T&E: ‘e-fuels in cars make no economic or environmental sense’
In a new study, NGO Transport & Environment (T&E) says, “e-fuels in cars make no economic or environmental sense.” Calculating the total cost of ownership (TOC) of battery-electric cars (BEV) against cars with a conventional combustion engine, burning e-fuel made with ‘green hydrogen’ and captured CO2, the latter would be 43% more expensive than a BEV for an average driver by 2030.
In the advent of the EU determining new CO2 emission standards for cars (Euro 7), expected by June, T&E warns not to give in to pressure from the oil industry to give credits to so-called e-fuels.
Untenable tactical blunder
“The EU is at risk of making an untenable tactical blunder. Rewarding synthetic fuels under the cars’ CO2 standard regulation is a bad idea. Implementing this would delay electrification in road transport. With no e-fuels at scale in sight and a surge in electric car sales, the e-fuels appear to be a Trojan Horse to keep combustion engines and demand for hydrocarbons alive.”
Last month, the European Parliament and the 27 member states reached an agreement on a binding CO2 reduction of 55% by 2030, compared to 1990 as a necessary milestone to reach climate neutrality by 2050. The Commission will propose a ‘Fit for 55’ legislative package, which includes the new Euro 7 standards for CO2 emissions of cars and vans.
Credits for e-fuels
Already four years ago, during earlier CO2 negotiations, the oil and gas industry pushed heavily to introduce a kind of ‘credit’ for synthetic and advanced alternative fuels. Germany, in particular, is not insensitive to such a crediting system for renewable fuels, as indicated by a 2020 study commissioned by the German economic ministry.
But T&E says it already showed at that time that “this approach was a bad idea and had no regulatory credibility” and dives even deeper now with new calculations to say it makes no economic or environmental sense.
To start with, “e-fuel environmental benefits are a mirage”, the latest T&E report states. Lifecycle CO2 emission analysis shows that even considering the negative effect of the battery production, a new BEV powered by the EU electricity grid in 2030 emits around 40% fewer than a gasoline car running on the e-fuels which meet the RED II sustainability criteria.
The EU’s Renewable Energy Directive II defines a series of sustainability and greenhouse gas emission criteria that bioliquids used in transport must comply with to be counted toward the overall 14% target and eligible for financial support by public authorities.
Five times more energy
Seen from an environmental perspective, a car running on e-fuels produced from renewable electricity would require close to five times more energy than a BEV using the same ‘green’ electricity to be charged directly, T&E claims.
But the costs, both for the car owner as the auto industry to produce it, is another and probably even more sensitive argument. “For both new and second-hand cars in 2030, the TCO premium for running a car on e-gasoline compared to a BEV is €10 000, or 43% more expensive for an average driver.
10% more expensive than new BEV
“Running an existing gasoline car on e-fuels would still be 10% more expensive than buying a new battery-electric car”, T&E calculated. Not to mention the even greater benefit for one buying a second-hand BEV.
And it would be a better option for carmakers to keep on investing in going electric as soon as possible, instead of diverting funds to keeping the ICE car alive on e-fuels.
According to T&E, it would cost carmakers around €10 000 in fuel credits for the amount of synthetic gasoline needed to compensate for the emissions of an efficient gasoline car placed on the market in 2030.
Lost revenue for the EU
Meanwhile, T&E counts on costs of batteries being more than three times less by 2030, close to €3 000. T&E assumes BEVs reaching cost parity with ICE cars in the mid-2020s, and “producing a battery electric vehicle rather than a gasoline car will not require much additional investment.”
T&E emphasizes that the total additional cost of an e-fuel pathway “would be five times higher than the electrification pathway”. Even with the option to produce e-fuels in countries with lots of sunshine and solar parks and transport it with tankers to Europe, it wouldn’t make sense, as the industry suggests.
“T&E assumes this most favorable case for e-fuels where these fuels would be available in 2030 and shows that the lost revenue for the EU economy could be around 10 times higher for the e-fuels pathway compared to domestically produced batteries from the early 2020s.”