30 May 2018

Future Fuels: Climate friendly… and affordable?

#FutureFuels – part 5

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Liquid fuels will continue to be indispensable in the future. Without such fuels, many people wouldn’t probably be able to afford heating in their homes or a car for their travels. Alternatives tend to be more expensive and difficult to install for many people: As an example, affordable alternatives to liquid heating fuels are not easy to find when a home is not connected to an energy grid, as this is often the case in rural areas.

New fuels from biological or non-biological origin with reduced greenhouse gas emissions, such as advanced biofuels or synthetic fuels (“e-fuels”), can therefore contribute to the success of the energy transition. They represent a future solution for the 20 million people currently heating with heating oil within the EU.

One of the obstacles to the development of these new fuels has been their generation cost – which is substantially higher to conventional fuels. These costs would of course be reflected in the consumer prices and make their uptake difficult. Today, a few types of mainly first and second-generation biofuels have production costs relatively close to the price of conventional heating oil. This is for instance the case of hydrotreated vegetable oil (HVO), which can have production costs lower than € 1 per litre. Favourable taxation treatment can make this renewable fuel a competitive option, especially when blended with heating oil.

Production costs future fuels Freiberg Study

(Source: TU Bergakademie Freiberg)

 

The most advanced alternatives, in particular fuels generated with Biomass-to-Liquid and Power-to-Liquid (PtL) technologies, currently have an excessive price difference to represent a viable substitution to conventional liquid fuels at this point in time.

However, economies of scale and expected evolutions of energy prices (including renewable electricity, which is used to produce e-fuels) will reduce this price difference overtime and make these new fuels a credible solution at medium to longer term. A study by Frontier Economics anticipates some PtL products to achieve a price of 5 to 10 cent per kWh, i.e. close to the anticipated price of conventional fuels, by 2050.

Price evolutions PtL 2

(Source: Frontier Economics. Translation: Eurofuel)

 

Furthermore, a progressive transition to newer fuels by means of blending with conventional fuels could make the price evolution of these hybrid fuels easier to afford for citizens and society at large.

The advantages of liquid fuels are manifold; transport and storability of the liquid form of energy is a clear asset that should not be neglected in the future, when such fuels with a closed carbon cycle will be produced. Research and innovation into newer liquid fuels, as well as the maintenance of Europe’s infrastructure and expertise in liquid energy sources, are important contributors to achieving a successful, affordable and acceptable energy transition for the largest number of citizens.

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Other #FutureFuels articles

Part 1: What future liquid fuels to heat our homes?

Part 2: New liquid fuels... out of biomass and waste?

Part 3: New liquid fuels... out of the sunshine? 

Part 4: New liquid fuels... out of algae?

Interested to learn more?

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Register to our workshop on Future Liquid Fuels, which will take place in Brussels on Wednesday 6 June 2018.