Green Fuel Technologies: How E-Fuels (Power-to-Liquid) Could Revolutionize Road and Air Transport
- Green Fuel Journal
- Nov 13, 2025
- 39 min read
The global transport sector stands at a critical crossroads. While electric vehicles advance rapidly for passenger cars and short-haul applications, heavy-duty road transport and aviation face unique decarbonisation challenges that batteries alone cannot solve. Enter green fuel technologies—particularly e-fuels produced through Power-to-Liquid (PtL) processes—a powerful yet under-discussed solution that could revolutionise how we power vehicles and aircraft for decades to come.
This comprehensive analysis explores how e-fuels fit within the broader landscape of green fuel technologies, examining their production pathways, business implications, deployment challenges, and opportunities. With special emphasis on India and Asia's emerging role, this article provides strategic insights for business leaders, policymakers, researchers, and sustainability professionals navigating the complex transition to low-carbon transport.
What makes this article unique: We present data-driven cost projections, India-specific market analysis, a technology comparison matrix, and actionable enterprise checklists—providing both technical depth and strategic clarity for decision-makers.
What Are Green Fuel Technologies – Context and Scope
Green fuel technologies encompass a diverse family of low-carbon energy carriers designed to replace fossil fuels across transport sectors. These include synthetic fuels, renewable synthetic fuels, drop-in fuels, green hydrogen, green ammonia, and advanced biofuels. Their collective importance stems from a fundamental reality: while battery-electric vehicles excel in many applications, they face significant limitations in hard-to-electrify transport sectors including long-haul aviation, maritime shipping, and heavy-duty freight.
The Electrification Gap
Transportation accounts for approximately 37% of global end-use CO₂ emissions, with heavy-duty vehicles contributing 65% of NOx emissions despite representing less than 10% of road vehicles. Aviation alone consumed nearly 250 million tons of fuel in 2021—equivalent to 10.75 exajoules—with demand surging by 82.3% in early 2022 as travel rebounded post-pandemic.
Battery technology, while transformative for light-duty vehicles, encounters fundamental physics
constraints for long-distance and heavy applications:
Energy density limitations: Jet fuel contains approximately 12,000 Wh/kg compared to lithium-ion batteries at 250-300 Wh/kg
Weight penalties: A battery-powered long-haul truck would sacrifice payload capacity for battery mass
Charging infrastructure: Multi-megawatt charging stations require significant grid investments
Application constraints: Current battery technology cannot meet the energy requirements for intercontinental flights
Taxonomy of Green Fuel Technologies
To understand e-fuels' role, we must distinguish between different green fuel pathways:
Technology | Production Method | Primary Feedstock | Carbon Source |
First-generation biofuels | Fermentation/Transesterification | Food crops (corn, sugarcane, vegetable oils) | Biomass |
Advanced biofuels | Gasification/Hydrotreating | Waste oils, agricultural residues, forest biomass | Biomass |
E-fuels (PtL) | Electrolysis + Synthesis | Renewable electricity, water | Captured CO₂ (DAC or point sources) |
Green hydrogen | Water electrolysis | Renewable electricity, water | N/A (direct use) |
Green ammonia | Hydrogen + Nitrogen synthesis | Renewable electricity, air | N/A |
Technology Readiness and Commercial Viability
Green Fuel Technology | Technology Readiness Level (TRL) | Est. Cost (2024) | Infrastructure Compatibility | Best Application |
E-fuels (PtL) | TRL 7-8 (Demonstration) | $4-6/litre | 100% (drop-in) | Aviation, existing vehicle fleets |
Green hydrogen | TRL 8-9 (Commercial) | $3.5-5/kg | 0-10% (requires new infrastructure) | Heavy trucks, industrial processes |
Advanced biofuels | TRL 9 (Commercial) | $1.5-3/litre | 100% (drop-in) | Road transport, aviation (limited supply) |
Green ammonia | TRL 7-8 (Demonstration) | $450-650/tonne | 0% (requires engine modifications) | Maritime shipping |
The strategic insight: E-fuels occupy a unique position—they offer complete existing infrastructure compatibility (drop-in capability) while addressing sectors where direct electrification faces the greatest challenges, though at a cost premium that requires strategic intervention to overcome.
E-Fuels (Power-to-Liquid) – A Deep Dive
Production Pathway & Technology
E-fuels, also known as electrofuels or power-to-liquid (PtL) fuels, are synthetic hydrocarbons produced by combining green hydrogen with captured carbon dioxide. The production process unfolds through four primary steps:
Step 1: Green Hydrogen Production Renewable electricity (primarily wind and solar) powers electrolysers that split water (H₂O) into hydrogen (H₂) and oxygen (O₂). Three main electrolyser technologies compete in the market:
Alkaline electrolysers: Mature technology, lower capital cost ($300-400/kW), longer response time
Proton Exchange Membrane (PEM): Faster response to intermittent renewables, higher cost ($359-600/kW), uses precious metals
Solid Oxide Electrolysis Cells (SOEC): Highest efficiency potential, can integrate waste heat, less commercially mature ($344/kW manufacturing cost)
India's National Green Hydrogen Mission targets electrolyser costs below $300/kW through domestic manufacturing incentives, with companies like Reliance, L&T, and Adani establishing production capacity under the SIGHT scheme.
Step 2: Carbon Capture CO₂ is sourced through two primary pathways:
Direct Air Capture (DAC): Removes CO₂ directly from the atmosphere using chemical sorbents. Current costs range from $600-1,000 per tonne but projected to decline to $100-300 per tonne by 2050
Point-source capture: Captures CO₂ from industrial facilities (cement, steel, fermentation). Cost: $40-100 per tonne
For aviation e-fuels to achieve true carbon neutrality, DAC or biogenic sources are essential. However, initial projects often use point-source CO₂ for economic viability.
Step 3: Synthesis Gas (Syngas) Production Hydrogen and CO₂ undergo reverse water-gas shift (RWGS) reaction to produce synthesis gas—a mixture of carbon monoxide (CO) and hydrogen (H₂). This step can be integrated with co-electrolysis systems that produce syngas directly.
Step 4: Fuel Synthesis Two primary synthesis technologies convert syngas into liquid fuels:
Fischer-Tropsch (FT) Synthesis: The most commercially proven pathway for sustainable aviation fuel (SAF) and diesel production. Modern microchannel FT reactors (such as those from Velocys and Sasol) achieve:
6-10x higher volumetric productivity than conventional reactors
Up to 85% liquid fuel yield from syngas
Co-production of diesel, jet fuel, and naphtha
98% overall CO conversion efficiency
Methanol-to-Gasoline/Jet (MtG/MtJ): Alternative pathway that produces methanol as an intermediate:
More flexible product slate
Less commercially mature for aviation applications
Lower capital costs per unit capacity
Real-world example: The Haru Oni pilot plant in Punta Arenas, Chile—developed by Porsche, Siemens Energy, and HIF Global—demonstrates the integrated PtL pathway. Using Patagonia's exceptional wind resources (capacity factors exceeding 60%), the facility combines:
3.4 MW wind turbine generating power at $20-30/MWh
1.2 MW PEM electrolyser producing green hydrogen
Methanol synthesis followed by conversion to e-gasoline
Initial capacity: 130,000 litres/year e-gasoline (pilot phase)
Planned scale-up: 55 million litres by 2024, 550 million litres by 2026
Total investment for the pilot: $78 million, demonstrating the capital intensity that must be reduced for widespread deployment.
Why They Fit Road and Air Transport
Drop-in Compatibility: The Infrastructure Advantage E-fuels' greatest strength lies in their molecular similarity to conventional fossil fuels. This means:
Zero vehicle modifications required: E-kerosene meets ASTM D7566 specifications for jet fuel blending (currently up to 50%, with 100% approval under development)
Existing fuel distribution infrastructure: Pipelines, storage tanks, refueling stations, airport fuel systems require no changes
Immediate deployment potential: The global fleet of 1.3 billion combustion engine vehicles and 25,000+ commercial aircraft can use e-fuels without retrofit
Familiar logistics: Fuel handlers, maintenance crews, and safety systems already exist
This existing infrastructure compatibility provides massive capital savings compared to building parallel hydrogen refueling networks or expanding electrical grids for battery charging—estimated at $trillions globally for complete infrastructure replacement.
Energy Density: The Physics Advantage For heavy duty transport fuels and aviation, energy density determines practical viability:
Jet fuel (kerosene): 43 MJ/kg, 35 MJ/litre
E-diesel: 42 MJ/kg, 34 MJ/litre (nearly identical)
Lithium-ion battery: 0.9-1.0 MJ/kg (40x lower gravimetric density)
Compressed hydrogen (700 bar): 5.6 MJ/litre volumetric density (6x lower than diesel)
For a Boeing 787 Dreamliner flying 14,000 km, battery power would require approximately 186 tonnes of batteries—exceeding the aircraft's maximum takeoff weight and eliminating payload capacity entirely. E-kerosene, by contrast, maintains aviation's fundamental operating model while reducing lifecycle emissions by 80-90% compared to fossil jet fuel.
Industry Perspectives on SAF Adoption Airbus commits to making all aircraft 100% sustainable aviation fuel (SAF) compatible by 2030, while Boeing pledged similar readiness by 2030. The EU's ReFuelEU Aviation initiative mandates:
2% SAF in aviation fuel by 2025
6% by 2030 (including 1.2% e-fuels minimum)
70% by 2050 (including 35% e-fuels)
These policy frameworks create guaranteed offtake for e-SAF producers, though current production remains minimal—approximately 600 million litres globally in 2023 compared to 360 billion litres of total jet fuel consumption.
Cost Curve and Commercialization Status
Current Economics:
The Challenge E-fuel production costs remain 3-5x higher than fossil fuel equivalents:
Fossil jet fuel: $0.60-0.90/litre (2024 average)
E-kerosene (current): $4.00-6.00/litre
Grey hydrogen: $2/kg (US), $5-6/kg (Europe/Asia)
Green hydrogen (India, 2024): $3.50-5.00/kg
This cost gap stems from three primary factors:
Renewable electricity costs (50-70% of total LCOH)
Electrolyser capital expenditure ($300-1,000/kW depending on technology)
Capacity utilization factors (intermittent renewables reduce electrolyser operating hours)
Projected Cost Decline Pathways Multiple analyses forecast substantial cost reductions driven by:
Electrolyser cost reduction: From current $400-600/kW to $150-250/kW by 2030
Renewable electricity: Hybrid wind-solar systems with oversizing achieving $15-30/MWh in high-resource regions
DAC technology: From $600-1,000/tonne CO₂ to $200-400/tonne by 2030
Scale economies: Moving from pilot (100,000 litres/year) to industrial scale (100+ million litres/year)
2030 Cost Projections:
E-kerosene: $2.00-3.00/litre (optimistic) to $3.00-4.50/litre (conservative)
Green hydrogen (India): $2.00-2.50/kg with policy support
Cost parity gap: E-fuels likely remain 2-3x fossil fuel costs even by 2030
2050 Cost Projections:
E-kerosene: $1.50-2.50/litre
Potential competitiveness: With carbon pricing ($100-200/tonne CO₂), e-fuels achieve competitiveness with fossil fuels plus carbon capture costs
Case Study: The Haru Oni Pathway
The Haru Oni project in Chile provides the first large-scale demonstration of integrated e-fuel production:
Phase 1 (2022-2024): Pilot operations
Capacity: 130,000 litres/year e-gasoline, 350 tonnes/year e-methanol
Wind capacity factor: ~60% (exceptional Patagonian conditions)
Primary customer: Porsche (motorsports applications, experience centers)
Key learnings: Technology integration, permitting pathways, supply chain development
Phase 2 (2024-2026): Commercial demonstration
Target capacity: 55 million litres/year (400x scale-up)
Demonstrates commercial-scale synthesis and downstream processing
Economics: Targeting $3-4/litre production costs with Chilean renewable power at $20-30/MWh
Phase 3 (2026+): Industrial scale
Target: 550 million litres/year (1% of Chile's potential)
Multiple HIF Global facilities planned: Texas (USA), Tasmania (Australia), Uruguay
Business model: Long-term offtake agreements with aviation sector and premium automotive brands
Critical success factors identified:
Access to low-cost renewable electricity (<$30/MWh)
Streamlined permitting for integrated facilities
Availability of CO₂ (transitioning from biogenic to DAC)
Policy support (EU SAF mandates, US 45Q tax credits, UK revenue certainty mechanisms)
Technology partnerships (Siemens Energy electrolysers, Porsche product validation)
Challenges encountered:
Direct air capture unit delays (originally planned for 2023, construction started 2024)
Higher capital costs than initial projections ($78M for 130k litres = $600/litre capacity)
Need for integrated project financing spanning electricity generation, hydrogen production, and fuel synthesis
The project demonstrates both the technical feasibility and the economic challenges that must be overcome through policy support, technological learning, and scale-up.
Region Focus – India & Asia: Strategic Importance and Emerging Opportunities
Why India and Asia Matter
Asia represents the world's fastest-growing transport emissions source and largest potential market for green fuel technologies:
Emissions Growth Trajectory:
India's road transport emissions: Projected to grow 3-4% annually through 2030
Asia-Pacific aviation demand: Forecasted to grow 5-6% annually, becoming the world's largest aviation market by 2030
China's heavy-duty truck fleet: Already the world's largest, with 6 million+ trucks
Southeast Asian freight: Rapid industrialization driving logistics demand
India's Strategic Position: India combines several advantages making it strategically positioned for green hydrogen and e-fuel production:
Renewable Energy Abundance:
Solar capacity: 84 GW installed (2024), targeting 280 GW by 2030
Wind capacity: 44 GW installed, with offshore wind potential of 127 GW
Renewable electricity costs: Among world's lowest at $0.02-0.03/kWh for solar
Land availability: Rajasthan, Gujarat, and Ladakh offer extensive suitable areas
Policy Framework: The National Green Hydrogen Mission (NGHM) launched in January 2023 with $2.4 billion initial outlay:
Target: 5 million tonnes per annum (MMTPA) green hydrogen production by 2030
Electrolyser manufacturing: 1,500 MW capacity incentivized under SIGHT program (Tranche-I)
Production incentives: $0.40-0.66/kg hydrogen for first three years
Export-oriented projects: Exempted from Approved List of Models and Manufacturers (ALMM) restrictions for solar modules
Key policy elements supporting decarbonisation pathways:
Waiver of Inter-State Transmission System (ISTS) charges for green hydrogen projects
GST reduction considerations for electrolysers and hydrogen components
Strategic partnerships with EU, Japan, UAE for technology transfer and market access
Industrial Demand Centers:
Refineries: Indian Oil, Reliance, BPCL seeking grey hydrogen replacement (6 MMTPA current consumption)
Fertiliser sector: Major ammonia consumer with mandate for green ammonia adoption
Steel industry: Direct reduced iron (DRI) production transitioning to hydrogen-based processes
Port clusters: Jamnagar, Mundra, Vizag, Kakinada positioned as green fuel export hubs
E-Fuels and Synthetic Fuels in the Indian Context
While India's immediate focus centers on green hydrogen and green ammonia for domestic industries, e-fuels present strategic opportunities:
Aviation Sector Implications:
India's domestic aviation market: 3rd largest globally, projected 8-9% annual growth
International connectivity: Major transit hub between Europe, Middle East, and Asia-Pacific
Fuel requirements: Approximately 10 billion litres/year jet fuel consumption (2024)
SAF opportunity: Even 10% e-SAF adoption by 2035 represents 1 billion litre/year market
Indian carriers including Air India, IndiGo, and Vistara have expressed SAF adoption commitments, though domestic production remains absent. Establishing e-SAF production facilities could:
Reduce $15+ billion annual aviation fuel import dependence
Create export opportunities to fuel-constrained markets (Singapore, UAE, Hong Kong)
Position India as Asia's sustainable aviation fuel hub
Road Transport: The Commercial Vehicle Dimension India operates the world's 2nd largest commercial vehicle market:
Medium and heavy commercial vehicles (MHCVs): 1.5+ million annual sales
Existing fleet: 8+ million trucks and buses
Challenges for electrification: Limited charging infrastructure, payload penalties, range requirements
E-fuels offer transition advantages:
Drop-in compatibility enables fleet decarbonisation without scrapping existing vehicles
Particularly relevant for heavy duty transport fuels where battery solutions face weight constraints
Could bridge 2025-2040 period while battery costs decline and infrastructure expands
Business Opportunities for India-focused Enterprises
1. Renewable Electricity Aggregation: Companies that can bundle low-cost solar/wind power for dedicated e-fuel facilities will capture value. Hybrid RE+storage systems achieving 50-60% capacity utilization factors represent competitive advantages.
2. Electrolyser Manufacturing: SIGHT program awardees (Reliance, L&T, John Cockerill India, Adani) establishing 1,500 MW capacity create domestic supply chains. Technology partnerships with Nel ASA (Norway), McPhy (France) bring global expertise.
3. Fischer-Tropsch Integration: Limited domestic FT expertise presents opportunity for:
Technology licensing from Velocys, Sasol, Topsoe
Integration with existing petrochemical complexes (Jamnagar, Dahej)
Modular reactor designs for distributed production
4. Carbon Capture Services: India's cement (550 MMTPA capacity) and steel (140 MMTPA) sectors provide abundant point-source CO₂. Companies offering capture and purification services can supply e-fuel feedstock while reducing industrial emissions.
5. Digital and Consulting Services: The emerging e-fuel value chain requires:
Project development and feasibility studies
Renewable energy optimization and forecasting
Supply chain and logistics planning
Carbon accounting and certification services
Workforce training programs for hydrogen safety, electrolyser operations, and fuel synthesis
6. Infrastructure Development:
Pipeline networks for green hydrogen distribution (GAIL, NTPC feasibility studies ongoing)
Coastal import/export terminals for green ammonia and e-fuels
Blending facilities at major refineries and airports
Regional Competitive Dynamics
India's position relative to regional competitors:
Advantages:
Lower renewable electricity costs than Japan, South Korea, Singapore
Larger domestic market providing demand anchor
Government policy support and financial incentives
English-language business environment easing international partnerships
Challenges:
Grid reliability and wheeling infrastructure less developed than China
Lower FDI attractiveness than Southeast Asian competitors for foreign technology partnerships
Water stress in high-solar regions (Rajasthan, Gujarat) requiring desalination integration
Regulatory complexity and slower permitting compared to Gulf states
Strategic positioning: India's optimal role likely combines:
Domestic green hydrogen/ammonia for captive industrial use
Green hydrogen exports to Europe and East Asia (shipping via green ammonia)
E-fuel production for domestic aviation and selective export to Southeast Asia and Middle East
The key lies in capturing value through technology localization rather than merely providing low-cost renewable electricity—avoiding the "commodity trap" that has challenged other renewable export strategies.
Green Fuel Technologies vs Alternative Pathways
Understanding how e-fuels compare with other decarbonisation pathways helps stakeholders make informed technology choices. Rather than a winner-takes-all competition, the optimal strategy involves deploying each technology where it offers the greatest advantages.
Comprehensive Technology Comparison:
Technology | Technology Readiness | Production Cost (2024) | Infrastructure Needs | Best Use Cases | Scalability | Lifecycle Emissions Reduction |
E-fuels (PtL) | TRL 7-8 (Demonstration to commercial) | $4-6/litre e-kerosene; $5-8/litre e-diesel | Zero (100% drop-in compatible) | Aviation, maritime, existing vehicle fleets, motorsports | High (limited by RE availability and capital) | 80-90% vs fossil (with DAC) |
Green Hydrogen | TRL 8-9 (Commercial) | $3.5-5/kg (India 2024); Target $2/kg by 2030 | High (new fueling stations, storage, pipelines) | Heavy trucks, industrial processes, steel/fertiliser, grid storage | Very high (electrolyser scaling) | 100% at point of use (depends on electricity source) |
Green Ammonia | TRL 7-8 (Demonstration) | $450-650/tonne | Very high (requires engine retrofits or fuel cells) | Maritime shipping, fertiliser, power generation | High (builds on ammonia synthesis) | 100% at point of use (challenges: NOx, N₂O emissions) |
Advanced Biofuels | TRL 9 (Commercial) | $1.5-3/litre | Zero (drop-in compatible) | Road transport, aviation (supply limited) | Limited by sustainable feedstock (competing uses) | 60-80% vs fossil (depends on feedstock and ILUC) |
Battery Electric | TRL 9 (Commercial) | $150-250/kWh battery | High (charging infrastructure) | Light-duty vehicles, urban delivery, short-haul trucks | Very high (battery manufacturing) | 70-90% vs fossil (depends on electricity mix) |
Which Technology for Which Transport Mode: Decision Matrix
Transport Mode | Primary Technology (2025-2035) | Secondary/Complementary | Rationale |
Light-duty vehicles (cars, SUVs) | Battery electric | E-fuels (premium/classic vehicles) | Battery costs declining rapidly; charging infrastructure expanding; superior efficiency (3-4x vs combustion) |
Urban delivery vans | Battery electric | None | Fixed routes; depot charging; strong TCO advantage |
Regional trucks (<500 km) | Battery electric | Green hydrogen (fuel cells) | Megawatt charging enabling viable range; zero local emissions benefit |
Long-haul trucks (>500 km) | Green hydrogen (fuel cells) or Battery electric (with megawatt charging) | E-diesel (transition fuel) | Hydrogen offers faster refueling; battery costs declining may enable economic viability by 2030 |
Short-haul aviation (<1,500 km) | E-kerosene (SAF) | Hybrid-electric (future) | Drop-in compatibility; battery weight penalties too severe; hydrogen aircraft minimum 2035+ |
Long-haul aviation (>1,500 km) | E-kerosene (SAF) | Hydrogen (post-2040) | Only viable near-term solution for decarbonising intercontinental flights; ASTM certification pathways established |
Maritime shipping (short sea) | Green ammonia or E-methanol | LNG (transition) | New builds adopting ammonia-ready engines; methanol infrastructure exists in some ports |
Maritime shipping (deep sea) | Green ammonia | E-methanol, E-diesel | Ammonia offers superior energy density for long voyages; dual-fuel engines enabling transition |
Railways | Electric (catenary) | Green hydrogen (non-electrified lines) | Electrification most cost-effective where infrastructure exists; hydrogen for remote/heritage lines |
Off-road (mining, construction) | Green hydrogen or E-diesel | Battery electric (light equipment) | High power requirements; refueling logistics favoring liquid fuels; enclosed spaces benefiting from zero emissions |
The Synergy Perspective: Complementary Rather Than Competitive
Rather than viewing these technologies as competitors, the optimal decarbonisation strategy recognizes their complementary roles:
1. E-fuels as Bridge and Specialty Solution:
Enable immediate emissions reduction for existing fleets (1.3 billion vehicles globally)
Provide the only near-term solution for aviation and remote maritime
Support niche applications (motorsports, classic cars, emergency generators, military)
Transition fuel while hydrogen infrastructure develops
2. Green Hydrogen as Industrial Cornerstone:
Replaces grey hydrogen in existing industrial processes (6 MMTPA in India alone)
Enables steel, cement, and chemical industry decarbonisation
Serves as precursor for both e-fuels and ammonia
Powers heavy-duty trucking through fuel cell electric vehicles (FCEVs)
3. Battery Electric as Primary Pathway:
Delivers 70-80% of light-duty vehicle market by 2040 (most studies)
Dominates urban transport, delivery logistics, and short-haul applications
Offers lowest total cost of ownership where charging infrastructure exists
Benefits from 15+ years of manufacturing scale and cost reduction
4. Advanced Biofuels as Sustainable Supply:
Provides immediate SAF volumes from HEFA (hydrotreated esters and fatty acids)
Utilizes waste feedstocks avoiding food vs fuel conflicts
Supply constraints limit to 10-20% of total liquid fuel demand
Blends with e-fuels to accelerate aviation decarbonisation
Cost-Competitiveness Evolution: 2025-2050 Outlook
The relative economics of each pathway will shift dramatically:
2025 (Current State):
Battery electric achieves TCO parity for many light-duty applications
Fossil fuels remain cheapest for aviation and heavy transport
Green hydrogen 2-3x cost of grey hydrogen
E-fuels 4-6x cost of fossil equivalents
2030 (Early Commercial Phase):
Battery electric dominant for light-duty; approaching parity for regional trucks
Green hydrogen reaches $2-2.5/kg in best locations (India, Middle East, Chile)
E-fuels decline to $2-3/litre but require policy support for competitiveness
Carbon pricing ($50-100/tonne) narrows gap for aviation fuels
2040 (Mature Market):
E-fuels approach $1.5-2/litre in high renewable resource regions
Green hydrogen widely competitive for industrial and heavy transport use
Battery costs enable long-haul trucking electrification for many routes
Aviation sector mandates (EU 34% SAF by 2040) create guaranteed market
2050 (Net-Zero Aligned):
E-fuels potentially competitive with fossil+CCS (carbon capture and storage)
Technology mix optimized by application rather than cost alone
Carbon pricing ($150-250/tonne) fundamentally reshapes economics
Infrastructure lock-in effects create path dependency
Risk Considerations for Technology Selection
Enterprises must evaluate:
Technology Risk:
E-fuels: Mature synthesis pathways but DAC scaling uncertain
Green hydrogen: Established technology, mainly cost reduction needed
Battery electric: Well-proven but raw material supply constraints (lithium, cobalt)
Policy Risk:
E-fuels: Dependent on SAF mandates and carbon capture and utilisation (CCU) incentives
Green hydrogen: Strong policy tailwinds (NGHM in India, EU hydrogen strategy, US IRA)
Battery electric: Mature policy frameworks, some jurisdictions considering ICE bans
Infrastructure Risk:
E-fuels: Zero transition risk (drop-in)
Green hydrogen: Massive infrastructure build required ($500B+ globally)
Battery electric: Charging infrastructure expanding rapidly but unevenly
Supply Chain Risk:
E-fuels: Electricity and water main inputs (abundant)
Green hydrogen: Similar input availability, some electrolyser component constraints
Battery electric: Concentrated supply chains (China 75% battery manufacturing), geopolitical concerns
Market Adoption Risk:
E-fuels: Consumer acceptance high (no behavior change)
Green hydrogen: Requires new fueling behaviors and safety protocols
Battery electric: Proven consumer acceptance in light-duty; challenges in heavy-duty
The strategic takeaway: Portfolio approach reduces risk. Companies investing across multiple pathways gain optionality as technology and policy landscapes evolve. Early movers in e-fuels for aviation capture first-mover advantages and learning curve benefits despite current cost disadvantages.
Deployment Challenges & Strategic Considerations
While e-fuels offer compelling advantages, multiple barriers must be addressed for large-scale deployment. Understanding these challenges—and the strategies to mitigate them—is essential for stakeholders across the value chain.
1. Technology & Scale Challenges
Challenge: Renewable Electricity Availability and Cost
E-fuel production consumes 3-4 kWh electricity per kWh of liquid fuel produced (70-75% round-trip efficiency)
Requires dedicated RE capacity to avoid grid impacts and ensure low lifecycle emissions of fuels
Competition with direct electrification and grid decarbonisation for available renewable generation
Mitigation strategies:
Site selection: Prioritize locations with exceptional renewable resources (Patagonia, Rajasthan, Western Australia, Texas, Middle East)
Hybrid systems: Combine wind and solar to maximize capacity factors (60%+ achievable)
Oversizing: Install 2-3x RE capacity relative to electrolyser nameplate, accepting curtailment
Grid integration: Strategic positioning near high-voltage transmission reduces wheeling charges
Time-of-use arbitrage: Flexible operation capturing lowest-cost electricity hours (EDF analysis shows $5-15/MWh possible vs $55-70/MWh firm power)
Challenge: Electrolyser Capacity and Manufacturing
Global electrolyser manufacturing capacity: ~10 GW/year (2024)
Required for net-zero scenarios: 150-200 GW/year by 2030
Supply chain constraints for critical components (membranes, catalysts, balance of plant)
Mitigation strategies:
Policy-driven scale-up: Production-linked incentives (India's SIGHT program, EU Important Projects of Common European Interest)
Technology partnerships: Joint ventures between established manufacturers (Nel, ITM Power, Plug Power) and industrial partners
Domestic manufacturing: Localization reduces currency risk and logistics costs (particularly important for India)
Standardization: Modular designs enabling factory production rather than custom builds
Challenge: CO₂ Capture Methods and Scale
Direct Air Capture commercially immature with current costs $600-1,000/tonne
Point-source capture limited to industrial concentration points
Transportation and storage logistics for captured CO₂
Mitigation strategies:
Phased approach: Initial projects using point-source CO₂ (cement, steel, bioethanol fermentation)
DAC R&D acceleration: Increased funding for solid sorbent and liquid solvent technologies
Policy incentives: US 45Q tax credits ($85/tonne for DAC), EU Innovation Fund support
Co-location: Siting e-fuel facilities near CO₂ sources minimizes transport costs
Shipping infrastructure: Development of CO₂ carriers enabling intercontinental transport
Challenge: Plant Utilization and Full-Load Hours
Intermittent renewables reduce electrolyser capacity factors to 30-40% without storage/grid
Low utilization increases levelised costs dramatically (fixed capex spread over fewer output units)
Fischer-Tropsch reactors require steady operation for catalyst stability
Mitigation strategies:
Hydrogen storage buffers: 2-12 hours storage decouples electrolysis from synthesis
Grid connectivity: Limited grid supplement during low RE periods (within sustainability thresholds)
Battery integration: 4-8 hour batteries smooth renewable variability
Geographical diversification: Portfolio of facilities across different resource profiles
Flexible design: Turndown ratios enabling economic part-load operation
2. Economic Challenges
Challenge: High Electricity Cost Sensitivity
Electricity represents 50-70% of green hydrogen production costs
Even with low RE costs ($20-30/MWh), electricity input constitutes $1.40-1.80/kg hydrogen
Small electricity price variations create large LCOH swings
Mitigation strategies:
Long-term PPAs: 15-25 year power purchase agreements lock in electricity costs
Vertical integration: Some developers (Adani, Reliance) building captive RE capacity
Merchant exposure: Sophisticated offtakers accepting price volatility in exchange for spot market access
Arbitrage strategies: Time-shifting production to lowest-price hours (requires storage)
Challenge: Capital Investment Intensity
E-fuel facilities require $500-1,500 per annual litre capacity (Haru Oni: ~$600/litre)
1 billion litre/year facility (1% UK aviation fuel) requires $750M-1.5B capex
Long payback periods (15-20 years) challenge financing
Mitigation strategies:
Blended finance: Concessional capital from development finance institutions (DFIs) alongside commercial debt
Carbon contracts for difference: Revenue certainty mechanisms guarantee strike prices (UK SAF revenue certainty scheme)
Offtake agreements: Pre-commitment from aviation customers (airline consortia, fuel suppliers)
Modular expansion: Phased build-out reduces upfront capital and enables course correction
Industrial partnerships: Petrochemical companies (ExxonMobil, Shell, TotalEnergies) provide project expertise and balance sheets
Challenge: Dependency on Policy Support
Without carbon pricing or mandates, e-fuels cannot compete with $0.60-0.90/litre fossil jet fuel
Policy uncertainty creates investment risk
Mitigation strategies:
Jurisdiction selection: Prioritize regions with stable policy frameworks (EU, California, UK)
Contractual pass-through: Structure agreements transferring policy risk to offtakers
Diversification: Develop facilities across multiple regulatory regimes
Advocacy: Industry collaboration through organizations like Aviation Fuel Alliance
3. Policy & Regulatory Frameworks
Challenge: Need for Carbon Pricing
Social cost of carbon ($50-250/tonne) not reflected in fuel prices
Creates fundamental competitive disadvantage for low-carbon alternatives
Mitigation strategies:
Emissions trading systems: EU ETS, UK ETS, California cap-and-trade provide implicit carbon pricing
Tax credits: US Inflation Reduction Act provides $1.75/kg clean hydrogen production credit (45V)
Direct mandates: ReFuelEU Aviation requiring minimum SAF percentages avoids reliance on carbon price
Border adjustments: EU Carbon Border Adjustment Mechanism (CBAM) creating level playing field
Challenge: SAF Mandates and Harmonization
Divergent regional requirements create compliance complexity
Definition inconsistencies (what qualifies as SAF, sustainability criteria)
Mitigation strategies:
International standards: ICAO CORSIA providing harmonized carbon accounting
Industry certification: RSB (Roundtable on Sustainable Biomaterials), ISCC (International Sustainability and Carbon Certification) creating common frameworks
Government coordination: Global Biofuels Alliance enabling policy learning
Clear timelines: Long-term visibility (EU: targets through 2050) enabling investment planning
Challenge: Sustainability Certification and Additionality
Ensuring renewable electricity truly additional (not displacing grid decarbonisation)
Carbon accounting methodologies (lifecycle assessment boundaries)
Temporal matching and geographical correlation requirements
Mitigation strategies:
Strict additionality rules: EU Renewable Fuels of Non-Biological Origin (RFNBO) criteria
Hourly matching: Real-time correlation between RE generation and hydrogen production (versus annual matching)
Dedicated RE capacity: Physical connection proving additionality
Third-party verification: Independent audits of carbon intensity claims
4. Supply Chain and Integration
Challenge: Feedstock Logistics
Water requirements: 9-10 litres per kg hydrogen (stress in arid high-solar regions)
CO₂ transportation from capture sites to e-fuel facilities
Storage and handling of compressed hydrogen (700 bar) or cryogenic liquid
Mitigation strategies:
Desalination integration: Co-located facilities in coastal regions (India's coastal hydrogen hubs)
Pipeline infrastructure: Repurposing natural gas pipelines for hydrogen (blending or pure hydrogen)
Shipping solutions: Conversion to ammonia or liquid organic hydrogen carriers (LOHC) for long-distance transport
Underground storage: Salt caverns, depleted oil/gas fields providing large-scale seasonal storage
Challenge: Integration with Existing Fuel Distribution
Airport fuel systems, pipeline specifications, quality standards
Blending ratios and compatibility testing
Safety protocols and handler training
Mitigation strategies:
Industry collaboration: Fuel suppliers (Shell, BP, TotalEnergies) integrating SAF into distribution networks
ASTM certification: Clear approval pathways for new synthetic fuel production routes
Progressive blending: Gradual increase from 10% to 50% to 100% as systems validate
Infrastructure adaptation: Relatively minor modifications to existing systems (e.g., seal materials)
Enterprise Checklist: Questions to Ask Before Entering E-Fuel Value Chain
Organizations evaluating e-fuel investments should systematically assess:
Strategic Positioning:
☐ Where do we sit in the value chain (RE developer, electrolyser manufacturer, fuel synthesizer, offtaker)?
☐ What is our core competency and how does it translate to e-fuels?
☐ Are we building proprietary advantage or competing in commodity segments?
☐ Do we have patient capital for 15-20 year payback periods?
Resource Access:
☐ What is our levelized cost of renewable electricity (target <$30/MWh)?
☐ Do we have water access (9 litres per kg H₂)?
☐ What CO₂ sources are available within 100 km (cost target <$100/tonne)?
☐ What is the capacity factor we can achieve (target >50%)?
Market and Offtake:
☐ Who are our anchor customers and what volumes do they commit to?
☐ What price are offtakers willing to pay (floor and ceiling)?
☐ How long are offtake agreements (target 10+ years)?
☐ What volume ramp trajectory is realistic?
Policy and Regulatory:
☐ What policy risks do we face (mandate changes, subsidy expiration)?
☐ Which jurisdictions offer most stable frameworks?
☐ How do we structure contracts to allocate policy risk?
☐ What sustainability certification do we need and how do we achieve it?
Technology and Operational:
☐ What is our technology strategy (license vs develop)?
☐ Which synthesis pathway (Fischer-Tropsch vs methanol-to-jet)?
☐ What electrolyser technology best suits our RE profile?
☐ How do we achieve plant utilization >50%?
Financial and Risk:
☐ What is our weighted average cost of capital (WACC)?
☐ What financial structures optimize our position (project finance, corporate investment, joint venture)? ☐ How do we stage investments to manage risk?
☐ What insurance is available for technology and market risks?
Risk Mitigation: Regional Considerations for India/Asia
Grid Reliability:
India's RE curtailment rates low (<3%) but grid frequency variations pose electrolyser challenges
Solution: Hybrid systems with battery buffering, DC-coupled designs
Policy Uncertainty:
Frequent revisions to GST rates, import duties, and incentive schemes
Solution: Multi-year fixed policy windows (NGHM provides 3-year incentive commitment)
Water Stress:
Rajasthan, Gujarat (high solar regions) face water scarcity
Solution: Coastal facilities with desalination (Mundra, Kakinada, Vizag model)
Financing Challenges:
Higher cost of capital (10-12% vs 4-6% in Europe/US)
Solution: DFI partnerships (World Bank, ADB), export credit agencies, blended finance structures
Technology Access:
Limited domestic Fischer-Tropsch expertise
Solution: Technology licensing agreements, JVs with global players (Velocys, Sasol, Topsoe)
Skilled Workforce:
Shortage of hydrogen engineers, safety specialists, process operators
Solution: Partnerships with IITs/NITs, international training programs, workforce transition from oil/gas sector
Successful Indian e-fuel projects will likely require:
Strong government partnership (state and central)
International technology partnerships
Anchor offtake from aviation sector (Air India, IndiGo)
Phased development (pilot, demonstration, commercial)
Integration with existing industrial clusters (Jamnagar, Dahej)
Future Outlook & Roadmap for Green Fuel Technologies
Realistic Timeline for Scaling E-Fuels and Green Technologies
The path to large-scale green fuel technologies deployment spans three distinct phases:
Phase 1 (2024-2030): Demonstration and Early Commercial
E-Fuels Milestones:
2024-2026: 10-15 pilot and demonstration facilities globally (100,000-5 million litres/year each)
2027-2028: First commercial-scale facilities (50-100 million litres/year)
2030: Global e-fuel production reaches 5-10 billion litres/year (1-2% of aviation fuel demand)
Key projects: Haru Oni scale-up (Chile), Nordic Electrofuel (Norway), Texas e-SAF facilities
Green Hydrogen Milestones:
2024: Global electrolyser manufacturing capacity reaches 15-20 GW/year
2027: Green hydrogen reaches $2.50-3/kg in best locations (India, Middle East, Chile, Texas)
2030: Global green hydrogen production reaches 30-40 MMTPA (5-6% of current hydrogen demand)
India specifically: 5 MMTPA production capacity (NGHM target)
Policy Developments:
EU ReFuelEU mandates: 6% SAF (2030), 1.2% e-fuels minimum
US SAF Grand Challenge: 3 billion gallons by 2030 (supported by IRA tax credits)
India: Green hydrogen obligations for refineries and fertiliser sectors
Multiple countries implement carbon border adjustments
Key Success Factors:
Sustained high renewable energy deployment (300-400 GW/year solar + wind globally)
Electrolyser cost reduction to $150-250/kW
Initial DAC deployments reaching 1-5 million tonnes CO₂/year capacity
First-mover airline commitments creating demand pull
Phase 2 (2030-2040): Commercial Scale-Up and Cost Decline
E-Fuels Milestones:
2035: E-fuel production reaches 50-100 billion litres/year (10-15% of aviation fuel)
Production costs decline to $1.50-2.50/litre in best locations
100% SAF approval for all major aircraft types (Airbus, Boeing)
E-diesel and e-gasoline capture niche markets (motorsports, maritime, remote applications)
Green Hydrogen Milestones:
2035: Green hydrogen reaches $1.50-2/kg in high-resource regions
Global production exceeds 100 MMTPA (15-20% of total hydrogen)
Hydrogen trucks reach price parity with diesel in total cost of ownership
Major steel and cement facilities transition to hydrogen-based processes
Green Ammonia Milestones:
2035: First large-scale ammonia-powered container ships in operation
Green ammonia production capacity reaches 50-75 MMTPA
Price competitive with fossil ammonia plus carbon costs
Infrastructure Development:
Global hydrogen pipeline network begins deployment (repurposed natural gas infrastructure)
Airport SAF blending infrastructure upgraded for 50-100% blends
Green fuel shipping routes established (Middle East, Australia, South America to Europe/Asia)
Market Dynamics:
Carbon pricing reaches $100-150/tonne in advanced economies
SAF mandates expand to Asia-Pacific region
Heavy industry decarbonisation drives green hydrogen demand
Battery electric vehicles dominate light-duty (70-80% market share)
Phase 3 (2040-2050): Mass Market and Net-Zero Alignment
E-Fuels Milestones:
2050: E-fuel production capacity sufficient for 50-70% of aviation fuel demand (400-500 billion litres/year)
Production costs approach $1-1.50/litre (competitive with fossil+CCS)
Complete infrastructure transition allowing 100% e-fuel use
Niche applications in motorsports, aviation heritage, and distributed generation
Green Hydrogen Milestones:
2050: Green hydrogen becomes dominant form (70-80% of 500+ MMTPA global production)
Price parity with natural gas on energy basis in many markets
Steel, cement, chemicals primarily hydrogen-based
Hydrogen provides seasonal grid storage and demand flexibility
System Integration:
Hybrid solutions optimized by application (BEV for light-duty, H₂ for trucks, e-fuels for aviation)
Circular carbon economy established (DAC-fuels-combustion-DAC)
Global trade in green energy carriers (hydrogen, ammonia, e-fuels)
Emerging Business Models
Model 1: Fuel-as-a-Service (FaaS) Rather than selling fuel as commodity, providers offer comprehensive decarbonisation solutions:
Value proposition: Guaranteed carbon intensity reductions, price hedging, regulatory compliance
Target customers: Airlines, logistics fleets, industrial facilities
Revenue structure: Per-tonne CO₂ avoided, fixed capacity payments, performance-based incentives
Example: Shell-led consortium offering SAF bundles with carbon credits and renewable electricity
Model 2: Fleet Integration Partnerships E-fuel producers partner directly with vehicle fleet operators:
Value proposition: Long-term supply certainty, customized fuel specifications, shared risk
Target customers: Airlines (Air France-KLM, United Airlines), trucking companies, maritime operators
Revenue structure: Take-or-pay offtake agreements, indexed pricing, volume commitments
Example: Porsche's equity stake in HIF Global securing prioritized e-fuel supply
Model 3: Industrial Cluster Development Integrated facilities co-locate multiple green fuel production pathways:
Value proposition: Shared infrastructure (RE, water treatment, CO₂ capture), economies of scale, feedstock flexibility
Target customers: Refineries, petrochemical complexes, port authorities
Revenue structure: Multiple product streams (hydrogen, ammonia, e-fuels), merchant sales, contracted volumes
Example: Jamnagar Special Economic Zone (India) master-planning green hydrogen hub
Model 4: Renewable Energy Aggregation Specialized developers bundle low-cost RE for dedicated hydrogen/e-fuel projects:
Value proposition: Optimized capacity factors through hybrid wind-solar-storage, lowest levelised costs
Target customers: E-fuel producers, industrial hydrogen consumers, export-oriented projects
Revenue structure: Long-term PPAs, merchant price exposure with hedging, capacity payments
Example: Renewable energy companies (Ørsted, Iberdrola, NTPC) developing hydrogen-specific RE portfolios
Scenario Matrix: India/Global Adoption Pathways
Understanding potential futures helps stakeholders prepare strategies robust across multiple scenarios:
Scenario A: Aggressive Adoption (Optimistic)
Global Context:
Carbon pricing reaches $150-200/tonne by 2035
Technology costs decline faster than expected (electrolyser: $100-150/kW by 2030)
Policy support remains strong and consistent
Private sector investment accelerates (aviation sector commitments, oil majors pivoting)
India-Specific:
NGHM targets exceeded: 7-8 MMTPA hydrogen by 2030
Domestic electrolyser manufacturing achieves 5 GW/year capacity
SAF mandate introduced: 5% by 2035, 20% by 2045
Major airlines (Air India, IndiGo) commit to 10%+ SAF use
Coastal green hydrogen hubs operational in Gujarat, Tamil Nadu, Odisha
Outcomes:
E-fuel production costs: $1.50-2/litre by 2035
Green hydrogen: $1.50-2/kg by 2030 in India
Aviation sector: 25-30% SAF adoption by 2040
Heavy trucking: 30-40% hydrogen fuel cell penetration by 2040
India becomes net exporter of green ammonia and hydrogen derivatives
Business Implications:
Early movers capture learning curve advantages
Equipment suppliers face capacity constraints
Talent competition intensifies for specialized skills
Export-oriented projects highly profitable
Scenario B: Conservative Adoption (Baseline)
Global Context:
Carbon pricing grows slowly ($50-75/tonne by 2035)
Technology costs decline as currently projected
Policy support uneven across jurisdictions
Aviation sector achieves mandated minimums but limited voluntary adoption
India-Specific:
NGHM targets partially met: 3-4 MMTPA hydrogen by 2030
Import dependence continues for advanced electrolysers
Voluntary SAF adoption remains <2% through 2035
Green hydrogen primarily serves domestic industrial replacement (grey hydrogen)
Export ambitions delayed to post-2035 timeframe
Outcomes:
E-fuel production costs: $2.50-3/litre by 2035
Green hydrogen: $2.50-3/kg by 2030 in India
Aviation sector: 10-15% SAF adoption by 2040
Heavy trucking: 15-20% hydrogen/battery mix by 2040
India achieves self-sufficiency but limited export success
Business Implications:
Pilot projects succeed but scale-up delayed
Consolidation in electrolyser manufacturing sector
Policy advocacy becomes critical business activity
Patient capital earns returns but over longer periods
Scenario C: Delayed Transition (Pessimistic)
Global Context:
Carbon pricing stalled or reversed in some regions
Technology costs decline slower than expected
Policy support weakens due to economic pressures or political shifts
Aviation sector lobbies successfully for extended timelines
India-Specific:
NGHM underachieves: 1-2 MMTPA by 2030
Policy uncertainty and regulatory delays slow project development
Continued reliance on grey hydrogen and fossil fuels
SAF adoption minimal (<1%) through 2035
Export ambitions abandoned
Outcomes:
E-fuel production costs: $3-4/litre by 2035
Green hydrogen: $3.50-4/kg by 2030 in India
Aviation sector: <5% SAF adoption by 2040
Heavy trucking: <10% alternative fuel penetration by 2040
India remains significant fossil fuel importer
Business Implications:
Many pilot projects fail to reach commercial scale
Write-offs on early investments
Brain drain as talent moves to more supportive regions
Long-term strategic value but near-term financial challenges
Preparing for Multiple Futures: Strategic Hedging
Given uncertainty about which scenario materializes, sophisticated players employ hedging strategies:
Portfolio Diversification:
Invest across multiple geographies (India, Middle East, Chile, Europe, USA)
Balance pilot, demonstration, and commercial-scale projects
Participate in both hydrogen and e-fuel value chains
Maintain exposure to battery electric and biofuel pathways
Flexible Contracting:
Offtake agreements with floor prices but merchant upside
Technology partnerships allowing pathway switching (FT vs MtJ)
Modular expansion enabling pause/resume based on market conditions
Policy Engagement:
Active participation in trade associations (Hydrogen Council, Aviation Fuel Alliance)
Support for evidence-based policy development
Building coalitions across industry sectors
Workforce Development:
Training programs creating pipelines for critical skills
University partnerships for R&D collaboration
Transition planning for fossil fuel sector workers
Call to Action for Stakeholders
For Businesses: The window for establishing first-mover advantage in e-fuels and green hydrogen is narrowing. Companies should:
Assess strategic fit: Identify which parts of the value chain align with core capabilities
Build partnerships: No single company can succeed alone—collaborations essential
Invest in pilots: Small-scale demonstrations derisk larger commercial commitments
Develop workforce: Begin training programs now for skills needed in 3-5 years
For Policymakers: Clear, consistent, long-term policy frameworks are prerequisite for investment:
Implement carbon pricing: Social cost of carbon must be reflected in fuel prices
Set ambitious mandates: SAF requirements with long-term visibility
Support infrastructure: Public investment in hydrogen pipelines, CO₂ transport, RE transmission
Harmonize standards: International cooperation on sustainability criteria and certification
For Educators and Training Providers: The energy transition creates millions of new jobs requiring specialized skills:
Develop curricula: Electrolyser operation, hydrogen safety, process engineering for synthesis
Partner with industry: Apprenticeships and on-the-job training programs
Create certification: Standardized credentials for green fuel technicians and engineers
Support transitions: Retooling programs for oil/gas sector workers
For Investors: E-fuels and green hydrogen represent multi-trillion dollar investment opportunity:
Patient capital thesis: Long payback periods but durable competitive advantages
Policy risk management: Diversify across jurisdictions with strong frameworks
Technology risk mitigation: Back proven synthesis pathways and established partners
Portfolio construction: Balance commercial projects with technology innovators
The transition to green fuel technologies is not a question of "if" but "when" and "how fast." Organizations that act decisively today—building capabilities, securing resources, and establishing partnerships—will capture disproportionate value as the market matures through the 2030s and beyond. The time to prepare, align strategies, and invest in skills is now.
Frequently Asked Questions (FAQs)
Q. What are the main green fuel technologies for aviation and road transport?
The primary green fuel technologies for aviation and road transport include:
For Aviation: Sustainable aviation fuel (SAF) produced through three main pathways:
(1) E-fuels (synthetic jet fuel from green hydrogen and captured CO₂),
(2) Advanced biofuels from waste oils and forestry residues using HEFA (Hydrotreated Esters and Fatty Acids) processes, and
(3) Power-to-Liquid (PtL) synthetic kerosene. E-kerosene is particularly promising because it's a drop-in fuel that works in existing jet engines without modifications and can reduce lifecycle emissions by 80-90% when produced with renewable energy and atmospheric CO₂ capture.
For Road Transport:
(1) Green hydrogen for heavy-duty trucks using fuel cell electric vehicles (FCEVs),
(2) E-diesel synthesized through Fischer-Tropsch processes,
(3) Battery electric for light-duty and regional trucks, and
(4) Advanced biodiesel from waste feedstocks. The choice depends on application—battery electric dominates light-duty vehicles and urban delivery, while hydrogen and e-fuels serve long-haul heavy-duty applications where batteries face weight and range constraints.
Q. How do e-fuels differ from traditional biofuels?
E-fuels and biofuels differ fundamentally in their production pathways and feedstock sources:
E-fuels are synthetic hydrocarbons produced from green hydrogen (made via water electrolysis using renewable electricity) and captured carbon dioxide. They're completely synthetic with no biological feedstock involved. The process is: renewable electricity → hydrogen via electrolysis → combine with captured CO₂ → liquid hydrocarbon fuels.
Traditional biofuels are derived from biological materials: first-generation from food crops (corn ethanol, soy biodiesel), second-generation from agricultural residues and waste, and third-generation from algae. Their production involves fermentation, transesterification, or gasification of biomass.
Key differences:
Feedstock limits: Biofuels face sustainable biomass supply constraints; e-fuels scale with renewable electricity availability
Lifecycle emissions: E-fuels with Direct Air Capture achieve near-complete carbon capture and utilisation (CCU); biofuels depend on sustainable farming practices and indirect land-use change considerations
Energy density: Both produce comparable energy density to fossil fuels
Cost: Currently, advanced biofuels ($1.50-3/litre) are cheaper than e-fuels ($4-6/litre), though this gap will narrow
Both are drop-in fuels compatible with existing engines, but e-fuels offer unlimited scalability potential while biofuels face feedstock availability ceilings limiting their role to 10-20% of total fuel demand.
Q. Are e-fuels cost-competitive with fossil fuels today?
No, e-fuels are currently not cost-competitive with fossil fuels without policy support:
Current price comparison (2024):
Fossil jet fuel: $0.60-0.90/litre
E-kerosene: $4.00-6.00/litre (4-6x more expensive)
Fossil diesel: $0.70-1.00/litre
E-diesel: $5.00-8.00/litre
This cost gap stems from:
High electricity costs (50-70% of production cost): Even cheap renewables at $20-30/MWh translate to $1.40-1.80/kg hydrogen cost
Electrolyser capital expenditure: $300-600/kW for equipment
Carbon capture costs: Direct Air Capture currently $600-1,000/tonne CO₂
Limited economies of scale: Most facilities remain pilot/demonstration stage
However, costs are projected to decline substantially:
By 2030: $2.00-3.00/litre with supportive policies
By 2040: $1.50-2.50/litre
By 2050: Potentially $1.00-1.50/litre approaching competitiveness with fossil fuels plus carbon capture costs
Pathways to competitiveness:
Carbon pricing ($100-200/tonne CO₂) narrows the gap
SAF mandates (EU: 6% by 2030) create guaranteed markets
Technology learning curves reduce costs 15-25% with each doubling of capacity
Access to ultra-low-cost renewables (<$20/MWh in Chile, Middle East, India)
E-fuels require transitional policy support (mandates, tax credits, carbon pricing) to bridge the cost gap during the 2020s and 2030s as the technology scales and costs decline.
Q. Can existing vehicles use e-fuels without modifications?
Yes, e-fuels are drop-in fuels that work in existing vehicles and aircraft without any modifications. This is one of their greatest advantages:
For Road Vehicles:
E-diesel and e-gasoline are chemically identical or nearly identical to fossil equivalents
Meet existing fuel standards (EN 15940 for diesel in Europe)
Compatible with all diesel and gasoline engines—no retrofits needed
Work with current fuel pumps, tanks, and distribution systems
For Aviation:
E-kerosene meets ASTM D7566 specifications for jet fuel
Currently approved for up to 50% blending with conventional jet fuel
100% e-kerosene approval anticipated by late 2020s as testing completes
Airlines like Lufthansa, Air France-KLM, and United already using SAF blends in regular operations
Infrastructure Compatibility:
Existing pipelines can transport e-fuels
Airport fuel storage and distribution systems require minimal adaptation
Fuel trucks, pumps, and metering equipment unchanged
Safety protocols for handlers remain same
This existing infrastructure compatibility provides massive advantages compared to alternatives requiring new fueling networks (hydrogen requiring $500 billion+ in new stations globally) or charging infrastructure (battery electric). It enables immediate deployment using the trillions of dollars already invested in fuel distribution systems.
The drop-in nature means e-fuels can decarbonize the existing global fleet of 1.3 billion vehicles and 25,000+ commercial aircraft rather than requiring complete fleet replacement—critical for achieving near-term emissions reductions while new zero-emission vehicles scale up.
Q. What role does India play in the green fuel technologies transition?
India is positioning itself as a major player in the green fuel technologies transition, particularly for green hydrogen and synthetic fuels:
Current Status:
National Green Hydrogen Mission (NGHM): $2.4 billion committed, targeting 5 million tonnes/year production by 2030
Renewable energy base: 128 GW solar and wind capacity (2024), targeting 500 GW by 2030
Cost advantages: Among world's lowest renewable electricity costs ($0.02-0.03/kWh) providing competitive green hydrogen production
Manufacturing capacity: 1,500 MW electrolyser manufacturing awarded under SIGHT scheme to companies including Reliance, L&T, Adani, John Cockerill
Strategic Advantages for E-fuels:
Abundant RE resources: Rajasthan, Gujarat, Ladakh offer exceptional solar; coasts provide wind potential
Growing transport demand: 3rd largest domestic aviation market, 2nd largest commercial vehicle market
Industrial demand: 6 million tonnes/year grey hydrogen consumption in refineries and fertilisers, potential anchor for green hydrogen
Port infrastructure: Kandla, Mundra, Kakinada positioned as green fuel export hubs
Policy Support for Synthetic Fuels:
MNRE mandates exploring Fischer-Tropsch synthesis for sustainable aviation fuel
Waiver of ISTS transmission charges for green hydrogen projects reducing electricity costs
GST reductions under consideration for hydrogen and electrolyser components
Export-oriented projects exempt from domestic content requirements
India's Likely Role by 2035:
Domestic green hydrogen producer replacing imported grey hydrogen in refineries and fertiliser plants
Green ammonia exporter to Europe, Japan, South Korea for power generation and shipping
Regional SAF hub for Asia-Pacific aviation with lower production costs than East Asia
Technology localizer bringing down electrolyser and synthesis equipment costs through domestic manufacturing
Challenges to Address:
Grid reliability and wheeling infrastructure development
Water stress in high-solar regions requiring desalination integration
Technology access (limited domestic Fischer-Tropsch expertise)
Higher financing costs (10-12% vs 4-6% in developed markets)
Policy consistency and regulatory streamlining
India's success depends on sustained policy support, technology partnerships with global leaders (Siemens Energy, Nel ASA, Topsoe), and strategic focus on applications where its advantages (low-cost renewables, large domestic market) create competitive positions.
Q. What exactly are e-fuels and are they part of green fuel technologies?
Yes, e-fuels are a critical subset of green fuel technologies. Specifically:
Definition: E-fuels (electrofuels) are synthetic liquid or gaseous fuels produced by using renewable electricity to combine green hydrogen with captured carbon dioxide or nitrogen. They're also called power-to-liquid (PtL) fuels or renewable synthetic fuels.
E-fuels include:
E-kerosene (synthetic jet fuel) for aviation
E-diesel for heavy-duty trucks and maritime vessels
E-gasoline for passenger vehicles
E-methanol for shipping and as chemical feedstock
E-ammonia (technically hydrogen + nitrogen rather than carbon-based)
Position within Green Fuel Technologies: Green fuel technologies encompass all low-carbon alternatives to fossil fuels, including:
Advanced biofuels (from waste biomass)
E-fuels (synthetic from renewable electricity)
Green hydrogen (direct use)
Green ammonia (for shipping and power)
Bio-methane and renewable natural gas
What makes e-fuels "green":
Carbon neutrality: When produced using atmospheric CO₂ (Direct Air Capture), the carbon released during combustion equals carbon captured during production—creating a closed cycle
Renewable electricity: Production powered by wind, solar, or other renewables
Lifecycle emissions: 80-90% reduction compared to fossil fuels
Why e-fuels matter strategically: They bridge the gap between renewable electricity and hard-to-electrify transport sectors (aviation, maritime, heavy road freight) where battery weight penalties or hydrogen infrastructure challenges make direct electrification difficult. As drop-in fuels compatible with existing infrastructure, they enable immediate deployment while maintaining energy security and familiar operating models.
E-fuels represent the chemical storage of renewable electricity in liquid form—essentially converting intermittent wind and solar into storable, transportable, high-density energy carriers suitable for transportation applications requiring long range and rapid refueling.
Q. Why are e-fuels so expensive compared to gasoline?
E-fuels currently cost 4-6x more than fossil gasoline due to multiple factors in their production chain:
1. Energy Conversion Losses (Biggest Factor): The power-to-liquid (PtL) process involves multiple conversion steps, each with efficiency losses:
Electrolysis: 70-80% efficient (renewable electricity to hydrogen)
CO₂ capture (DAC): Requires 1-2 kWh per kg CO₂ captured
Synthesis (H₂ + CO₂ to liquid fuel): 75-85% efficient
Overall efficiency: Only 40-55% of input renewable electricity ends up in the final liquid fuel
This means producing 1 litre of e-fuel requires 3-4 times more renewable electricity than directly charging a battery. Even with cheap renewable power ($20-30/MWh), electricity represents $1.40-1.80 per kg of hydrogen—already 70-80% of the cost of synthetic fuels target.
2. Capital Equipment Costs:
Electrolysers: $300-600/kW capital cost (versus mature technology for refineries)
Fischer-Tropsch reactors: $300-600 per annual litre capacity
Direct Air Capture: $600-1,000 per tonne CO₂ captured
Total facility cost: $500-1,500 per annual litre for integrated plants
These capital costs must be amortized over 15-20 year project lifetimes, significantly increasing per-litre costs.
3. Low Capacity Utilization:
Intermittent renewables reduce electrolyser operating hours to 30-40% without storage
Low utilization spreads fixed costs over fewer output litres
Fossil refineries operate 85-95% capacity factors, spreading costs more efficiently
4. Scale Disadvantages:
Current facilities: Pilot scale (100,000-1 million litres/year)
Mature refineries: Billions of litres/year with decades of optimization
Lack of manufacturing scale for key components (electrolysers, DAC units)
5. No Carbon Price: Fossil fuels don't include social cost of carbon ($50-200/tonne) in price, creating unfair comparison
Cost Reduction Pathways:
Technology learning: 15-25% cost reduction with each doubling of capacity
Electrolyser costs: Projected to reach $150-250/kW by 2030
Higher capacity factors: Hybrid solar-wind systems + storage achieving 50-60% utilization
Scale economies: Industrial facilities (100+ million litres/year) reducing unit costs
Carbon pricing: $100-150/tonne adds $0.25-0.40/litre to fossil fuel costs
Timeline expectations:
2024: $4-6/litre (current)
2030: $2-3/litre (with scale and technology improvements)
2040: $1.50-2/litre (approaching competitiveness with carbon pricing)
The cost premium reflects e-fuels being in the early deployment phase (equivalent to where solar PV was in mid-2000s). As deployment scales and technology matures, costs will decline substantially—though e-fuels will likely always be more expensive than direct electrification due to fundamental energy conversion losses.
Q. Will road transport ever switch from batteries to e-fuels?
No, for most road transport applications, the energy efficiency advantage of batteries is too large to overcome, even as e-fuel costs decline. However, e-fuels will serve important niche roles:
Why Batteries Dominate Road Transport:
1. Energy Efficiency Gap:
Battery electric vehicle: 70-85% well-to-wheel efficiency
E-fuel vehicle: 10-20% well-to-wheel efficiency (due to conversion losses in production plus combustion inefficiency)
This means a BEV travels 4-7x further on the same amount of renewable electricity compared to an e-fuel vehicle. Even if e-fuels become cheap, this efficiency gap creates massive energy demand implications.
2. Total Cost of Ownership: Studies consistently show battery electric trucks achieving TCO parity with diesel by 2025-2030 for many applications:
Battery costs: Declining from $250/kWh (2024) to $100-150/kWh (2030)
Operating costs: Electricity $0.10-0.20/kWh vs e-fuels $2-3/litre
Maintenance: BEVs have fewer moving parts, lower service costs
Battery electric long-haul trucks competitive by early 2030s with megawatt charging
3. Infrastructure Momentum: Hundreds of billions being invested in charging infrastructure globally, creating path dependency and network effects that favor BEVs.
Where E-Fuels Fit in Road Transport:
Viable niches:
Existing fleet preservation: 1.3 billion combustion vehicles worldwide provide transitional market
Long-haul heavy-duty: Niche applications where payload constraints favor liquid fuels over batteries
Remote/off-grid operations: Mining, construction, agriculture in areas without grid access
Heritage and collector vehicles: Classic cars, vintage vehicles maintained for cultural value
Emergency and military: Applications requiring long storage stability and energy density
Motorsports: Formula 1 transitioning to 100% sustainable fuels by 2026
Market share projections:
Light-duty vehicles (2040): <5% e-fuels (primarily premium/collector), 70-80% BEV, 15-25% hybrid/PHEV
Heavy-duty trucks (2040): 15-25% e-fuels, 40-50% BEV, 25-35% hydrogen fuel cell
Overall road transport fuel (2050): E-fuels 10-15% maximum, primarily heavy-duty and specialty applications
Strategic Insight: E-fuels are not an alternative to electrification for road transport—they're a complementary solution for specific applications where batteries face fundamental constraints. The debate isn't "batteries vs e-fuels" but rather "which technology optimally serves each use case."
For the vast majority of light-duty and regional transport, batteries win on efficiency, cost, and convenience. E-fuels serve as a bridge fuel and specialty solution rather than wholesale replacement for electrification.
The capital and renewable energy resources required to produce e-fuels make them too valuable to waste on applications where direct electrification works well. They're better reserved for hard-to-electrify transport sectors like aviation and maritime where no better alternative exists.
Q. What's the difference between green hydrogen and the green fuel technologies for transport?
Green hydrogen is both a component of and a standalone option within the broader category of green fuel technologies. Understanding the distinction is important:
Green Hydrogen as Building Block: Green hydrogen (H₂) is produced by electrolyzing water using renewable electricity. It serves as:
Direct fuel: Used in fuel cell electric vehicles (FCEVs) that convert hydrogen to electricity via fuel cells
Feedstock: The essential input for producing other green fuel technologies including e-diesel, e-kerosene, green ammonia, and e-methanol
Industrial input: Replaces fossil-derived hydrogen in refineries, fertiliser production, steel manufacturing
Key Differences Between Green Hydrogen and Derivative E-fuels:
Aspect | Green Hydrogen (Direct Use) | E-fuels (Derived from Hydrogen) |
Form | Gaseous (compressed 700 bar or liquid -253°C) | Liquid at ambient temperature |
Energy density | 33.3 kWh/kg (gravimetric); 5.6 MJ/L at 700 bar (volumetric) | 43-44 MJ/kg, 34-35 MJ/L (similar to fossil fuels) |
Storage | Requires high-pressure tanks or cryogenic systems | Standard fuel tanks |
Infrastructure | New fueling stations required ($1-2 million each) | Uses existing fuel distribution |
Vehicle compatibility | Requires fuel cell vehicles (FCEVs) | Works in existing combustion engines |
Efficiency | 60-70% well-to-wheel (production + fuel cell) | 40-55% well-to-wheel (production + combustion) |
Cost (2024) | $3.50-5/kg production; $8-12/kg at pump | $4-6/litre production |
Best applications | Heavy trucks, industrial processes, steel, refining | Aviation, maritime, existing vehicle fleets |
When to Use Each:
Choose Direct Green Hydrogen for:
Heavy-duty trucking: Fuel cells offer longer range than batteries with faster refueling (10-15 minutes)
Industrial applications: Direct hydrogen use in ammonia synthesis, steel production (direct reduced iron), refining (hydrocracking)
Grid services: Seasonal energy storage converting summer solar surplus to winter fuel
New vehicle deployments: Fleet operators willing to invest in specialized refueling infrastructure
Choose E-fuels (Hydrogen Derivatives) for:
Aviation: No viable hydrogen aircraft until post-2035; e-kerosene only near-term solution
Maritime: Long-distance shipping where e-ammonia or e-methanol provide better energy density
Existing fleets: 1.3 billion vehicles can use e-fuels immediately without conversion
Remote applications: Areas lacking refueling infrastructure
Strategic Relationship: Think of green hydrogen as the "raw material" and e-fuels as the "processed product." Converting hydrogen into e-fuels adds cost and reduces energy efficiency (additional 20-25% energy loss in synthesis), but provides advantages in storage, transport, and compatibility.
Market dynamics:
Direct hydrogen: Expected to dominate heavy trucking (30-40% market share by 2040), industrial uses, and seasonal storage
E-fuels: Critical for aviation (50-70% SAF by 2050), maritime (e-ammonia), and transitional road transport
Combined market: Green hydrogen production must reach 500+ million tonnes/year by 2050 to supply both direct use and e-fuel synthesis
The choice between direct hydrogen and derivative e-fuels isn't either/or—both will coexist, with selection driven by specific application requirements, existing infrastructure, and total system costs. India's National Green Hydrogen Mission recognizes this, supporting both hydrogen for industrial replacement and power-to-liquid pathways for transport applications.
Conclusion
The decarbonisation of global transport presents one of humanity's most pressing challenges—and one of its greatest opportunities. While battery-electric vehicles have captured attention and investment for passenger cars, the harder question remains: how do we decarbonise aviation, maritime shipping, and heavy-duty freight where electrification faces fundamental physical constraints?
Green fuel technologies, particularly e-fuels produced through Power-to-Liquid pathways, offer a compelling answer. As this comprehensive analysis has demonstrated:
E-fuels provide unique strategic value:
Drop-in compatibility enabling immediate deployment using $trillions in existing infrastructure
Energy density matching fossil fuels, solving the aviation and long-haul transport challenge
Scalability limited only by renewable electricity availability, not sustainable biomass feedstock
Lifecycle emissions reduction of 80-90% when produced with captured atmospheric CO₂
But challenges remain substantial:
Cost premium of 4-6x versus fossil fuels requiring policy support and technology scale-up
Energy efficiency losses of 50-60% from renewable electricity to final fuel
Capital intensity requiring patient investment with 15-20 year payback periods
Technology scaling from pilot (100,000 litres/year) to industrial (100+ million litres/year)
India's strategic position offers opportunity: The combination of low-cost renewable electricity, growing transport demand, strong policy support through the National Green Hydrogen Mission, and potential as a regional green fuel hub positions India to capture significant value. Success requires sustained commitment to:
Domestic electrolyser manufacturing achieving cost competitiveness
Technology partnerships bringing Fischer-Tropsch and synthesis expertise
Coastal hydrogen hubs integrating renewable generation, desalination, and export infrastructure
Clear policy frameworks providing long-term investor certainty
The business case is clear for those who act decisively: While e-fuels won't replace battery-electric vehicles for most road transport, they're irreplaceable for aviation and complement other technologies in a portfolio approach to decarbonisation. Companies establishing positions in the e-fuel value chain today—securing renewable energy resources, building electrolyser capacity, demonstrating synthesis pathways, and securing offtake agreements—will capture disproportionate value as policy mandates drive demand through the 2030s and beyond.
No single technology solves all transport decarbonisation needs. Battery electric dominates light-duty vehicles, green hydrogen serves heavy trucking and industrial processes, advanced biofuels provide near-term SAF volumes, and e-fuels enable aviation's transition while bridging the gap for hard-to-electrify applications. The winners will be those who understand where each technology offers the greatest advantage and deploy capital accordingly.
The time to prepare is now. Policy frameworks are solidifying (EU ReFuelEU mandates, US Inflation Reduction Act incentives, India's NGHM), technology costs are declining on predictable learning curves, and early-mover advantages accrue to those establishing positions before mass market deployment begins. Whether you're a business leader evaluating strategic options, a policymaker designing supportive frameworks, an investor seeking opportunities, or a professional considering career transitions, the green fuel technologies sector offers compelling prospects for those who engage seriously and systematically.
The future of transport will be powered by electrons, molecules, and increasingly sophisticated combinations of both. E-fuels occupy a critical position in this landscape—not as silver bullets, but as essential tools in the comprehensive toolkit required to achieve net-zero emissions while maintaining the mobility, connectivity, and economic dynamism that modern society requires.
The question is not whether green fuel technologies will succeed, but which organizations, regions, and individuals will lead their deployment—and capture the economic, environmental, and strategic benefits that follow.
References This comprehensive analysis draws on the following authoritative sources:
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Last Updated: November 2024
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