

Existing infrastructure can be utilised for distribution, storage, and delivery of synthetic fuels to the end consumer. This would point to large amount of capital saved, or at least a longer duration of cost amortization, on the creation of brand-new infrastructure compared to the use and distribution of other alternate fuels like electricity and hydrogen power. This would also allow the end user to seamlessly adopt a “cleaner” fuel because their current cars would be able to run on synthetic fuels.

Key Issues

There are important issues and gap areas that are a hindrance to the widespread replacement of traditional fuels with synthetic fuels:

Increased Costs

With the cleaner nature of synthetic fuels, it is to be expected that synthetic fuels will cost more than the readily available petrol and diesel. Synthetic fuels are expected to cost around 4.5 times that of traditional fuel today. Generous projections claim that with future innovation, costs could be brought down to 1.2 times of traditional fuel by 2050.

These costs are higher because of the expected capital investment required for the setup of industrial scale plants for synthetic fuel synthesis and the wide variation in costs required to produce green hydrogen. Additionally, depending on the source of carbon and the integrated utility of the carbon capture setup, carbon capture costs could also contribute to a wide variance in synthetic fuel costs. There are some additional processes that need to be embedded in the synthetic fuel process to ensure total compatibility with existing infrastructure, further adding to the costs.

Quantity and Availability

In the case of biofuels, some of the most high energy yield bio matter tend to be agricultural produce and crops, which are in high demand throughout the world as food shortages are on the rise. Biofuel makers therefore must compete to source biofuel feed against agricultural manufacturers, creating a bottleneck on the quantity of biofuel that can be produced.

In terms of industrial production of e-fuels, there is a severe lack of existing production facilities which would need to provide the over 5 trillion litres of expected liquid fuel demand in 2026. At the current rate of production growth, less than 12% of the global demand would be met by synthetic fuels by 2030.

Gaps in research

A significant amount of research and development needs to go into streamlining the industrial and commercial processes associated with synthetic fuels. Fischer Tropsch plants would need to be adopted to smaller scales to take advantage of isolated high carbon or renewable energy sources. Further research needs to be conducted into making low carbon hydrogen more viable. Efficiencies in the conversion of energy into hydrogen need to be improved. Newer and improved e-fuels need to be developed to adapt to the future needs of the consumer. The area of catalysis needs massive innovation to ensure more efficiencies across the multiple synthesis processes. Production processes need to adapt to the higher technology readiness levels required to sustain the advanced production processes that go into the synthesis of these fuels. Finally, desirable process combinations need to be identified that maximize the cost effectiveness and carbon reduction of these processes.

Future Trends

In the past few years, there has been an upturn in the market for synthetic fuels. Rising oil prices and increasing focus on sustainability by governments and businesses, coupled with political unrest in oil-producing countries are pushing synthetic fuel demand.

Global Scenario

The global synthetic fuel market size was valued at US$ 3.45 billion in 2021 and is projected to surpass US$ 21.7 billion by 2030, growing at a CAGR of 22.67%. 10 The growth forecasted is expected to remain healthy, as more and more countries begin to look for alternatives to substitute their overdependence on crude oil energy.

The current energy market faces sharp, rapid swings in the price of crude, which has been shown to have magnified effects on companies, economies, and global geopolitics. Oil price spikes can stunt economic growth, as shown during the recent economic crisis in Sri Lanka. Similarly, a sudden price plunge can bankrupt cash-strapped oil companies. This overreliance on crude oil for energy needs creates an incentive for countries to invest in synthetic fuel manufacturing facilities, which can alleviate the over-dependence on crude while minimizing capital investment into the larger consumer infrastructure ecosystem.

The major companies looking to exploit the synthetic fuel market globally are Sasol, PetroChina Jinzhou Petrochemical Ltd., Reliance Industries Ltd., Robert Bosch GmbH, Indian Oil Corporation Ltd, Royal Dutch Shell Plc., Phillips 66, Exxon Mobil Corporation, Red Rock Biofuels, and SG Preston Company.

There are 6 major types of synthetic fuels, segregated as gas-to-liquid oil, coal-to-liquid, extra heavy oil, biomass-to-liquid, tire derived fuel, and others. Among the above, extra heavy oil segment is set to gain the highest synthetic fuel market share and remain the most demanded synthetic fuel type. Extra heavy oil most closely resembles crude oil, and hence is the most widely adaptable synthetic fuel type in development. Modern technological advancements are enabling more efficient processes to produce and recover these fuels.

Regional Insights

A geography wise segregation of the market shows that the synthetic fuel market in the Asia Pacific region is expected to grow at the highest relative rate of 38% per year. This is due to the high rate of increase in energy demand within the region as large countries like India and China develop. This is due to the increasing per capita income in the region leading to higher demand for automobiles.

The EU and North American markets are expected to grow at the median growth rates of 20–25% a year, as investments from the public and private sector into the clean energy market continues to grow. Currently, the Latin American and Middle Eastern markets are showing the least growth in the synthetic fuels sector.

Market Development Conditions

This section will cover some of the factors that could intensify the shift from traditional fuels to synthetic fuels.

Firstly, the potential of a region to produce renewable electricity and hydrogen is directly proportional to the production of synthetic fuels. This potential is determined by the concentration and usability of renewable resources like wind and solar energy, coupled with the ease of investment in the region. The investment environment determines the potential synthetic fuel production of a region and is heavily influenced by country specific risk factors.

Favourable trade and energy models are the second factor which can drive the synthetic fuel market in a region. Low generation costs (driven by raw material and labour costs) and high trade potential (determined by export relations) would allow export focussed synthetic markets to flourish. This factor is enabled by the structure of general economic conditions in any given region, categorized into renewable energy sector risk and national or multi-lateral financing capabilities in the region.

Thirdly, any region or country looking to take command of the synthetic fuel industry needs to develop industrial scale processes for many of the required technologies that go into synthetic fuel production. This would require overcoming challenges of integrating processes like Fischer-Tropsch, carbon capture etc with the production of renewable energy, a task likely to demand high amounts of capital investments. This can ensure that synthetic fuels become a mainstream supplier of the energy demand and not just another experimental alternative fuel.

Conclusion

Synthetic fuels hold the potential to offer a medium to long term transition pathway to sustainability within the transportation industry. The synthesis processes can produce a wide range of fuels which can directly substitute traditional fossil fuels. While they are currently more expensive than the traditional fuels, innovation and technological development, coupled with policy and regulatory intervention, can lead to affordability within the industry. If rightly supported, countries with an abundance of renewable energy resources should be able to produce synthetic fuels at requisite industrial scales. There are key research areas that need to be explored to facilitate a large-scale transition away from fossil fuels to synthetic fuels, and subsequently to other alternative cleaner forms of energy. Further work also needs to be carried out to ensure that the final carbon footprint of synthetic fuel production is indeed smaller than that of fossil fuels, while also ensuring that costs to the end consumer can be brough down to comparable levels.