IEA – The Role of E-fuels in Decarbonising Transport

The rapid deployment of low-emission fuels in the next decade is crucial for decarbonizing the transport sector. While improvements in fuel efficiency and the increasing sales of electric vehicles can reduce fossil fuel demand in road transport, the aviation and marine sectors still heavily rely on fuel-based solutions. Sustainable aviation fuels are being incorporated into aviation fuel mixes, and there is a growing trend towards alternative fuels in new ship orders. E-fuels, which are fuels obtained from electrolytic hydrogen, could be a viable solution that can scale up quickly by 2030. This would require a massive expansion of renewable electricity and cost reductions in electrolysers. This study assesses the techno-economic implications of achieving a 10% share of e-fuels in aviation and shipping by 2030, including the necessary cost reductions, resources, and infrastructure investments. Low-emission e-fuels, produced using low-emission electricity and low life-cycle greenhouse gas emissions, provide an additional option for decarbonizing transport. They can complement sustainable biofuels, particularly in aviation, as they can utilize existing infrastructure and equipment. While currently expensive to produce, the cost gap between low-emission e-fuels and fossil fuels could be significantly reduced by 2030. However, the production of e-fuels requires significant resources and infrastructure due to low efficiency and associated losses. Producing large amounts of low-emission e-fuels would also require a substantial increase in renewable electricity demand. Additionally, achieving a 10% share of e-fuels in aviation and shipping would necessitate significant investments in electrolyser capacity, refuelling infrastructure, and vessels. Overall, low-emission e-fuels have the potential to contribute to the decarbonization of the transport sector, but significant investments and cost reductions are needed to achieve widespread adoption.