The complementary role of E-fuel in decarbonizing transportation and stabilizing the power grid

Widely recognized as a promising energy storage technology for decarbonizing transportation and stabling the grid, batteries have yet to fully meet travel and storage demands under all conditions. E-fuels, produced from hydrogen and captured carbon dioxide or nitrogen, keep the merits of liquid fuels with low lifecycle carbon intensities. However, they receive significantly less policy attention than batteries or hydrogen, especially on their synergetic decarbonization with electrification. This paper reviews 220 literature sources and examines E-fuel technologies regarding production, vehicle fuel application, grid storage application, economics, decarbonization potential, and country-level policies. It is found that E-fuels have been proposed as both a drop-in and standalone fuel for road, maritime, and aviation sectors, but demonstrations and commercialization efforts are still limited. E-fuels offer high volumetric energy density, infrastructure compatibility, environmental benefits, and application versatility. Yet they face challenges such as high costs, low conversion efficiency, and inadequate renewable electricity supply. Additionally, some E-fuels may pose risks to human health and the environment. European countries and certain automakers are at the forefront of E-fuel adoption, supported by various policies. Current estimates of E-fuel abatement cost (at least about 300 $/t CO2) seems much higher than acceptable. Future optimistic estimates (e.g. 1–3 times of fossil gasoline prices or down to 26 $/t CO2 abatement cost by 2050) exist in very few studies and require further verification. Also, the synergetic decarbonization benefit of E-fuel in complementing battery-based electrification via the form of PHEV can be an important topic, but with little quantitative research.