Electric mobility is a central pillar of the energy transition. What role will liquid fuels still play in the future?

Andreas Menne: Liquid fuels will continue to play a major role in the coming years, especially in shipping and aviation. High-energy-density fuels are also still needed in the heavy-duty transport, agriculture and, to some extent, logistics sectors.

There are different types of liquid fuels. What do the terms “fossil”, “biogenic” and “synthetic” mean in this context?

Andreas Menne: Today, we mainly use fossil fuels derived from crude oil. Biogenic fuels such as ethanol or biogas are based on renewable raw materials. Synthetic fuels cannot always be defined with absolute accuracy. In principle, they are produced through chemical processes, for example by converting hydrogen and CO₂ into methanol or by using Fischer-Tropsch synthesis. The raw material sources used in these processes may or may not be entirely sustainable.

What challenges exist regarding the availability of green hydrogen?

Andreas Menne: Basically, green hydrogen is available in unlimited quantities since only water and electricity are needed to produce it. In practice, however, storage and complex logistics in particular pose major obstacles. They drive the already high costs even higher. Green hydrogen can therefore be produced competitively above all in regions where renewable electricity is cheap and constantly available. It also makes sense to produce hydrogen derivatives at these locations, meaning hydrogen-based energy carriers such as synthetic fuels or ammonia, which enable long-term storage and thus transport over long distances. However, the conversion processes themselves also require a great deal of energy and high levels of investment.

Are biofuels the solution?

Andreas Menne: Biofuels can make an important contribution, but they are not the only solution. The available quantities are limited compared to total fuel demand. This applies in particular to sustainable feedstocks derived from residual materials not competing with food production, which are far from being available in adequate amounts.

To better tap into existing biogenic resources, it may be worthwhile to integrate green hydrogen into processing methods. This approach can boost efficiency in specific processes and help lower costs.

Let’s look at the market: How much oil does Germany import from the Middle East, and what are the implications of the UAE leaving OPEC?

Andreas Menne: In terms of import volumes, Germany is directly dependent on the Middle East to a small extent only: the share is below 10 percent. The consequences of the UAE leaving OPEC cannot be reliably quantified at this time. However, since oil is traded on the global market, price increases there still have an impact here in Germany.

Is it foreseeable when fossil fuels will no longer be needed?

Andreas Menne: We will probably still need fossil fuels for a very long time. In Germany, around 50 million tons of diesel, gasoline and kerosene from fossil sources are consumed every year. If these quantities were to be fully replaced by sustainable synthetic fuels, this would require around 180 million tons of CO₂, 25 million tons of hydrogen and 1,500 TWh of renewable electricity to produce that hydrogen. For comparison, Germany currently produces only about 20 percent of this amount of electricity each year. Three key points can be derived from this for the coming years:

1. Fuel consumption must be significantly reduced. Even a 50 percent reduction would have a substantial impact. The greatest leverage is in the direct use of electricity because it is much more efficient—with an efficiency of around 80 percent—than the production and subsequent combustion of synthetic fuels. Cutting diesel consumption in half and reducing gasoline consumption by 80 percent would be a major step forward and can, in principle, be achieved with determined but realistic electrification efforts.
2. The available alternative fuels—both biogenic and synthetic—must be specifically used in sectors where electrification is not possible. If the demand for fossil fuels is cut in half, the share of biofuels already used today would mathematically double from 5 to 10 percent. If additional sustainable sources are tapped, increasing this share to as much as 20 percent is possible.
3. All conceivable pathways require the expansion of renewable energy and a high share of imports from countries with abundant low-cost renewable electricity. Significant investments abroad will be unavoidable in order to achieve the requested capacities. In addition, previously unused biogenic raw materials and residual materials should also be included, provided their supply is sustainable and economically feasible. For Germany, as mentioned, using hydrogen in the production of biogenic fuels appears to be a sensible approach to reduce costs and make the best use of limited potential.

So the respective region is a key factor for the expansion of alternative fuels.

Andreas Menne: Since alternative fuels cost significantly more than fossil fuels and require immense investment, large industrialized nations will be able to make the transition much faster. For developing and emerging economies, the transition offers major opportunities to export their energy and attract investment.

What political and economic framework conditions are necessary?

Andreas Menne: Politics and economics are closely intertwined here. If companies are to invest in sustainable fuels, they need to know for sure that these fuels will actually find buyers—despite significantly higher costs compared to fossil fuel alternatives. This can be achieved, for example, through quota systems such as those already in place for biofuels. Another approach could be providing subsidies for sustainable fuels and increasing prices for fossil fuels although from today’s perspective, that would probably not be a good solution. Market entry can also work through niche markets, which can already be substantially large in the fuel sector.

What would such a niche market be?

Andreas Menne: One example is methanol for biodiesel production—Germany requires around 200,000 tons annually. At present, this methanol is provided on a fossil basis. It would be relatively easy to produce this quantity sustainably. A production plant with a capacity of 300,000 tons per year could be operated profitably if offtake were secured. Around 70,000 tons of green hydrogen would be required, corresponding to an electricity demand of 4 TWh. This figure is lower than the amount of renewable electricity that is not produced due to the phased shutdown of the relevant plants. On paper, implementation is therefore quite realistic. From a technological point of view, the processes required for this do not pose a major challenge. In the scenario described, the bottom line would be 450,000 tons of CO₂ saved, which is equivalent to the emissions of more than 1,500 flights on the Frankfurt-New York route.

How much additional cost would consumers have to pay for biodiesel in this case?

Andreas Menne: The cost of sustainable methanol produced in Germany is four to five times higher than that of fossil-based methanol. In relation to the diesel price at the pump, this would amount to about 1 to 2 cents more per liter, depending on the blending ratio. CO₂ emissions per liter of diesel would decrease slightly (<0.5 percent).

Is it realistic to expect that, in the medium term, synthetic and sustainable fuels will be able to compete with fossil fuels on price even outside niche markets?

Andreas Menne: No, that is not realistic, and the following comparison makes this clear. Imagine you only eat from a constantly stocked pantry filled with microwave meals. All you have to do is take the food out and heat it up. But at some point, you realize that this diet makes you sick in the long run and that your pantry will not stay full forever. So you have to start growing your own food and animal feed, which requires labor, water and fertilizer. Livestock farming, harvesting, logistics and food preparation require additional people and a great deal of energy. In the end, the food you produce yourself is many times more expensive than the ready-to-heat microwave meals from the pantry.

The situation is similar with fossil raw materials. Currently, our system relies on extracting energy carriers like oil or gas from the earth, in which energy has been stored over millions of years. With renewable energy carriers, however, we have to shorten the production process to just a few minutes, using renewable energy to convert water and CO₂ into fuels. That comes at a cost. Sustainable fuels would only become price-competitive if crude oil prices exceeded 200 dollars per barrel or if a CO₂ price of more than 300 euros per ton were imposed.

Back to policy: Are current laws sufficient to create a viable market for sustainable fuels?

Andreas Menne: The current targets for CO₂ reduction and permissible raw material sources are hindering the broader rollout of sustainable fuels and investments in related production processes. The laws are based on the assumption that we will have largely CO₂-neutral mobility in less than 20 years. This excludes processes and raw materials that emit, for example, “only” 50 percent CO₂—which would still be better than a 10 percent reduction or no reduction at all. Considering the size of the market and the fact that many vehicles will remain in use for the next 20 years, production processes that might not save 100 percent of CO₂ can still be helpful in the near future, especially if they are more economical than near-perfect processes.

In aviation in particular, the alternatives are very limited. What role do Sustainable Aviation Fuels play?

Andreas Menne: Aviation can only be electrified in the medium to long term—if at all. We might be able to fly using hydrogen in 20 or 30 years. But until then, a great deal of development work still needs to be done. So we will need liquid fuels with a high energy density for at least another 50 years in this sector. SAF are currently the only option available in the short to medium term.

How do Sustainable Aviation Fuels differ from conventional kerosene?

Andreas Menne: The fuels are designed to resemble their fossil-based counterpart as closely as possible. If they meet the quality standards required, they can generally be used in existing engines as well as within today’s storage and logistics infrastructure. Before Sustainable Aviation Fuels can be used in aircraft, they must therefore pass extensive testing and be certified. At present, they are generally only approved as a blend with fossil kerosene, usually up to a maximum share of 50 percent. In addition to quality, the key challenges include cost-effective production and the use of by-products from the production process.

Which feedstocks and processes are used to produce SAF?

Andreas Menne: The feedstocks are similar or identical to those used for other renewable fuels. Currently, SAF is mainly produced from vegetable fats and oils. These are processed with hydrogen and converted into so-called HEFA fuels (Hydroprocessed Esters and Fatty Acids) or HVO (Hydrotreated Vegetable Oils). After further refining steps, a blend is produced that can be mixed with conventional jet fuel.

Another method is based on the Fischer-Tropsch process where synthesis gas is converted into long-chain hydrocarbons that can be used as jet fuel. There are also approaches in which alcohols such as methanol, ethanol or butanol are first converted into olefins and then further processed into hydrocarbons suitable for use in turbines.

This is exactly what we are researching at Fraunhofer UMSICHT. We usually produce not only SAF but also other fuels like diesel and gasoline, or components that can be blended into SAF, such as specific aromatic compounds. Our goal is to ensure that as much of the initially used carbon as possible ends up in the SAF.

Does SAF production compete with food, or create pressure on forests or biodiversity?

Andreas Menne: With the currently low volumes, there is no competition. The use of food crops is also not permitted. If certain processes based on biogenic materials are scaled up, competition may of course arise. That is why bio-based aviation fuels alone will not be sufficient, although they can make a contribution.

What is your conclusion regarding the future use of sustainable fuels?

Andreas Menne: The discussion often proceeds as if fossil fuels could be fully replaced in the short term. That is not the case. I would therefore like to emphasize once again that it is more realistic to significantly reduce fuel consumption, consistently expand the direct use of electricity and to use alternative fuels specifically in sectors that will be difficult to electrify in the foreseeable future.