New Paper: American-Made E-Fuels are a Major Opportunity for U.S. Energy and Aviation Sectors

(Baku, Azerbaijan) A new paper from Environmental Defense Fund, Intermittent Production of Electricity-based Synthetic Jet Fuel as a Demand-side Management Strategy for Grid Decarbonization, finds that American-made e-fuels present a huge economic and climate opportunity for the U.S.

“By marrying CO2 waste from local ethanol plants with surplus renewable electricity, the U.S. has the potential to produce some of the cheapest, most sustainable aviation fuels on the market, while growing the country’s economy, meeting climate goals and accelerating the energy transition,” said Pedro Piris-Cabezas, Senior Director, Global Transportation at Environmental Defense Fund. “State and federal policymakers have a critical role to play in supporting the growth of this exciting new industry.” 

Aircraft emissions are a serious and growing source of climate pollution. If aviation were a country, it would be one of the world’s top 10 sources of greenhouse gas pollution —and demand for air travel is on the rise. Sustainable aviation fuels are considered one of the only ways to reduce pollution from airplanes. But how raw materials are sourced and converted into SAF can determine how sustainable it truly is. 

E-fuels — a type of SAF — are made by combining renewable electricity, water and carbon. When the electricity is sourced from excess renewable energy and the carbon comes from waste CO2, these ingredients produce a hydrogen-based fuel that’s cleaner and more affordable than any e-fuel currently on the market. But e-fuels are in short supply and too expensive for most airlines to adopt at scale, due in large part to the high cost of clean electricity and hydrogen required to produce these energy-intensive fuels.

EDF’s paper projects that when e-fuels are produced in a dynamic, supply-driven electricity market, e-fuel costs could be slashed by half compared to mainstream estimates. The paper also finds that there will be enough surplus renewable electricity in the U.S. to meet most or all of U.S. jet fuel demand with e-fuels in 2050, and potentially a significant fraction of demand in 2030.

Other key takeaways include:

• E-fuel synthesized in the Midwest could deliver a bulk of the 2030 U.S. SAF Grand Challenge target, which aims to produce 3 billion gallons of SAF annually. The main reason is that there are hundreds of ethanol plants producing high-quality, waste CO2 from their operations in the Midwest and renewable energy is abundant in the region.
• E-fuels should be produced when renewable energy is plentiful and demand for power is low, so as not to compete with other essential demand from homes and businesses.
• E-fuel production offers multiple co-benefits, including balancing the grid, fostering energy system resilience and supporting other hard-to-decarbonize sectors, such as shipping.

These findings come just weeks before the U.S. Treasury Department is expected to issue guidance on the 45Z tax credit, which was passed under the Inflation Reduction Act to provide tax subsidies for the production of alternative fuels, including e-fuels.

“Federal policymakers should give e-fuels a chance to compete on a level playing field with other alternative fuels by protecting the safeguards written in the IRA that ensure only high-integrity sustainable aviation fuels receive generous taxpayer subsidies,” adds Piris-Cabezas. “By nurturing a Midwest e-fuels industry, the U.S. can attract global demand for a made-in-America product and secure its position as an international leader in sustainable aviation.”

You can read the full report here. For more information, please visit: https://www.edf.org/sustainable-aviation-fuels.