E-fuels are better for the climate than fossil fuels, so why haven’t they taken off yet?

Moving people and goods around the world requires a lot of energy, and 95 percent of that comes from burning fossil fuels. As a result, the transportation sector contributes roughly a quarter of the greenhouse gases emitted globally every year.

Battery technology has long been heralded as a way to decarbonize transportation. For personal use, this is increasingly true. Eighteen percent of new cars globally are now electric. But electrifying cars alone won’t solve the problem of all transportation-related emissions, and electrifying other forms of transportation is currently unrealistic. Meron Tesfaye, a senior policy analyst at Energy for Growth Hub, says that this is because electricity can’t take you as far as liquid fuels like gasoline.

Pulling over your electric vehicle to charge on a drive from Portland to Seattle could certainly be annoying or inconvenient. Landing the same plane in Chicago, and then again in Denver, on your way from Boston to Los Angeles is a logistical and economic nightmare. This is partly why electrifying transportation industries like aviation or heavy freight is unlikely. Batteries just aren’t well-suited for long-haul travel.

“You can get energy in and out of [batteries] really fast which is good, but they are very, very low energy density,” Joel Rosenthal, professor of chemistry and biochemistry at the University of Delaware, explains.

Energy density–the amount of energy stored per a given mass or volume of some material–is something batteries lack. Liquid fuels are incredibly energy dense, however. But reliance on petroleum-based fuels is helping to fuel the climate crisis. That’s why some scientists and climate activists are trying to source liquid fuels more “greenly.”

For industries that can’t use batteries, emissions can be limited by producing synthetic fossil fuels, or e-fuels, from waste carbon emissions, using renewable energy, rather than avoiding fossil fuel consumption altogether. E-fuel proponents argue that by recycling carbon emissions that already exist, we can make difficult-to-electrify industries greener. This carbon recycling doesn’t eliminate all emissions, but effectively stabilizes the amount of carbon in the atmosphere by not adding new carbon emissions. But relying on carbon-based fuels still has drawbacks that make curbing emissions a difficult prospect.

Making an e-fuel. Chemically speaking, an e-fuel is no different than the liquid fossil fuels we’ve been relying on in industrialized countries since the late 1800s. The source, however, is different. “Virgin” fossil fuels are extracted (often from refineries), while e-fuels can be made in a lab—and in that respect, are similar to synthetic oil. To make an e-fuel you need either carbon monoxide or carbon dioxide, hydrogen, and either a metal or microbial catalyst. Rosenthal notes that “carbon monoxide and hydrogen are two incredibly energy-rich molecules.” As gases, however, they’re more akin to a lithium-ion battery than gasoline; they have a low energy density.

Once converted to liquid fuels like ethanol or methanol, however, their energy density spikes upward. This makes them more useful as transportation fuels. Additionally, e-fuels don’t need new technology to be adopted.

“The big advantage of e-fuels is that you can use them in any car or truck or plane or ship with combustion engine technology,” Ralf Diemer, CEO of eFuel Alliance, says.

E-fuel technology has been around for almost a century. One of the key processes involved in converting carbon monoxide and hydrogen into liquid fuels was actually popularized in Nazi Germany during World War II. Rosenthal explains that as “Germany’s war machine was starting to fail” due to lack of fuel, Nazi scientists and engineers turned to e-fuels. Decades later, Apartheid South Africa also resorted to e-fuels to meet energy demands due to global oil and gas embargoes on the country. But e-fuels never took off more widely. Many experts think that’s been due to policy choices.

Tom Dower, vice president of public policy at the global carbon recycling company LanzaTech, uses the American industrial sector as an example. In the United States, “there’s no price on carbon and there’s no direct regulation of steel mills to reduce their emissions” he says. This means that most US industrial companies never consider capturing or recycling carbon emissions.

While the United States has been slow to adjust their emissions regulations in response to climate crisis, European nations have strengthened their emission standards to protect the environment. European industries with high carbon monoxide or carbon dioxide emissions, like steel mills and cement manufacturers, often have emissions containment mandates and incentives. These incentives are a bit different than carbon credits which permit continued emissions through payment for reductions elsewhere. With e-fuels, these industries can directly eliminate their own emissions by selling them to e-fuel producers, making carbon capture even more attractive. E-fuels transform legal obligations into profit.

Energy, energy. The e-fuel manufacturing process also requires a lot of upfront energy to function: To make an e-fuel you need energy to get the hydrogen gas, energy to potentially purify the carbon monoxide or carbon dioxide, energy to spark the chemical reaction to produce the liquid fuel, and energy to transport the fuel. If it is cheaper and easier to procure that energy using fossil fuels, e-fuel producers are likely to do so. (Approximately 60 percent of the cost to produce e-fuels is electricity costs, according to Diemer.)

If done efficiently, some of these companies can also partly power their operations with e-fuels created as a byproduct of their own emissions. But this type of carbon recycling is only environmentally friendly if no virgin fossil fuels are used in e-fuel production. That’s not a guarantee. This is a problem e-fuel advocates are aware of and actively seeking solutions to solve.

Diemer says one solution is placing e-fuel manufacturing alongside accessible renewable energy. This could look like having e-fuel production plants nearby wind or solar farms. For instance, one of eFuel Alliance’s partners is building an e-fuel production site in Patagonia, where wind energy is plentiful. The issue with Patagonian e-fuels is that they would be so far from consumers that some virgin fossil fuels would likely be necessary to transport the e-fuels to market. This kind of net-zero solution would be difficult to scale because it’s very dependent on geography.

Experts recognize that the location of e-fuel production can complicate how seamlessly e-fuels fit in with renewable energy systems. This is why some researchers and companies are considering cutting energy costs by changing how raw materials are acquired.

Possible solutions. Some companies have started searching for innovative ways to solve the e-fuel energy problem by taking alternative routes to gather e-fuel ingredients. Hydrogen gas, for example, is not easily sourced in nature. Most of it is found in liquid water. Rosenthal notes that some of the processes which extract hydrogen gas from water molecules are the most energy intensive part of producing e-fuels.

Virgin fossil fuels, on the other hand, come from decomposition of living matter over millions of years. Maybe a biologic process is the secret to more efficient hydrogen production. This is what carbon recycling company LanzaTech has staked their business on.

LanzaTech has been using bacterial assistance to balance the e-fuel equation. Historically, hydrogen sourced from liquid water needed a lot of energy and a precious metal catalyst. According to Dower, the company uses a special microbe that’s hungry for carbon monoxide. Under ambient temperature, in the presence of water, this microbe produces hydrogen gas. This hydrogen gas and more carbon monoxide then goes through another microbial immersion to produce e-fuels. Using biology gives LanzaTech two advantages: They can bring the energy costs down and diversify their e-fuel production.

“You could be making ethanol one day and decide the ethanol market is saturated here in Europe or in the US, [so] let’s make isopropanol instead,” Dower says. “You just stop producing, you empty out the bioreactor, you fill it with a new version of the bacteria, and you start the process back up again.”

Diversity of e-fuels also means diversity of products. Petroleum is used to make plastics, so e-fuels can also be used to make plastics. LanzaTech has partnerships with L’Oréal, Zara, On, and other companies where they provide plastics for everything from foam insoles to plastic containers. This helps their business model by providing more reason to create e-fuels. But with a large portfolio of clients, LanzaTech needs a large source of carbon emissions to produce the e-fuels.

They fill this gap by working with steel mills and ferroalloy mills in Europe to collect waste carbon monoxide and carbon dioxide. LanzaTech then either licenses their microbial cocktail to these companies so they can go out and produce their own e-fuels, or they buy their carbon emissions to produce LanzaTech e-fuels. Both ways incentivize companies not to flare their emissions into the atmosphere, intensifying climate change.

For now, most of LanzaTech’s work primarily takes place in Europe and parts of Asia where emissions policies provide a friendlier business environment. Incentives to produce e-fuels in the United States are much more limited. Dower says that the Environmental Protection Agency’s renewable fuel standard—which was designed to support renewable energy—doesn’t include carbon capture-based fuels.

“You’re basically supposed to grow something, chop it down, and then make a fuel out of it, rather than capturing emissions from industrial facilities,” he adds.

Through funding from the Inflation Reduction Act, LanzaTech is working with Technip, a French energy company, to capture emissions from the Gulf Coast to make ethylene. While this project is slated to grow, most other e-fuel companies are slowing chipping away at the American market by trying to create sustainable aviation fuel–a combination of traditional jet fuel with some e-fuel mixed in. With aviation sticking with some form of carbon fuel for the foreseeable future, this market might be the most open.

“I don’t see the electric plane in the near future coming,” Diemer says.