E-Fuels: “The cost of e-fuels is uncompetitive”

VDE dialog: How important is openness to technology in the shift to green mobility?

Prof. Dr. Martin Wietschel: I'd prefer to talk about openness to results. Of course, one has to be open-minded and look very closely at the different technological options available. At some point, though, there’s no getting around making a decision. Particularly in the transport sector, where expensive infrastructure has to be built – charging stations and overhead lines, for example – it would hardly be realistic to implement every option in parallel.

The advantage of e-fuels would be that the infrastructure is already there in the existing network of filling stations and wouldn’t have to be built from scratch. Why do you still oppose the use of e-fuels in cars and even trucks, including in Fraunhofer ISI’s recent discussion paper?

It’s mainly a question of cost. In heavy-duty transport, energy costs are the decisive factor – much more so than the cost of buying a truck, for example. A truck pays for itself very quickly given the long distances it usually covers each year. And from what we know today, the cost of e-fuels is uncompetitive, especially with considerably cheaper alternatives like e-mobility and fuel cells.

Uniti, a lobbying organization representing mineral oil companies, takes a completely different view. It predicts that the cost of producing e-fuels will fall to less than a euro per liter by 2050.

Economies don’t work based on production costs. Prices are set by the market based on supply and demand. The cost of extracting conventional crude oil is currently around 20 cents a liter, but look at what we pay at the pump these days for gasoline and diesel! I also highly doubt that the production costs will evolve as Uniti predicts; most experts think it will be more like €1.20 to €1.50 per liter, including delivery. By the way: even BP – one of the largest mineral oil companies in the world – emphasized in a recent study that, for cost reasons, they foresee road vehicles running on electricity and in some cases hydrogen, but hardly ever on e-fuels.

Another point often raised by critics of e-fuels is their poor energy balance. But isn’t that completely irrelevant if e-fuels are produced in countries with an unlimited supply of renewables?

Yes, that’s right, of course In theory, we have the potential to meet all our energy requirements using renewables. But we also have to think about where we are today: So far, renewables cover just 13% of the current global energy demand. Before we create more demand through the inefficient use of renewables, we should first remove all energy based on fossil fuels from the market. That will take time and money.

But wouldn’t it be a huge opportunity for countries like Namibia and Chile to enter this market?

On the one hand, yes, and they should absolutely do so. Germany will continue to be reliant on energy imports in the future. On the other hand, though, we’re talking about countries that are themselves still very dependent on fossil fuels. If we really want to protect the climate all around the world, we should first help these countries transform their own fossil-based energy supply. In some cases, this means ensuring they actually have a stable supply of electricity at all. Once things reach the stage where these countries can export e-fuels and hydrogen on a large scale, then supplying industry along with aviation and shipping will come first for us here in Germany. The resulting demand will be more than enough to stimulate the production of hydrogen and e-fuels.

Why are you touting e-fuels as a solution for aviation and shipping while opposing them so vehemently for cars and even heavy-duty trucks?

Because in international aviation and shipping – just like in industrial applications like chemicals, steel and cement – there are unfortunately no economical alternatives. In the case of trucks, we were also still skeptical a few years ago as to whether electrification could work given the charging infrastructure needed and the issue of range. Our analyses now show, however, that although the transition will take an enormous effort, it can succeed in road haulage – unlike in the areas I just mentioned – provided we’re serious about the goal of climate-neutral transport.

A study by the Potsdam Institute for Climate Impact Research shows that it’s downright far-fetched to believe that we’ll have enough e-fuels in the coming decades to meet any of the demand in road traffic. So why is this idea still even on the table?

First of all, there are naturally certain groups that have an interest in clinging to their current business model based on internal combustion engines. Secondly, a seemingly easy solution that gets around the need for a big transition is a pleasant thought. That’s true when it comes to cars, and it’s similar with heating systems. But what’s the point in having the option to fuel my gas heating system with hydrogen if we already know this will be the more expensive solution for many users?