How the ban on combustion engines in road traffic is slowing down investment in eFuels
Road traffic is one of the biggest sources of COâ‚‚ emissions worldwide. Governments and political decision-makers are increasingly turning to electromobility to reduce these emissions. This is leading to a strategic direction that aims to completely ban combustion engines from road traffic. But this strategy leaves the potential of alternative fuels such as eFuels and RFNBOs (renewable fuels of non-biological origin) largely untapped. Why is the complete exclusion of combustion engines possibly a mistake? And how could a technology-neutral strategy serve the energy transition in the transport sector?
The planned exclusion of combustion engines: opportunities and risks
Many countries, including the EU, have announced that they will ban the sale of new vehicles with combustion engines by 2035. This is intended to accelerate the electrification of road traffic and drastically reduce COâ‚‚ emissions. What seems sensible at first glance, however, harbors risks for the development and spread of alternative fuels.
The loss of a significant sales market
Road transportation is the world’s largest consumer of fuels. The ban on internal combustion engines will eliminate a significant market for eFuels and RFNBOs, which are considered climate-friendly alternatives to fossil fuels. Without road transport as a sales market, these alternative fuels will find it difficult to achieve the necessary economies of scale to become competitive. Economies of scale are crucial to reduce production costs and facilitate market access. Without demand from road transport, the cost of producing eFuels will rise and the technology will remain trapped in a niche that will not find the necessary mass acceptance.
The value of a technology-neutral strategy
Instead of focusing exclusively on electromobility, an open-technology strategy should promote several solutions and drive them forward in parallel. Such a strategy would make it possible to focus on both electromobility and alternative fuels in order to support a flexible and comprehensive energy transition in the transportation sector.
Advantages of a technology-neutral strategy:
- Use of existing vehicles: Millions of vehicles with combustion engines are already in use. Simply replacing these vehicles would make neither economic nor ecological sense. eFuels offer a solution here, as they could operate existing combustion engines in a climate-neutral way without the need for major infrastructure adjustments.
- Long-term reduction in new CO2 emissions: The gradual introduction of eFuels in road traffic could immediately achieve a significant reduction in new COâ‚‚ emissions, while the complete transition to electromobility could still take years or even decades.
- Diversity of options: Bringing multiple technologies to market creates competition that drives innovation. This can lead to better and cheaper solutions in the long term, both for electric and combustion-based vehicles.
Negative impact on investments
The exclusion of road traffic from the use of alternative fuels could also cause serious barriers to investment. Investors and companies see road transport as one of the largest sales markets for fuels. If this market is excluded, the potential profits and incentives to invest in the production of eFuels will decrease. Without strong demand, these technologies will fail to scale and eFuel prices will remain high.
Investors are confronted with several risks:
- Reduced market opportunities: A limited sales market for eFuels reduces the opportunities for returns, which could deter many investors.
- Higher production costs: Without road transport as the main customer, production capacities remain low, which in turn results in high production costs.
These factors mean that alternative fuels remain in a small market niche, while electromobility is being promoted as the main solution.
Alternative areas of application: Maritime and aviation as beacons of hope
While road transportation is currently the largest market for fuels, other sectors also offer great potential for alternative fuels. In the maritime and aviation sectors in particular, eFuels and RFNBOs could play a significant role. These sectors are difficult to electrify and require fuel-based solutions with high energy density. By focusing on these sectors, eFuels can keep a foothold in the market and enable their scaling in the long term. However, this alone is not enough – road transport should also be included in the strategy to promote alternative fuels.
Conclusion: technological openness as the key to a successful mobility transition
The complete exclusion of combustion engines from road transport could significantly hinder the spread of alternative fuels and leave their potential for reducing new CO2 emissions untapped. A technology-neutral strategy that supports both electromobility and alternative fuels is the best way to make the transportation sector more climate-friendly. By including road transport as an important market for eFuels, economies of scale could be achieved that would make these technologies competitive. At the same time, existing combustion fleets could be operated in a climate-friendly way, which would accelerate the transition to sustainable mobility. It is time to consider alternative fuels as an equivalent solution alongside electromobility and give them the space they deserve.