Economic and environmental assessment of current (2015) and future (2030) use of E-fuels in light-duty vehicles in Germany

While e-fuels offer a path towards large scale use of renewable electricity in transportation and improved energy security their economic effectiveness is unclear. To address this gap, an economic and environmental analysis of e-fuel production in Germany using renewable wind energy, different electrolysis technologies, and Fischer-Tropsch synthesis in 2015 and 2030 was performed. For current alkaline electrolysis and future solid oxide co-electrolysis using wind energy for electrolysis, e-fuel production costs and life cycle emissions were estimated to be 4.97 €/leq diesel and 64.07 gCO2-eq/MJ in 2015, and 3.24 €/leq diesel and 6.63 gCO2-eq/MJ in 2030. The critical parameters determining e-fuel cost are electricity cost, carbon dioxide (CO2) cost, electrolysis investment cost, and capacity utilization. Using optimistic estimates for all these parameters gives a production cost of 1.17 €/leq diesel (3.12 € ct/MJ). Abatement costs in the range 544-6424 €/tCO2-eq were estimated for e-fuels; much higher than those for competing vehicle-fuel technology options. While e-fuels are currently not a cost-effective method to reduce CO2 emissions they could be in the future if investment cost, capacity utilization, CO2 cost, and wind electricity cost can be improved by further research and development, or if fossil fuel prices increase substantially.