Synthetic fuel: A clean burn

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  Quantumrun Foresight
• November 15, 2024

Insight summary

Synthetic fuels from renewable sources offer a promising solution to reduce carbon emissions in aviation and heavy transportation. These fuels could help individuals continue using existing vehicles while cutting their environmental impact. However, governments and companies may need to invest heavily in infrastructure and research.

Synthetic fuel context

Synthetic fuel, or e-fuel, is produced from renewable energy sources like solar or wind power. Unlike traditional fossil fuels, synthetic fuel is derived from processes like hydrogen production through electrolysis and carbon dioxide capture. According to Oxford University spinoff OXCCU, synthetic fuels can significantly reduce carbon emissions, making them a more sustainable alternative for aviation. OXCCU's approach converts hydrogen and carbon dioxide into long-chain hydrocarbons used for aviation. This method bypasses the traditional multi-step process, cutting costs and reducing energy consumption.

The potential for synthetic fuels to reduce greenhouse gas emissions is particularly valuable in industries where electrification is not yet feasible. In addition to aviation, companies like Boostane are developing synthetic fuels for automobiles, which could allow vehicles to run on low-emission fuel without engine modifications. Boostane has stated that their synthetic fuel, which uses carbon and hydrogen from non-oil sources like wood and biomass, offers a practical solution for consumers who are unable to transition to electric vehicles. However, the high production costs remain a challenge, with experts emphasizing the need for government subsidies to make synthetic fuels competitive with gasoline. 

While synthetic fuel offers promising benefits, there are still hurdles to overcome, particularly in energy efficiency. Electric vehicles, for instance, can travel three to five times farther than internal combustion engines using synthetic fuels with the same amount of energy. Nonetheless, synthetic fuels may play a key role in reducing emissions in heavy transportation and aviation, where electrification faces limitations. According to the International Air Transport Association, the scalability of synthetic fuel technologies is critical for meeting global emission reduction targets by 2050.

Disruptive impact

As synthetic fuel becomes more affordable, it could allow people to continue using their existing vehicles while reducing their carbon footprint. For drivers of classic or high-performance cars, this offers an attractive solution that does not require sacrificing their vehicle preferences for environmental reasons. Additionally, the widespread use of synthetic fuels could decrease the reliance on charging infrastructure, which is not yet available in all areas, especially in rural regions. However, individuals might see higher fuel costs in the early years, until large-scale production lowers prices.

For companies, synthetic fuel could shift the way businesses think about sustainability strategies and product development. Automakers, for example, may explore new models that are optimized for synthetic fuels, extending the life cycle of internal combustion engines. Synthetic fuel offers a practical alternative in aviation and shipping, whereas battery-powered solutions are still impractical due to energy limitations. Furthermore, logistics companies that rely heavily on long-haul transportation may find synthetic fuel critical for decarbonizing their fleets. However, businesses may need to invest in new infrastructure, such as refining plants and storage facilities, to support this transition.

Meanwhile, governments could invest in synthetic fuel technology as part of broader environmental policies aimed at reducing national emissions. This may involve subsidies or tax incentives like those already in place for electric vehicles. However, governments will also need to balance these investments with the continued development of renewable energy sources and electric vehicle infrastructure. Countries with advanced synthetic fuel capabilities could form new alliances or trade agreements centered around energy exports, while others may focus on building local manufacturing capacities to avoid energy dependencies.

Implications of synthetic fuel

Wider implications of synthetic fuel may include: 

• A rise in job creation within the synthetic fuel sector, leading to shifts in labor demands away from traditional fossil fuel industries.  
• Increased competition among automotive companies adapting to synthetic fuel engines, driving innovation in vehicle design and fuel efficiency.  
• A reduction in fossil fuel imports, leading to improved national energy security and more stable economies for energy-importing nations.  
• Rural communities benefiting from decentralized synthetic fuel production, leading to local economic growth and energy independence.  
• Synthetic fuel adoption reducing the urgency for rapid electric vehicle infrastructure expansion, leading to more balanced energy policies.  
• Countries with limited renewable energy capabilities struggling to produce synthetic fuels, leading to greater global energy inequalities.  
• Companies investing in carbon capture technologies, leading to broader applications of CO2 reuse across multiple industries.  
• A decline in demand for electric vehicle batteries, leading to slower advancements in battery recycling and disposal technologies.  

Questions to consider

• What are the potential trade-offs between investing in electric vehicles versus supporting synthetic fuel development?
• How could the availability of synthetic fuels impact your future vehicle purchasing decisions?