The fueling industry should continue to keep an eye on e-fuels.

 

By Joe O’Brien

E-fuels have the potential to contribute to decarbonization without an overhaul of the entire energy distribution system. Made with electricity, carbon dioxide and water, they could reduce lifecycle greenhouse gas (GHG) emissions by 75% compared to fossil gasoline. As drop-in fuels compatible with the current fueling system and new and existing vehicles, e-fuels represent a practical decarbonization solution for fuel site operators.

Before e-fuels can be deployed on a large scale, producers will need to overcome several challenges. The Transportation Energy Institute (TEI) assessed the fuels’ economic viability in the United States and its environmental impact in the report “E-fuels: Evaluating the Viability of Commercially Deploying E-fuels in Road Transport.” Here’s a snapshot of some of the report’s findings.

  1. Cost may inhibit adoption. In this early phase of development, e-fuels are expensive to produce, which may prevent them from being economically viable, at least in the short term. TEI estimates that e-gasoline will be 25-30% more costly than fossil gasoline and e-diesel will be 40% more expensive than fossil diesel in 2040.
  2. Supply constraints and geographic dependencies will influence e-fuels’ sustainability and scalability. Currently, renewable electricity and heat sources that are needed to produce e-fuels, such as green hydrogen or renewable natural gas, are supply-constrained. The TEI report noted that meeting renewable electricity demands to produce e-fuels could divert that energy source from existing uses. If fossil fuels are used to meet the increased energy demand, GHG emissions would likely increase.Additional ly, clean power—energy not derived from fossil fuels or traditional petroleum refining processes—must be sourced from the same region as a hydrogen producer to achieve deliverability. Carbon capture faces similar challenges. The availability of CO2 capture and transport infrastructure affects the amount of CO2 that can be efficiently delivered to plants to produce e-fuels.
  3. E-fuels lack policy support. Fuels are globally traded commodities—domestic and international policies influence their supply and demand.

 

At this time, there is no meaningful federal policy support for e-fuels in the United States. There has been no proposal to include e-fuels in the Renewable Fuel Standard (RFS). Without an e-fuel blending mandate, suppliers are unlikely to choose to distribute e-fuels over biofuels. Incentivization is further hampered by limited access to tax credits. In fact, the TEI report indicated that the “current policy landscape could result in e-fuel producers favoring markets outside of the U.S.”

While the lack of a structured federal e-fuel policy is not surprising at this early stage, it is something to keep in mind if this energy source is to expand. Low carbon fuel standards (LCFS), such as California’s LCFS, could provide a pathway for guiding decarbonization at the state level. However, because e-fuels appear to have production considerations that may need to be addressed at a regional level, multi-state, coordinated advocacy efforts may be necessary for a successful expansion.

 

Sifting Through the Complexity

In just a matter of a few years, e-fuels went from an energy source that nobody had heard of to a fuel that many people are talking about as a potential bridge to decarbonization. Their compatibility with existing infrastructure and vehicle equipment justifies the heightened attention.

While the trajectory of e-fuels is uncertain at this early juncture, they are an energy source the fueling industry should keep an eye on.

As a non-advocacy group, TEI is a leading source of data regarding the future of transportation energy, and Source North America is proud to be a member of TEI’s board of advisors. Consider following TEI on their social media channels to stay informed about the latest developments with e-fuels and other transportation energy matters that influence profit strategies and operations decisions.

 

Joe O’Brien is vice president of marketing at Source North America Corporation. He has more than 25 years of experience in the petroleum equipment fuel industry. Contact him at [email protected] or visit sourcena.com to learn more.