Potential and risks of hydrogen-based e-fuels in climate change mitigation

Abstract

E-fuels promise to replace fossil fuels with renewable electricity without the demand-side transformations required for a direct electrification. However, e-fuels’ versatility is counterbalanced by their fragile climate effectiveness, high costs and uncertain availability. E-fuel mitigation costs are €800–1,200 per tCO2. Large-scale deployment could reduce costs to €20–270 per tCO2 until 2050, yet it is unlikely that e-fuels will become cheap and abundant early enough. Neglecting demand-side transformations threatens to lock in a fossil-fuel dependency if e-fuels fall short of expectations. Sensible climate policy supports e-fuel deployment while hedging against the risk of their unavailability at large scale. Policies should be guided by a ‘merit order of end uses’ that prioritizes hydrogen and e-fuels for sectors that are inaccessible to direct electrification.