Alternative Fuels : benefits, criticisms and controversies
The world is at a critical juncture in addressing the environmental challenges associated with transportation. As the global community seeks sustainable solutions, the transition to greener forms of mobility is urgent. One possible solution is the use of synthetic fuels. These artificially produced fuels are garnering attention for their potential to reduce greenhouse gas emissions and provide an alternative to traditional fossil fuels.
In this article, we will provide an overview of e-fuels as a sustainable mobility solution, examining their benefits, criticisms, and controversies. We will also draw comparisons with biofuels to offer a comprehensive perspective on the future of sustainable transportation.
Understanding Synthetic Fuels
Synthetic fuels, also known as e-fuels, are industrially made hydrocarbon fuels produced through chemical processes. They are designed to mimic the properties of traditional fossil fuels. The production of synthetic fuels involves various processes, including the conversion of renewable energy sources, like wind or solar power, into synthetic hydrocarbons.
To better understand the environmental impact of synthetic fuels, we can compare the lifecycle analysis of vehicles using classic fuels (petrol), biofuels (E85), e-fuels (e-petrol), Plug-in Hybrid and electric vehicles.
The chart above is based on two studies, one from IFPEN and the other from T&E , demonstrating the potential emission reduction using biofuels such as E85 and e-petrol. It is crucial to note that these solutions remain limited compared to electric vehicles. These studies were conducted using a life cycle analysis for a distance of 250 000 kilometers(1).
(1) The T&E study provides information on CO2 emissions reduction between a thermal car using petrol and one using e-petrol for 200 000 kilometers. The IFPEN study provides information on CO2 lifecycle emissions for a thermal car using petrol, biofuel, a Plug-in Hybrid using biofuel and an Electric vehicle for 250 000 kilometers. The values were adjusted to compare the results of both studies.
The Advantages of Synthetic Fuels
According to T&E which defines itself in their website as an “Europe’s leading clean transport campaign group”, a conventional car running entirely on e-fuels would reduce CO2 emissions over its entire lifecycle by 51% to 57% while Concawe self-described on their website as “a small group of leading oil companies to carry out research on environmental issues relevant to the oil industry” estimates the potential for reducing CO2 emissions to be between 70% and 96%.
Synthetic fuels can leverage the existing infrastructure for fuel distribution, making it easier for consumers to transition to these fuels. They also reduce the dependence on finite fossil resources.
One advantage of synthetic fuels over biofuels is the absence of competition with the agricultural sector. Biofuels often raise concerns regarding land use and resource competition, which synthetic fuels can help mitigate by not contributing to the strain on available land and resources, especially when the world is at the risk of facing shortage of biomass.
The Criticisms of Synthetic Fuels
One criticism of synthetic fuels is their high production costs, a concern that is closely related to the cost of production and the production conditions, as well as their connection to electricity prices. In fact, E-fuels are economically viable primarily in conditions of surplus of electricity production or when electricity prices are low or even negative.
The production of synthetic fuels requires substantial resources, particularly in terms of renewable energy. Their energy intensity, which refers to the amount of energy required in the production process per unit of output is higher than the one of fossil fuels. Closing this energy intensity gap poses an important challenge.
Synthetic fuels may also face challenges in scaling production to meet immediate demand.
Contrasting Viewpoints
Proponents of synthetic fuels from the oil and automotive industries such as Concawe and Efuel Alliance, self-identified in their website as “A strong alliance for carbon-neutral renewable fuels to fight climate change” with members such as Porsche, Bosch, and Siemens Energy, have been actively publishing reports and studies advocating for the adoption of these alternative fuels.
On the other side of the spectrum, environmental and pro-electric advocacy groups such as T&E, have campaigned vigorously for cleaner transportation options, including advocating for laws to end the sale of internal combustion engine vehicles by 2035. They have published studies highlighting the limitations of synthetic fuels compared to electric vehicles, pointing to issues related to energy intensity, production costs, and environmental impact.
Both sides, whether it’s T&E or Fuel Europe, appear to respond to each other through their respective reports, addressing subjects such as : the compliance of synthetic fuel’s performance; the environmental impact of synthetic fuels; and comparative CO2 emissions between e-petrol and electric vehicles. These reports tackle similar issues while considering different perspectives, sometimes making it challenging to form a comprehensive opinion on these matters.
Synthetic Fuels in the Aviation Sector
The aviation industry is also exploring the potential use of synthetic fuels and biofuels to reduce its environmental footprint.
The use of biofuels in aviation can reduce greenhouse gas emissions by 50 to 90% compared to current kerosene, according to IFPEN.
According to another study of T&E, e-fuels are considered a viable solution primarily for aviation, as their as their energy efficiency and cost-effectiveness is deemed insufficient for land-based transportation and other non-aviation transportation modes. However, it’s important to note that using e-fuels in aviation poses a significant challenge, as illustrated by the case of Lufthansa in Germany. According to an article posted by Bloomberg, Lufthansa’s CEO said that, to transition their entire fleet to synthetic fuels, Lufthansa would need around half of Germany’s electricity production.
Conclusion
In conclusion, synthetic fuels present a multifaceted solution in the ongoing transition towards sustainable mobility. They offer advantages in terms of reduced greenhouse gas emissions and compatibility with existing infrastructure. However, the debates surrounding synthetic fuels reflect diverse perspectives, including those who believe in the potential of electric vehicles as a cleaner alternative.
The role of synthetic fuels in the future of the energy transition remains an open question. A balanced approach is necessary, where research and innovation continue to play a role in shaping the future of clean transportation.
If you are a financial practitioner eager to work on this topic, and looking for advanced formations and/or practical methodology developments or else, you can contact the ESG Lab, our structure dedicated to operational R&D on green and sustainable finance subjects at the Institut Louis Bachelier.
Acknowledgements
We would like to give credit and a special thanks to Youssra Bendjebbar since the content of this article is based on her work at the Institut Louis Bachelier, and Marine Bouwmeester for her expertise on biofuels.
