Synthetic Fuels Market Size & Share Analysis - Trends, Drivers, Competitive Landscape, and Forecasts (2024 - 2030)

Synthetic Fuels Market Size

Synthetic Fuels Market Trends & Drivers

• Along with implementing strict regulations, governments are taking initiatives to encourage the usage of sustainable fuels in industries. For example, from 2024–25, the Indian government will set benchmarks and targets for the reduction of carbon emissions from the petrochemical, iron & steel, cement, and pulp & paper industries. These regulations will act as drivers for private companies to get first-mover advantages, be transition leaders, and decrease the chances of fines or government action. Therefore, companies have begun analyzing the potential opportunities in this market, fostering strategic partnerships, diversifying their energy portfolios, and focusing on global expansion.
• Boosted by such efforts, some researchers have developed a novel catalyst that advances the production of gasoline by boosting the formation of long-chain hydrocarbons. Compared to the same amounts of carbon dioxide, hydrogen, pressure, heat, time, and standard catalysts, it created 1,000 times more butane than standard catalysts.
• Even private organizations are consciously investing heavily in the production of synthetic fuels. This is due to the global environmental concerns, strategic planning, and economic benefits these chemicals bring. For example, in 2020, Porsche made a USD 21-million investment with Siemens Energy to produce e-fuels. Later, this project received an additional investment of around USD 79 million from another source. This fuel was trialed for the first time in December 2022, and it is expected to be launched for public use soon.
• The production of clean fuels requires clean energy, but some countries experience harsh winters; therefore, solar energy is not a reliable solution. Researchers believe nuclear energy is a problem solver, as it provides clean and constant energy all through the year. A USD 20-million project being run by Utah-based Oxeon Energy and supported by the U.S.
• Department of Energy would use nuclear energy to create synthetic hydrocarbon fuels. Additionally, in a recent report, the Nuclear Industry Association urged the U.K. to lead the world in harnessing nuclear energy to produce emission-free electricity.
• In 2015, the United Nations released its set of 17 sustainable development goals (SDGs), which have to be achieved by the abiding countries by 2030. Affordable and Clean Energy, i.e., SDG 7, and Ensure Sustainable Consumption and Production Patterns, i.e., SDG 12, are the two goals directly linked with synthetic fuels.
• Each country is focusing on reducing its carbon footprint at its own pace. For e-fuel-related projects, governments are funding private- and public-sector R&D and providing subsidies and tax benefits to reduce costs and financial risks.
• For example, the Inflation Reduction Act 2022 of the U.S. allocated USD 369 billion for climate-related provisions, placing focus on energy. It intends to support the administration’s pledge to reduce greenhouse gas emissions across the economy. Subtitle D of this act contains 29 energy-related tax and credit measures, including record tax incentives on climate-related provisions of USD 271 billion. The provisions can be divided into nine major groups, including clean energy and fuel.

Segmentation Analysis

Transportation Industry Has Largest Market Share

The transportation category, under the end use segment, holds 40% market share in 2023. The usage of electric vehicles is increasing rapidly around the world, but the transportation industry still depends heavily on fossil fuels. Additionally, internal combustion engines offer added advantages in heavy vehicles and sports cars, or even in remote areas, where the supply of electricity is inadequate. Moreover, the aviation industry needs liquid fuel as it cannot rely completely on electricity. However, the International Energy Agency estimates that in 2021, transportation accounted for more than one-third of the global carbon dioxide emissions.

The carbon footprint of the transportation sector can be decreased if e-fuels are produced with hydrogen from an emission-free source and the carbon dioxide emissions generated in the process were absorbed. Moreover, since the engines of the current cars can consume e-fuels without needing to be modified, there is no need to build new infrastructure or incur significant costs. This factor could continue to drive the market amidst the global shift to EVs.

Industrial Category Will Have Significant Market Share

The industrial category also holds a significant share in the market. As per reports, the CO2 emissions of the industrial sector in 2022 were 9.0 Gt, where electricity and heat generation contributed 15.83 billion tonnes of emissions. This is because fossil fuels have wide usage in industries as energy sources and raw-material.

For instance, by-products of oil are used to produce plastics, chemicals, tars, medicines, and many other products. Moreover, coal is widely used to power machinery in industries, as natural gas and oil are expensive; so, they are unaffordable for many countries. Coal is used as a primary energy source in the cement, steel, and pharmaceutical sectors. Similarly, natural gas (CNG or LNG) is used during the manufacturing of fertilizers, dyes, and plastics, as well as in glass foundries and aluminum smelters, both as a raw material and an energy source.

Therefore, as industries are gradually moving toward renewable and clean energy sources, the demand for syngas and e-fuel will rise. For example, in place of conventional gasoline and diesel, synthetic gasoline and biodiesel can be used, respectively, because they are compatible with all current engines.

Coal Category Will Continue Generating Highest Revenue

The coal category will dominate the synthetic fuels market, based on raw material, during the forecast period.

As per reports, the worldwide coal reserves in 2020 were 1,074 billion tonnes, the majority of which are in the U.S., China, Australia, and Russia. Coal gasification is acknowledged as one of the most-practical and efficient clean technologies for e-fuel production from this fossilized resource. It also provides a workable way to use coal to satisfy the strict environmental standards. The Indian government is dedicatedly working for encouraging the adoption of the coal gasification process to produce many valuable chemicals.

Globally, one of the most-widely available resources of energy is coal, but its combustion has a high negative impact on the environment. Therefore, the usage of the available coal in the most-efficient and environmentally benign ways is required to fulfill the continuously increasing energy demand. Innovative techniques, specifically gasification, help in producing clean energy by converting coal first to synthetic gas and then to liquid fuel, meanwhile reducing emissions.

Non-Food Crop Category Is Growing Rapidly in Raw Material Segment

The non-food crop category is growing fast, because of the rising concerns over food security. The first-generation processes used sugarcane, corn, soyabean, and rapeseed to produce bio-ethanol, thus reducing global food supplies. In contrast, second-generation biofuels are made by advanced technologies that use residual or non-food parts of crops, such as stems, husk, and leaves. Moreover, advanced technologies, such as thermochemical routes (which can produce ethanol, synthetic gasoline, synthetic diesel, and jet fuel) and gasification (which produces syngas), are being used to process these raw materials into low-carbon sources of heat energy.

Currently, diesel is one of the most-demanded fuels, with up to 28.6 million barrels being consumed daily. Synthetic diesel produced from non-food crops can prove to be a potential replacement for conventional diesel derived from crude oil in the efforts to reduce emissions.

Segments covered in this report;

Based on Type

• Extra-Heavy Oils
• Gas-to-Liquid Fuels
• Biomass-to-Liquid Fuels
• Fuel-from-Waste
• Fuel-from-Atmospheric Carbon
• Shale Oil
• Oil Sands
• Coal-to-Liquid Fuels

Based on Raw Material

• Coal
• Natural Gas
• Non-Food Crop Sources
• Food Crop Sources

Based on Application

• Gasoline
• Diesel

Based on End Use

• Transportation
• Industrial
• Chemicals

Geographical Analysis

The Asia-Pacific region holds the largest market share, of around 50%, in 2023. Asia has many developing economies, most of which are also highly polluted. To improve the air quality, these countries are working tirelessly to reduce greenhouse emissions, by introducing regulations for industries and at the individual level. Additionally, governments are taking measures to coordinate actions to produce 2G ethanol at scale.

India has promised to cut the carbon footprint of its economic output by 45% by 2030, as part of its Nationally Determined Contributions (NDC). Further, China’s net carbon emission in 2020 was 2,912 million tonnes. Therefore, he country holds the largest market share in APAC for e-fuels, followed by Japan and India.

The North American market will also see fast growth throughout the forecast period. This will be since both the public and private sectors in the U.S. are investing a lot in technological developments to produce more synthetic fuels.

Further, Europe will hold a market share of 30% in 2030. The usage of these carbon-neutral or low-carbon substitutes has been rising since the European Union approved its 2035 ban on cars that create greenhouse gases; the ban does not apply to engines running on synthetic fuels. Additionally, the U.K. has initiated several recycling programs to reduce the amount of municipal solid waste that is disposed of directly. This waste can be used to produce biofuels with appropriate technologies.

For example, Audi runs a power-to-gas e-fuel production facility in Germany. In Europe, e-fuels are receiving a push as a means of lowering transportation-related greenhouse gas emissions and petroleum consumption.

Regions and countries covered in this report; 

• North America
  • U.S
  • Canada
• Europe
  • Germany
  • U.K.
  • France
  • Italy
  • Spain
• Asia-Pacific
  • Japan
  • China
  • India
  • South Korea
  • Australia
• Latin America
  • Brazil
  • Mexico
• Middle East and Africa
  • Saudi Arabia
  • South Africa
  • U.A.E

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