South America E-Fuels Market Outlook, 2029

South America's e-fuel business is a burgeoning sector that will play an important role in the region's energy landscape as it transitions to sustainable and renewable energy sources. E-fuels, or electro-fuels, are synthetic fuels created by turning renewable electricity into fuels using technologies such as electrolysis and Fischer-Tropsch synthesis. This strategy, which provides an alternative to fossil fuels, shows promise for decarbonising transportation and industrial processes. Early endeavours began in the late 2000s, with an emphasis on biofuels, specifically sugarcane ethanol and soybean biodiesel.

Countries like Brazil, which already had a well-established biofuel industry, began to investigate the possibility of e-fuels as part of a larger strategy to improve energy security and meet emissions targets. During the pandemic, there was a large decrease in transportation demand, resulting in lower gasoline usage. However, the crisis underscored the vulnerability of traditional fossil fuel supply systems, emphasising the critical need for diversification. As governments began to create recovery plans, several included green projects aimed at promoting sustainable energy alternatives.

The National Energy Plan seeks to diversify the country's energy mix while reducing reliance on fossil fuels. Similarly, Argentina has pledged to encourage renewable energy initiatives through its Renewable Energy Law, which provides incentives for investment in green technology. Compliance with environmental legislation is becoming more crucial as governments work to achieve international climate pledges under agreements such as the Paris Accord.

According to the research report, "South America E-Fuel Market Outlook, 2029,", the South America's e-fuel market is anticipated to add to more than USD 1.24 trillion by 2024-29. Collaborations between universities and technology companies are focussing on enhancing electrolyser technologies, which are critical for creating hydrogen, the primary feedstock for many e-fuels. Furthermore, carbon capture and utilisation (CCU) technologies are being developed and can be integrated into the e-fuel manufacturing process to minimise the carbon footprint even more.

Countries such as Brazil and Chile are also investing in pilot projects to assess the practicality of various e-fuel production pathways, including hydrogen produced from renewable sources like as wind and solar power. International relationships are also notable, with South American countries collaborating with European and North American corporations to share expertise and technologies. These cooperation strengthen the region's ability to manufacture e-fuels and promote the development of critical infrastructure. Brazil, as a biofuel pioneer, has already established itself as a major ethanol exporter, with the potential to extend its participation in the e-fuel industry.

With the correct investments and governmental assistance, South American countries may become exporters of hydrogen and synthetic fuels. The global demand for green fuels is increasing, driven by legislative obligations and corporate sustainability initiatives, providing an opportunity for South American countries to enter international markets. In terms of suppliers, South America's e-fuel market is comprised of both major energy firms and young startups. These providers are in charge of producing e-fuels as well as the technology required to do it.

Market Drivers

Government Policy and Incentives: South American governments are increasingly recognising the importance of diversifying their energy sources and reducing carbon emissions. Initiatives like Brazil's National Energy Plan and Argentina's Renewable Energy Law create favourable conditions for e-fuel manufacturing. These policies frequently involve financial incentives, tax exemptions, and funding for R&D, enticing investment in e-fuel initiatives.

Growing demand for renewable energy: As people become more aware of climate change, there is a growing need for renewable energy options. E-fuels offer a feasible alternative to fossil fuels, especially in difficult-to-decarbonize industries like aviation and shipping. The International Energy Agency (IEA) predicts that demand for synthetic fuels will increase as countries commit to achieving net-zero emissions targets.

Market Challenges

Market Acceptance: The acceptability of e-fuels by consumers and industries is still developing. Many stakeholders are still unaware of the benefits and possibilities of e-fuels, which is causing resistance to the shift from conventional fuel sources. Education and communication programs are required to raise awareness and demand for e-fuels among end users.

Competition from other renewable solutions: Alternative renewable energy options, such as battery electric vehicles (BEVs) and hydrogen fuel cells, are posing challenges to the e-fuel sector. As technology progresses, these alternatives may become more cost-effective and broadly accepted, thus limiting the spread of e-fuels in some applications.

Market Trends

Investment in research and development: Significant expenditures in R&D are being made to improve e-fuel manufacturing technology. The public and private sectors are working together to develop creative solutions that can reduce production costs and increase efficiency. Brazil and Chile are investing in pilot projects to test novel e-fuel production methods, such as hydrogen derived from renewable sources.

Collaborative efforts: Collaboration among governments, private firms, and academic institutes is becoming more widespread in the e-fuel industry. Partnerships are being developed to harness expertise and exchange resources, allowing for the creation of a strong e-fuel ecosystem. Such cooperation are critical for pooling resources and promoting technological adoption.

In the South American e-fuel market, aviation is emerging as a key end-use application.

Airlines are increasingly focussing on sustainable aviation fuels (SAFs), which can be made from e-fuels, in order to reduce their carbon footprint and comply with strict requirements. The International Air Transport Association (IATA) has set aggressive carbon neutrality targets, pushing airlines in Brazil and Argentina to look into e-fuels as realistic decarbonisation solutions. Major carriers, including as LATAM Airlines, are forming alliances with technology companies and research institutions to accelerate the development and deployment of SAFs. Following aviation, the maritime sector is emerging as a major end-use for e-fuels.

The International Maritime Organisation (IMO) is pushing for a reduction in shipping emissions, and e-fuels such as methanol and ammonia are being examined as alternatives to assist fulfil these targets. Several shipping corporations are conducting pilot projects in partnership with local ports to assess the viability of using e-fuels in maritime vessels.

Petrobras in Brazil is a leading domestic company in the South American e-fuel sector, spending heavily in e-fuel research and development alongside its traditional oil activities. Argentina's YPF is likewise leading the way, focussing on hydrogen generation and possible transportation applications. Furthermore, companies such as Ecooils and Bioenergy Latin America are making great progress towards manufacturing sustainable fuels from renewable sources.

In the South American e-fuel market, transportation is now the most popular end-use application.

This dominance stems principally from the critical need for decarbonisation in the transportation industry, particularly in aviation and maritime. The aviation industry, with rigorous emission reduction targets established by organisations such as the International Air Transport Association (IATA), has expressed a strong interest in sustainable aviation fuels (SAFs) derived from e-fuels. This trend is paralleled in the marine industry, where shipping companies are looking at alternative fuels to comply with International marine Organisation (IMO) standards aimed at lowering greenhouse gas emissions.

Petrobras, Brazil's largest energy firm, is a leading domestic player in the South American e-fuel sector, with investments in sustainable fuel research and development. Argentina's state-owned oil and gas corporation, YPF, is likewise making progress in this area, focussing on the production of hydrogen and biofuels as part of its overall commitment to sustainability. Ecooils and Bioenergy Latin America are also rising firms that specialise in the production of e-fuels and biodiesel, helping to build the region's infrastructure for sustainable mobility solutions.

These companies play an important role in developing the appropriate technology frameworks and supply chains to satisfy the growing demand for e-fuels in the transportation sector, establishing South America as a major player in the global e-fuel scene. As the region invests in sustainable energy solutions, the transportation sector is expected to remain a focus for e-fuel applications.

In the South American e-fuel market, e-kerosene, commonly known as synthetic aviation fuel, is now the most popular type of e-fuel.

This dominance can be linked to the aviation industry's growing emphasis on sustainability and the need to dramatically cut greenhouse gas emissions. With international organisations like the International Air Transport Association (IATA) advocating for net-zero emissions by 2050, airlines are looking to e-kerosene as a potential way to accomplish their environmental goals. E-kerosene can be effortlessly incorporated into current aviation infrastructure, making it an appealing choice for airlines wishing to decarbonise their operations without requiring significant changes to their fuel delivery systems.

Petrobras, Brazil's state-controlled oil behemoth, is aggressively developing sustainable aviation fuel (SAF) projects, with a concentration on e-kerosene manufacturing. Petrobras is working with universities and technology companies to develop novel methods for synthesising aviation fuels from renewable resources. Another major player is Avianca, which has formed partnerships to study and implement e-kerosene technologies as part of its sustainability strategy. Furthermore, GOL Linhas Aéreas, another Brazilian airline, has expressed an interest in investing in e-fuels to further its environmental efforts. As the aviation industry seeks alternatives to fossil fuels, demand for e-kerosene is predicted to climb, making it the primary form of e-fuel in the South American market.

In the South American e-fuel market, hydrogen technology, notably electrolysis, is now the dominant way of creating e-fuels.

Given the region's plentiful renewable energy resources, particularly solar and wind power, electrolysis offers a long-term solution for creating hydrogen, which may then be transformed into e-fuels such as e-methanol and e-kerosene. The adaptability of hydrogen technology makes it an appealing choice for organisations looking to decrease their carbon footprint. Petrobras, a leading domestic company researching hydrogen technology in South America, is investing in green hydrogen initiatives. The corporation understands the importance of hydrogen as a future fuel source and is working with academic institutions and international partners to improve its skills in this area.

YPF in Argentina is looking at hydrogen production as part of a larger drive to switch to more sustainable energy sources. YPF has announced pilot initiatives to generate green hydrogen from renewable sources and integrate it into current fuel systems. Other noteworthy players include Universidad de Chile, which conducts research and innovation on hydrogen generation technologies and its applications in e-fuels.

Enel Green Power, an Enel Group company, is also making large investments in hydrogen projects around the region, with a focus on using renewable energy sources to manufacture hydrogen via electrolysis. As the South American e-fuel market develops, the emphasis on hydrogen technology, particularly electrolysis, is likely to drive further breakthroughs and investments, cementing its position as the main technology for e-fuel generation.

The country has a well-established biofuels sector, particularly in ethanol production, which serves as a strong foundation for the integration of e-fuels into its energy mix.

Brazil's extensive sugarcane plantations provide a reliable source for producing biofuels, and the ongoing transition to advanced biofuels and e-fuels complements this existing infrastructure Additionally, Brazil's investment in renewable energy technologies, particularly wind and solar power, creates an ideal environment for producing green hydrogen through electrolysis. The country has set ambitious targets for reducing greenhouse gas emissions, further encouraging the development of e-fuels to meet international climate commitments. Major Brazilian corporations, such as Petrobras, are actively researching e-fuel technology, notably for synthetic fuels like e-kerosene and e-methanol.

These efforts are supplemented by collaborations with foreign companies and research institutions, which are pushing advances in e-fuel production processes. Furthermore, Brazil's favourable geographical location and existing transportation infrastructure make it easier to distribute e-fuels locally and internationally. As the country expands its renewable energy resources and develops supportive regulations, Brazil is well-positioned to lead the South American e-fuel system industry and contribute significantly to global sustainability initiatives.

Considered in this report

• Historic year: 2018
• Base year: 2023
• Estimated year: 2024
• Forecast year: 2029

Aspects covered in this report

• E-fuels market Outlook with its value and forecast along with its segments
• Various drivers and challenges
• On-going trends and developments
• Top profiled companies
• Strategic recommendation

By End-use

• Aviation
• Marine
• Industrial
• Railway
• Automotive
• Others

By Application

• Transportation
• Industrial
• Power Generation
• Others

By Type of E-fuel

• E-kerosene (Synthetic Aviation Fuel)
• E-diesel
• E-gasoline
• E-methanol
• Other Hydrocarbons

By Technology

• Hydrogen technology (Electrolysis)
• Fischer-Tropsch
• Reverse-Water-Gas-Shift (RWGS)

The approach of the report:

This report consists of a combined approach of primary and secondary research. Initially, secondary research was used to get an understanding of the market and list the companies that are present in it. The secondary research consists of third-party sources such as press releases, annual reports of companies, and government-generated reports and databases.

After gathering the data from secondary sources, primary research was conducted by conducting telephone interviews with the leading players about how the market is functioning and then conducting trade calls with dealers and distributors of the market. Post this; we have started making primary calls to consumers by equally segmenting them in regional aspects, tier aspects, age group, and gender. Once we have primary data with us, we can start verifying the details obtained from secondary sources.

Intended audience

This report can be useful to industry consultants, manufacturers, suppliers, associations, and organizations related to the E-fuels industry, government bodies, and other stakeholders to align their market-centric strategies. In addition to marketing and presentations, it will also increase competitive knowledge about the industry.