The Future Cost of Electricity-Based Synthetic Fuels

To what extent can electricity-based fuels contribute to the decarbonisation of the heating sector?

  • Project Duration: 02/2017 - 05/2017

Numerous climate studies have concluded that the most cost-effective strategy for decarbonizing the transportation and heating sectors would be to considerably increase efficiency while directly consuming wind and solar power (e.g. in heat pumps and electric vehicles).

Yet experts are also discussing how synthetic fuels that are created with electricity from renewables can be harnessed to supplement direct consumption. Power-to-gas and power-to-liquid technology enable the manufacture of CO2-neutral fuels, including hydrogen (PtG-H2), methane (PtG-CH4) and gasoline or diesel (PtL). However, the conversion of electricity to these fuels is associated with high energy losses and, by extension, a low level of efficiency.

Germany does not have unlimited land for the deployment of wind turbines and solar panels, and local resistance to new projects is already a pressing problem. Against this backdrop, Agora Energiewende and Agora Verkehrswende have asked Frontier Economics to forecast the cost of imported CO2-neutral synthetic fuels up to 2050.

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