eFuel: Why Does It Exist if Electric Vehicles Are the Future?

Written by: Nathan Guan

Edited by: Sophia Eli

In today’s global push for sustainability, electric vehicle (EV) manufacturers market their vehicles as the ultimate solution for clean transportation. However, while EVs eliminate tailpipe emissions, they are far from achieving a perfect score in sustainability.

Can of eFuel from “eFuel for thought” by Sandro Kälin, 2023 https://newsroom.porsche.com/fr_CH/2023/company/porsche-efuels-pilot-plant-haru-oni-chile-synthetic-fuels-behind-the-scenes-31240.html 

A major source of EV emissions comes from producing their large lithium-ion batteries. Extracting and refining key minerals like lithium, cobalt, and nickel rely on fossil fuels, generating significant carbon dioxide emissions. Manufacturing an 80 kWh lithium-ion battery – such as the one in a Tesla Model 3 – can release 2.5 to 16 metric tons of carbon dioxide or CO₂, depending on the energy source used (Atkinson, 2025). As a result, building an EV can create up to 80% more emissions than a gas-powered car of a similar size before it even hits the road (Moseman, 2022).

Despite this, S&P Global projects that 64% of passenger cars sold by 2030 will be EVs (Fletcher, 2024). Does this move towards EVs signal the inevitable decline of gas-powered cars? Or could a new, more sustainable fuel source bring a new, more sustainable solution to the table?

eFuel: An Alternative to EVs

The German automobile manufacturer Porsche invested 100 million dollars in HIP Global, an eFuel company, and has promoted eFuel as the future of internal combustion engines since 2021. In short, eFuel uses green hydrogen, that is, hydrogen produced through electrolysis, the splitting of water into hydrogen and oxygen using renewable electricity such as wind and solar. The hydrogen is then combined with CO₂ captured from the atmosphere to synthesize hydrocarbons, which can be refined into gasoline, diesel, or aviation fuel. Theoretically, this makes eFuels carbon-neutral, as they recycle atmospheric CO₂.

The first-ever eFuel was produced in 2022 in Chile. Confident in this technology, Porsche partnered with ExxonMobil during the 2021 and 2022 seasons of the Porsche Mobil 1 Supercup motorsports series, to subject the new fuel to the most demanding conditions, i.e., racing (Porsche Newsroom, n.d.). This demonstrated eFuel’s capability to power conventional internal combustion engines in consumer cars.

eFuel’s advantage over traditional gasoline is that the CO₂ used to produce it is captured from the air, meaning that no additional CO₂ is released into the atmosphere during production or when the fuel is burned in a car’s engine. This makes eFuel a potential solution for reducing the environmental impact of gasoline-powered vehicles, allowing them to remain relevant in a more sustainable future. However, like EVs, the expectations for eFuels are not always as pleasant as reality.

Challenges Ahead

Producing eFuels is highly expensive. The cost of synthetic gasoline can reach $55 per gallon, far higher than conventional gasoline. Estimates suggest that with technological advancements and economies of scale, this could drop to around $4 per gallon by 2050. However, until then, eFuels are economically infeasible for widespread adoption.

Another major issue is energy efficiency. eFuel production requires multiple energy-intensive steps, with each step causing significant energy loss. In the first step alone, electrolysis (hydrogen production) results in about 30-40% energy loss; CO₂ capture leads to 10-20% energy loss; and fuel synthesis, 30-40% energy loss. Further exacerbating the energy loss, combustion engines are only 20-30% efficient.

While EVs convert 70-80% of electrical energy into motion, eFuel-powered cars retain only 15-20% of the original renewable energy, making EVs nearly 5 times more efficient while on the road. (Ellis et al., 2024)

Infrastructure and Policy Barriers

Producing eFuels at a global scale requires significant renewable energy, advanced electrolysis, and efficient carbon capture. Currently, global renewable energy production struggles to meet electrification demands, making energy-intensive eFuel synthesis even more challenging. In 2023, the European Union (EU) introduced a policy to ban combustion vehicles by 2035, but later allowed an exemption for those running on eFuels, provided their fuel production is fully carbon-neutral. However, with the EU actively incentivizing EV adoption and eFuels remaining costly to produce, it is unlikely that combustion engine vehicles will receive similar incentives.

A Brighter Future in Aviation and Transatlantic Transport

The transition to sustainable fuels has gained momentum in recent years, with increasing interest from aviation and transatlantic companies. However, unlike EVs, it is nearly impossible to electrify aviation with the current state of battery technology. Thus, the EU has mandated that sustainable fuels must comprise at least six percent of the fuel supplied at its airports by 2030, increasing to 70 percent by 2050. In the United States, financial incentives such as a $1.25-per-gallon credit for sustainable fuel blends that reduce emissions by at least 50 percent have been introduced to encourage adoption. These policies are expected to accelerate investment in eFuel production, potentially driving down costs and improving scalability.

The expansion of eFuel infrastructure could have a broader impact beyond aviation, specifically making eFuel affordable for the road. If regulatory pressure and market incentives drive widespread adoption of eFuel in aviation and maritime transport, the resulting production growth could lead to reduced costs, making these fuels more accessible for consumer vehicles. (Silvestro, 2024)

Conclusion

While most car manufacturers are set to go fully electric, Porsche is investing in eFuel to preserve automotive passion while addressing environmental concerns. Although it still has a long way to go to compete with electric vehicles, eFuel's marketability and application in aviation and transatlantic transport sectors could drive technological advancements and cost reductions. Despite its potential, challenges remain. The slow legislative process and capital required for large-scale production imply that mainstream adoption of eFuels in automobiles is still years away. However, with increasing regulatory support, industrial investment, and technological innovation, synthetic fuels could play a vital role in the future of sustainable mobility – offering a path to reduce emissions while preserving automotive passion and existing infrastructure.

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References:

Abnett, Kate. (2023, September 22). EU Set to Demand E-Fuel Cars Have No Climate Impact. Reuters. www.reuters.com/sustainability/eu-set-demand-e-fuel-cars-have-no-climate-impact-document-2023-09-22/.   

Alberto Boretti, et al. (2024, July 6). Advancements in E-Fuel Combustion Systems for a Sustainable Energy Future. International Journal of Hydrogen Energy, 79, 258-266. www.sciencedirect.com/science/article/pii/S0360319924026727.   

Atkinson, Michaela. (2025, February 3). Electric Vehicles and Their Environmental Impact – Are They Really the Green Solution? CarboEurope. https://www.carboeurope.org/electric-vehicles-and-their-environmental-impact-are-they-really-the-green-solution/#:~:text=The%20Carbon%20Footprint%20of%20EV%20Production&text=The%20EV%20production%20footprint%20includes,16%20metric%20tons%20of%20CO2

Ellis, Terry et al. (2024, March 25). E-Fuels: A Challenging Journey to a Low-Carbon Future. S&P Global. www.spglobal.com/_assets/documents/ratings/research/101595057.pdf.  

Fletcher, Ian. (2024, November 19) Fuel for Thought: How EU Tariffs Will Impact the Battery Electric Vehicle Market. S&P Global. https://www.spglobal.com/mobility/en/research-analysis/eu-tariffs-chinese-electric-vehicles-impact.html 

Moseman, A. (n.d.). Are Electric Vehicles definitely better for the climate than gas-powered cars?. MIT Climate Portal. https://climate.mit.edu/ask-mit/are-electric-vehicles-definitely-better-climate-gas-powered-cars

“Porsche’s Synthetic Fuel: Porsche Lauzon.” Porsche,      dealer.porsche.com/ca/lauzon/en-CA/News-and-Events/Carburant-efuel.  

Silvestro, Brian. (2024, June 27). E-Fuels Can’t Work in Cars until They Work in Planes. Here’s Why. Efuels Future. https://www.motor1.com/news/705067/efuels-future-explained/