E-Fuels Market Outlook, 2029

E-fuels are turning out to be the secret weapon in the battle against climate change because they transform renewable energy into a powerhouse of sustainable mobility as the world speeds into a greener future. E-fuels, electro-fuels artificially manufactured from renewable energy sources, include all fuels created through electrolysis and carbon capture. Therefore, it can be applied in the widest variety of applications as alternatives to traditional fossil-based fuels. For instance, production plants in Chile mix water with coal and replicate the exact chemical composition of gas, diesel, or gas. Technological advancements are the gateway to the market growth of e-fuel.

Electrowinning technology advances, enabling the commercial production of hydrogen from renewable sources more cheaply and efficiently. This again, sources are other innovations in carbon capture technologies that assure the production of CO2 for e-fuel. Enhanced methods capturing CO2 directly from sources that have atmospheric or industrial origin are more prevalent, hence more achievable for the production of e-fuel. According to the International Energy Agency, because air travel will continue growing and more petrochemical raw materials will be consumed, total oil demand (excluding biofuels) will reach 102 mb/d in 2030, or 5 mb/d above 2022 levels.

E-fuels, hydrogen, BEVs, and biofuels are all expected to shape a diversified energy profile. This integrated approach will increase energy security and resilience, along with more sustainable choices for the consumers. A robust regulatory framework and standards homogenization are very important for the development of the market for e-fuels. Standardization at international level will further trade and adoption by giving the respective safety, quality, and sustainability certifications to e-fuels. For instance, the Clean Fuels & Products Shot is one of the most crucial initiatives the U.S.

has taken. Some of the initiatives being taken by the Energy Earthshots under the Department of Energy are towards transforming the fuel and chemical industries. The ultimate goal is to shift towards renewable fuels and its innovative technologies wherein it strives to cut down by 85% the greenhouse gas emissions related to industry in the year 2035.

According to the research report, “Global E-fuel Market Outlook 2029” the market is anticipated to cross USD 35 Billion by 2029, increasing from USD 10.08 Billion in 2023. The market is expected to grow with a 24.54% CAGR from 2024 to 2029. The economic landscape of the e-fuel industry is also becoming more favorable with greater investment in technology and production. Funding is increasing both from the public and private sectors as various governments provide monetary incentives and grants to propel research and development. E-fuels currently have a higher cost of production than fossil fuels.

Advances in technology are likely to lower those costs over time, which means that price competitiveness will increase along with the growth in production volumes. It is hoped that various sectors will use this product more widely. Environmental laws can play an important role in promoting the adoption of the product. Mandated under governments, they can enforce requirements whereby a definite proportion of renewable fuels must be included in the total fuel supply, thereby fostering demand for electric fuels. For example, the United States' Renewable Fuel Standard requires a certain volume of renewable fuels, including electric fuels, that must be blended with transportation fuel over any given year.

For example, such legislations enhance the production as well as intake of electronic fuels. This is because it leads to reduced greenhouse gases and makes transportation in the economy sustainable. Market adoption is also improved when there exist set standards on emission that require the uptake of clean fuel, for example, electronic fuel. In April 2023 Norsk e-fuel partnered with Norwegian Air Shuttle ASA to build a new e-fuel production factory in Northern Norway.

This new plant is meant to deliver sustainable e-fuels not only to the aviation industry but also to everybody in the world by 2026. Amongst some of the early adopters of clean energy solutions in the world for sectors such as power generation and transportation is the United States. This is primarily because of the greater attention given to clean energy alternatives in keeping with the Energy Act passed by the U.S. administration in 2005.

Market Drivers

• Decarbonization Goals:Many countries and regions are committing to aggressive decarbonization targets to mitigate climate change. E-fuels are viewed as a viable solution to decarbonize hard-to-abate sectors like aviation, shipping, and heavy-duty transportation, where electrification alone may not be feasible. The drive for net-zero emissions is propelling investments in e-fuel technologies and infrastructure.
• Advancements in Renewable Energy:The increasing deployment of renewable energy sources, such as wind and solar, provides a sustainable electricity supply necessary for producing e-fuels. Innovations in electrolyzer technology and improved efficiencies in converting renewable energy into hydrogen (a primary feedstock for e-fuels) are making e-fuels more economically viable and attractive for energy companies and investors.

Market Challenges

• High Production Costs:The production of e-fuels is currently more expensive than conventional fossil fuels and even some biofuels. The capital costs associated with setting up the required infrastructure (such as electrolyzers and synthetic fuel production plants) and the operational costs tied to renewable electricity and raw materials pose significant barriers to widespread adoption. Reducing these costs through technological advancements and economies of scale is crucial.
• Technological Maturity and Scalability: While significant progress has been made in e-fuel production technologies, many remain in developmental stages. For instance, the efficiency of carbon capture and utilization (CCU) methods and electrolysis techniques must improve for large-scale adoption. Scaling these technologies to commercial levels often requires extensive pilot projects and funding. Additionally, without proven technologies, investors may be hesitant to commit capital, slowing overall market growth.
• Resource Availability: E-fuels typically require abundant renewable energy sources (e.g., wind, solar) and carbon dioxide for production. Regions with less favorable conditions for renewable energy generation or limited industrial emissions may find it challenging to produce e-fuels economically. Countries in the Arctic may struggle to harness sufficient renewable energy for e-fuel production, limiting their ability to participate in the market despite potential demand for low-carbon fuels. This disparity could lead to uneven development and investment in e-fuel projects, with some regions benefitting more than others.

Market Trends

• Emergence of E-fuel Hubs:Regional Production and Distribution Networks: The establishment of e-fuel hubs that integrate renewable energy production, hydrogen generation, and e-fuel synthesis can facilitate efficient production and distribution. These hubs can serve as local solutions to energy needs while minimizing transportation emissions.
• Increased Focus on Sustainable Aviation Fuel (SAF): The aviation sector is prioritizing the development and adoption of sustainable aviation fuel, a specific type of e-fuel. Investments in research and production technologies aimed at creating SAF from renewable sources can drive innovation and demand for e-fuels overall.

Aviation is the largest global market player for e-fuels, as this sector was seeking alternative sustainable fuels for replacement of fossil fuels and a decrease in carbon footprint due to very strict regulations for the industry.

Among the identified tough-to-decarbonize sectors, aviation is estimated to account for 2-3% of the world's carbon emissions. This push requires exploring alternatives for both airlines and regulators; therefore, this research deems e-fuels an option for a sustainable alternative. Of these alternatives, e-kerosene holds the potential to answer to the demand for a vast quantity of sustainable aviation fuel, thus leading to a substantial reduction in greenhouse gas emissions. The European Union stands at the forefront of this change. It has enforced a call for 2025 under which at least a percentage of jet fuel needs to be derived from renewable sources when used in EU airports.

Such regulations not only encourage the production of these e-fuels but, by passing laws that set up a market in which airlines have no choice but to comply, they create a market for these technologies in the airlines' system. Cooperation between companies Norsk e-Fuel and major airlines clearly declares that the industry is committed to scaling up e-fuel production to operational use. New technology in the generation of such fuels via electrolysis with renewable energy sources used for hydrogen production is increasingly making the e-fuels economical to manufacture. The reduced costs and efficiency of these e-fuels increasingly challenge the traditional fossil fuels on the market.

The largest global fight against climate change offers the aviation industry a place for its concerns about sustainability, making it one of the leading players in the e-fuel market. Airlines are taking these fuels also due to their environment-related advantages, but at the same time, to improve their corporate responsibility profiles and consumers demanding greener options for travel.

Transportation is currently dominating the global e-fuel market, primarily because it represents a critical enabler of decarbonization in difficult-to-electrify sectors, like aviation and maritime, to meet low-carbon demands.

The transport sector is amongst the most emission-intensive sectors on the globe and, thus, among focuses of sustainability efforts; indeed, e-fuels, made using renewable energy sources, can replace fossil fuels in this sector. As cited above, the advantage of using e-fuels is that they do not require any such overhauls in the engine and the distribution system as would be true for traditional fuels. This flexibility highly benefits heavy-duty vehicles and aircraft, which long proved challenging to electrify because of their energy requirements and operation requirements.

For instance, in aviation, e-kerosene is being increasingly accepted as a sustainable fuel alternative, while in shipping, its analog, e-diesel, is similarly being considered as a sustainable fuel alternative. On the other hand, using battery technology only has limitations in these areas. Government policies across the globe are becoming more amiable to acceptance of e-fuel. In Europe, regulation sets specific levels of sustainable aviation fuels, including e-kerosene. This is further fueled by significant investment into industrial-scale development of e-fuels by some of the top automobile and energy companies.

E-kerosene is the leading product in the global e-fuel market to date. This primarily owes to the compatibility of e-kerosene with the existing infrastructure for aviation and near zero emission when produced from renewable resources.

E-kerosene is a kind of synthetic aviator fuel obtained by carbon dioxide captured from the atmosphere or industrial sources, and hydrogen obtained by the electrolysis of water. This innovation in the terms known as Power-to-Liquid (PtL) technology basically replicates the chemical structure of traditional jet fuels, and thus it is a "drop-in" solution requiring no modifications on existing engines or fueling systems of aircraft. This compatibility is very crucial for the aviation sector squeezed to produce a carbon footprint reduction amidst growing anxieties over climate change issues.

E-kerosene production can be nearly 100% emission-reducing when enabled by power from renewable electricity sources, and thus, it is sustainable compared to fossil fuels. Beyond this, the Union has set ambitious targets for the share of SAF in aviation fuels by 2030; specific mandates must be met regarding the sale of e-kerosene. To say the least, all this regulatory framework does is stimulate investment in its production but also innovates in the sector.

Latest establishment of production facilities in Germany proves commitment to scaling up this technology through further developments across the Europe and beyond. Furthermore, when alternative fuels such as batteries and hydrogen cells reach the limits of their applications for aviation, the viable answer for them in fuelling demands far into the future will be e-kerosene while dramatically cutting greenhouse gases.

Hydrogen technology, through electrolysis, leads in the global e-fuel market, as promising sustainable and scalable forms of energy production directly support decarbonization efforts in almost every sector.

The increased hydrogen ranking among the leaders in the e-fuel market is as a result of its exclusive capabilities in critical energy challenges with environmental sustainability. The process for making green hydrogen involves electrolysis by splitting water into hydrogen and oxygen. In its most simple terms, by using renewable sources such as wind or solar to power those electrons in the process, it is possible to create green hydrogen. This method significantly reduces carbon emissions compared to traditional fossil fuel-based hydrogen production methods.

Hydrogen technology has become part of decarbonization, and as global economies have focused on ending fossil fuel reliance, the backbone of achieving net-zero emissions is set through hydrogen production. Of specific interest in electrolysis technology is its scalability; research has made it more affordable and efficient, creating a high degree of production needed to match increasing energy usage. Beyond this, hydrogen is a great energy carrier. It allows for long-distance transport over long distances without storage and makes the transport of renewable sources of energy possible.

Such traits are highly necessary for balancing supply and demand in the energy systems, especially in light of the stochastic character of sources of generation. Hydrogen is by no means limited to transport. It will have applications in heavy industry, shipping, and aviation - areas hardly easy to decarbonize. Market growth is supported by the realization of this potential on the part of governments and industries worldwide, which make huge investments in hydrogen infrastructure and technology. Initiatives, such as the Inflation Reduction Act of the U.S., grant substantial subsidies for the production of green hydrogen, which accelerates market growth further.

Europe has a bigger lead in the Global E-fuel Market due to ambitious climate ambitions and favorable policies that promote such innovation and transition toward sustainable fuels.

Europe has strict climate objectives-it aims for net-zero greenhouse gas emission by 2050, providing a strong incentive for more e-fuel development and use. These fuels, generated from renewable electricity, water, and carbon dioxide, are thus low-carbon alternatives to traditional fossil fuels yet essential for decarbonizing sectors that are challenging to electrify, such as aviation, maritime, and heavy-duty transport. Beyond this funding and regulatory boost, e-fuel technologies also receive additional financial and regulatory support in Europe.

The European Green Deal, together with national policies across the countries in Europe, offers funding and incentives and favorable regulatory environments for the production and distribution of e-fuels. This has led to investing heavily in research and development, as well as pilot and commercial-scale facility developments. In addition, Europe has good infrastructure with sound technological expertise in renewable energy sources such as wind and solar, a safe foundation for producing e-fuels.

Advanced electrolysis technologies are employed in the region for this critical conversion of electricity into hydrogen-though a key constituent of e-fuels. Commitment to sustainability and circular economy principles has deepened the ground for capturing Europe's market leadership, shaping a strong market demand for e-fuels. Being a region keen on the reduction of its carbon footprint and improvement of energy security, e-fuels have been an attractive option for both sectors-public and private.

• In March 2024, Argentina's Techint Engineering and Construction - also known as Techint E&C-has won the contract from HIF Global to design and develop Chile's first large electro-fuel plant. The project is primarily conceptual design and FEED development of the plant, HIF Global said.
• In March 2024, Infinium opened the world's first commercial-scale green hydrogen e-fuel production plant in Corpus Christi, Texas. An electronic fuels plant that is producing from captured carbon dioxide (CO2) and green hydrogen proprietary process in catalysts combined with on-site electrolyzers. Infinium refused to disclose details on electric fuel output capacity of the site or how much green hydrogen and carbon dioxide were being fed into it.
• In November 2023, The first commercial export of green hydrogen-based electronic fuels produced by HIF Global in Chile left the country for delivery to the UK. 24, 600 liters of e-gasoline produced at Haru Oni demonstration plant left Puerto Mardones before docked at St. Antonio to head off to Great Britain where Porsche used it.
• In October 2023, Saudi energy major Saudi Aramco collaborated with ENOWA to set up a demonstration e-fuel plant for synthetic electric fuel. The electronic fuel plant will produce 35 barrels of low-carbon synthetic gasoline per day using hydrogen from renewable sources and captured carbon dioxide to confirm that it is commercially and technically viable. It is located at ENOWA's Hydrogen Innovation and Development Centre (HIDC).

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.