E-fuels: a synthetic solution to the real problem

The European Union’s compromise on e-fuels opens the back door to an afterlife for the combustion engine.

Last October, the Council of the EU and the European Parliament reached a provisional political agreement on stricterperformance standards on carbon-dioxide emissions for new cars and vans. It was the first part of the ‘Fit for 55’ package—envisaging a reduction of that scale in greenhouse-gas emissions by 2030—to be translated into legislative form.

A target of a 55 per cent reduction in CO₂ emissions would hence apply to new cars and 50 per cent for new vans by 2030, compared with 2021 levels, with a goal of zero emissions for new cars and vans by 2035. The transition to electric vehicles was sealed and the internal combustion engine relegated to the realm of automotive history.

Or was it? Apparently not for everybody, including the neoliberal Free Democratic Party, the smallest partner in the German Ampelkoalition. Under the guise of technological neutrality, the FDP was keen to retain the use of carbon-neutral synthetic fuels, to provide an alternative to electric vehicles.

Such ‘e-fuels’ are carbon-neutral if made with renewable electricity and carbon extracted from the atmosphere. These synthetic alternatives to fossil fuels, made from hydrogen and CO₂, can be used in traditional combustion engines and are permitted under the Euro 6 legislation on vehicle pollution.

Creating a loophole

To avoid a coalition crisis, last month the German government made the unprecedented move to block, at the 11th hour, the political agreement reached in October. In essence it proposed to create a loophole for continued sale of combustion-engine cars after 2035 by carving out criteria for vehicles running exclusively on e-fuels.

Acceding to Germany’s request, on March 28th member states gave final approval to a regulation that will ban the sale of carbon-emitting cars and vans after 2035 but, by means of a non-binding recital clause, will allow cars running exclusively on e-fuels to be registered for sale thereafter. Vehicles will then have to be fitted with technology that prevents them from starting if petrol or diesel are used.

To make the agreement legally binding, the European Commission will present a delegated act to set out how e-fuel vehicles can count towards CO₂ targets for cars. Delegated acts, which are used to cover highly technical issues, are not subject to parliamentary debate. The parliament and member states can however reject a delegated act outright. It is understood that if the delegated act is rejected the commission will put forward an amendment to the regulation, which will be subject to the usual legislative scrutiny.

Credibility undermined

This compromise sends out four extremely negative signals. First, by blowing up a political agreement reached at the highest level it undermines the credibility of EU decision-making ahead of next year’s elections to the parliament. It also creates uncertainty, as the delegated act may run into legislative deadlock.

Secondly, pursuing the illusion of a niche technology diverts resources away from genuine low-carbon technologies and from fields of application where scarce e-fuels are needed (aviation, heavy-duty vehicles and, potentially, used-car combustion engines). The production of e-fuels is a complex and energy-intensive process far from technological maturity.

Under a pilot project developed by Porsche in Chile, the estimated cost of producing one litre of e-fuel is €50. The Potsdam Institute has calculated that the industrial-scale use of direct air capture to produce e-fuels would mean they would cost four times as much as petrol now. If all planned e-fuel projects were to materialise, the institute forecasts that, by 2035, global production would still cover only 10 per cent of Germany’s essential demand for e-fuels (from aviation, shipping and the chemical industry).

Targets jeopardised

Thirdly, allowing the use of e-fuel in new cars after 2035 would jeopardise net-zero climate targets. Transport & Environment calculates that new e-fuel-driven combustion engines sold after 2035 would displace sales of up to 46 million zero-emission electric cars by 2050 and deprive cars already on the road of synthetic fuel—meaning an additional 135 billion litres of fossil petrol would be burnt by 2050 and an extra 320 megatonnes of CO₂ equivalent emitted.

Furthermore, while synthetic fuels can be carbon-neutral, they release toxic nitrogen dioxide and carcinogenic particles when burned in combustion engines. Transport & Environment estimates that cars running on e-fuels could add up to 160,000 tonnes of nitrogen oxides to pollution in the EU by 2050. And the question remains as to how technologies could be certified to prevent any petrol and diesel being used in combustion engines after 2035, when those sold before would be able to use conventional and e-fuels.

Finally, the compromise delivers a negative message for industrial policy. Only weeks after launching the EU’s response to the Inflation Reduction Act in the United States, the Green Deal Industrial Plan—its ambition to create a competitive, zero-carbon industrial base in Europe in the face of fierce global competition—it is a surrender to revert to a 120-year-old polluting technology as the perceived saviour of European (or at least German) jobs.

In recent times cars, including fully electric and battery-hybrid vehicles, have become bigger, faster, heavier and more expensive. This trend towards ‘up-marketisation’ undermines the feasibility of vehicle-fleet change and leaves the entry segment of the European electric-vehicle market open to foreign (predominantly Chinese) competitors.

Ultimately, all this ‘bikeshedding’ over e-fuels diverts political attention away from much bigger questions about the future of zero-carbon mobility. While electrification is necessary to decarbonise individual road transport, ownership-based individual mobility should be seen as only part of the sustainable mobility mix—along with public transport, walking and cycling.