What is e-fuel and how might it assist with making cars zero-emission?

The law must permit the sale of new cars with internal combustion engines (ICEs) until 2035, but only if they are powered by e-fuels.

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Recently, Germany has unexpectedly opposed a significant European Union law that aims to prohibit the sale of new cars emitting CO2 by 2035. The German government is demanding that the law should allow the sale of new cars with internal combustion engines (ICEs) post-2035, but only if they run on e-fuels. 

The EU's new law dictates that from 2035, all new cars sold must have zero CO2 emissions, making it impractical to sell new vehicles powered by fossil fuels. 

However, the rule does not prohibit ICEs outright, and Germany had previously supported the regulation, as did the majority of EU countries and lawmakers. 

Nevertheless, the law is seen as a "death knell" for the ICE technology because of a lack of viable options that could enable them to operate without emitting CO2.

How Do E-Fuels Work?

E-fuels, such as e-kerosene, e-methane, and e-methanol, are produced by combining captured C02 emissions with hydrogen produced through renewable or CO2-free electricity. 

When these fuels are burned in an engine, they emit CO2, but the amount released is equal to the amount taken out of the atmosphere during production, making the fuel CO2-neutral on balance.

However, Germany and Italy are seeking greater clarity from the EU regarding the possibility of selling new ICE cars beyond 2035 if they can run on these CO2-neutral fuels. They are seeking reassurances that the sale of new internal combustion engine cars can continue after 2035, as long as they are powered by CO2-neutral fuels.

Who produces them?

Many of the world's leading car manufacturers have placed their bets on battery-electric vehicles (BEVs) as the primary solution to reduce carbon dioxide emissions from passenger cars. BEVs are already widely available and have proven to be a popular choice for consumers who prioritize sustainability.

However, there are some industry players, including suppliers and oil majors, who are advocating for the use of e-fuels as an alternative to BEVs. Some carmakers also prefer e-fuels because they believe that heavy batteries negatively impact their vehicles' performance and design.

Despite the advantages of e-fuels, such as their compatibility with existing internal combustion engines and the fact that they do not require a large charging infrastructure, they are not yet being produced on a large scale. 

The world's first commercial e-fuel plant opened in Chile in 2021, with backing from Porsche, and aims to produce 550 million litres of fuel per year. Other e-fuel plants are in the planning stages, including Norsk e-Fuel in Norway, which is set to begin production in 2024 with a focus on aviation fuel.

Therefore, while some industry players are still exploring alternative solutions to reduce carbon emissions, the majority of carmakers are committed to the development and production of BEVs as the most viable path to a sustainable future for passenger cars.

Can e-fuels make cars cleaner?

The utilization of e-fuels in existing ICE vehicles and their transport through existing fossil fuel logistics networks is seen as positive news for suppliers of ICE car components, and petrol and diesel transport companies. 

Those who support suggest that e-fuels can reduce the CO2 emissions of the current passenger car fleet without the need to replace every vehicle with an electric one.

However, critics argue that e-fuel production is costly and energy-intensive. A 2021 study published in the Nature Climate Change journal highlights that using e-fuels in an ICE car requires approximately five times more renewable electricity than operating a battery-electric vehicle. 

Even proponents acknowledge that Europe lacks the necessary renewable energy capacity to produce e-fuels on a large scale and will need to import them from other regions.

Moreover, some policymakers believe that e-fuels should be reserved for hard-to-decarbonize industries such as shipping and aviation, which cannot easily operate on electric batteries, unlike passenger cars.

What Will Happen to EU Legislation Next?

Shortly before the final vote on an EU law scheduled for March 7th, German Transport Minister Volker Wissing surprised policymakers, including the Environment Ministry led by the Greens, by questioning Germany's support for the law. 

As a member of the Free Democratic Party, Wissing stated that the use of e-fuels should still be permitted after 2035 and criticized the fact that a proposed European Commission plan on this issue was missing.

The EU law stipulates that if it aligns with climate goals, the Commission will make a proposal on how vehicles running on CO2-neutral fuels can be sold after 2035. However, Germany's transport ministry desires clearer assurances before supporting the law. 

This last-minute move by Berlin has angered some EU lawmakers and diplomats who warn that allowing one country to undermine an already-agreed-upon law would put other carefully negotiated deals on EU policies in jeopardy.

Currently, the future of one of Europe's main climate change policies is uncertain. If Germany's coalition government cannot come to a consensus on the law, they will have to abstain from the EU vote. Italy has already expressed opposition, and other countries, including Poland, may also oppose, making it possible for enough support to block the law.

EU officials are urgently searching for a solution, with the European Commission announcing on March 6th that they are in discussions "at all levels" to finalize the law as quickly as possible.

What do Carmaker brands Want?

Prominent auto component suppliers in Germany, including Bosch, ZF, and Mahle, are members of the eFuel Alliance, an industry advocacy group. In addition to these suppliers, oil and gas giants such as ExxonMobil and Repsol are also members of this group.

Some car manufacturers such as Piech, Porsche, and Mazda are generally supportive of e-fuel technology. Porsche has a stake in e-fuel producer HIF Global and is the exclusive purchaser of fuel from the company's pilot project in Chile. BMW has invested $12.5 million in e-fuel start-up Prometheus Fuels while also dedicating billions of dollars to battery-electric technology.

On the other hand, Volkswagen and Mercedes-Benz have publicly declared their reliance on battery-electric vehicles to achieve decarbonization.

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