By the Green Mobility Magazine in partnership with the eFuel Alliance.
A new study by the eFuel Alliance, developed with Porsche Consulting, argues that the debate over e-fuels in Europe should shift from technological feasibility to industrial deployment. In an interview with the Green Mobility Magazine, CEO Ralf Diemer said the report assesses the global potential of e-fuels and their role in the European transport sector, focusing on volumes, timelines and costs.
“When we started with the eFuel Alliance back in summer 2020, the number of companies seriously pursuing e-fuels was small. Six years on, we are looking at a fully-fledged global industry, and one that is ready to scale. The study underlines this potential,” Diemer said.
The publication comes at a point where the European policy debate is shifting. As the European Union advances its 2040 climate targets, questions around delivery are becoming more prominent. Electrification remains central to the EU’s strategy, but the pace of deployment, industrial constraints and geopolitical pressures are increasingly shaping the discussion.
“Together with Porsche Consulting, we have taken a close look at the full range of propulsion technologies and where the real bottlenecks lie. Our study draws on the European Commission’s impact assessment for the 2040 climate targets.”
According to that assessment, around 37% of passenger cars, 62% of trucks, and over 80% of ships and aircraft will still run on liquid fuels in 2040.
“That demand will need to be met with renewable fuels at scale, requiring immediate policy alignment to avoid a structural shortfall. Our analysis shows that overall demand for liquid fuels could even grow. Meeting Europe’s climate targets in transport will require both electrification and renewable fuels. Neither alone will be sufficient.”
The report identifies a substantial global pipeline. Around 500 e-fuel projects have been announced, are in development, or are already operational. Roughly 300 target the transport sector, while the remaining 200 focus on industrial applications. More than 120 companies are actively working to bring e-fuels to the transport market. As a result, supply is no longer hypothetical but contingent on near-term regulatory and investment conditions.
“This is a potential study,” Diemer said. “Now it is about leveraging this potential under the right regulatory and investment conditions.”
For Diemer, the distinction between potential and delivery is central. While the project pipeline is significant, only a limited share has reached maturity.
“Financing is the make-or-break issue,” he said. “Only six percent of those 300 projects have cleared a final investment decision, leaving the vast majority of announced capacity at risk of delay or relocation. Closing the gap between supply and demand requires a stable and predictable regulatory framework. Whether e-fuels reach their potential will come down to political choices.”
This investment gap is closely linked to the regulatory environment. Rules governing electricity sourcing and CO₂ inputs, alongside uncertainty around future demand, continue to affect project bankability, directly delaying final investment decisions and limiting scale-up.
More broadly, the alliance’s argument is that the debate has moved beyond technology validation. The projects exist. Cost trajectories are becoming clearer. The remaining question is whether policy frameworks will enable market development at the required scale.
Against this backdrop, the eFuel Alliance identifies three immediate policy levers to mobilise investment.
First, demand. Set ambitious and binding e-fuel quotas with long planning horizons, including a clear trajectory beyond 2030, and extend regulatory coverage to road transport
Second, regulation. Apply workable and investment-compatible production standards, streamline access to renewable power, and enable the use of industrial CO₂ sources to accelerate project deployment.
Third, financing. Reform energy taxation and scale up EU financial instruments, including the Innovation Fund and the European Hydrogen Bank, to provide predictable revenue support and de-risk early projects, alongside the targeted use of EU ETS revenues from aviation and shipping to accelerate e-fuel deployment.
The study finds that, under favourable conditions and sustained scale-up, global e-fuel production capacity could reach approximately 200 billion litres of petrol-equivalent by 2045, positioning e-fuels as a core pillar of the global transport energy mix. In such a scenario, supply could cover demand from aviation and maritime transport as well as residual demand from road transport.
“There is no need to fear a race between sectors for limited supplies,” Diemer said.
EU policy has largely prioritised the use of e-fuels in aviation and maritime sectors, where alternatives are limited. However, the alliance maintains that excluding road transport overlooks the continued, long-term presence of combustion-engine vehicles in the fleet.
“For the massive car fleet, if you want to reach climate goals, you need a solution,” Diemer said. “If you do not scrap them, then you have to find an alternative to fossil fuels.”
This feeds into a broader tension in EU transport policy: the interplay between electrification and alternative fuel pathways. While battery electric vehicles remain a cornerstone of the transition, the report highlights constraints across the battery value chain, including raw material availability. Even under optimistic scenarios, these constraints may materially constrain the speed at which electrification can scale.
“Even if everything goes right, there will be difficulty in producing all these electric cars simply because we do not have the necessary amount of raw materials,” Diemer said.
E-fuels face different bottlenecks but rely less heavily on critical raw materials. The result is not a simple substitution between technologies, but a system constrained by multiple supply chains.
These constraints are not occurring in isolation. Globally, competition to develop e-fuel value chains is intensifying. The report highlights China’s rapid expansion in hydrogen and e-fuel production, supported by coordinated policy and domestic demand.
Chinese players already account for roughly 18% of globally announced e-methanol production through 2030, and more than 60% of electrolyser manufacturing capacity. This illustrates how policy clarity can accelerate industrial development, and how leadership can shift where investment conditions are more favourable.
For Europe, the risk is not the absence of technology, but the relocation of industrial activity. If demand signals remain weak, production and technological development may shift to regions with clearer policy frameworks, with investment decisions already being taken on that basis. This risks transferring both industrial capacity and technological leadership outside Europe.
That concern is reflected in the study’s assessment of the Renewable Energy Directive. While the framework provides a basis for renewable fuel deployment, the current sub-quota for e-fuels remains at 0.5%, and implementation varies across member states, creating fragmentation and uncertainty for investors.
“We need a very different Renewable Energy Directive with a much higher ambition level,” Diemer said.
The message for European policymakers is clear: the industrial base is emerging, and the technology is available. What is required is a policy framework that provides long-term certainty, supports investment, and enables e-fuels to scale as part of the broader transport decarbonisation strategy.
