How much will synthetic fuel cost?

Today, true synthetic “e‑fuels” made from green hydrogen and captured CO2 typically cost about $3–7 per liter (€2.8–6.5/L) at plant gate for e‑gasoline/e‑diesel, $2–4/L (€1.9–3.7/L) for e‑kerosene, and $0.9–1.6/L (€0.8–1.5/L) for e‑methanol, with retail prices higher after taxes and distribution; by around 2030, best‑location projects are expected to fall to roughly $1.5–3.0/L for drop‑in hydrocarbons and $0.6–1.2/L for e‑methanol, and by the 2040s–2050s to about $1–2/L for hydrocarbons if cheap renewables, high utilization, and mature supply chains materialize. These ranges vary widely by electricity price, scale, policy incentives, and carbon source, so local “at-the-pump” figures can be higher or lower.

What we mean by “synthetic fuel”

Synthetic fuels—often called e‑fuels or power‑to‑liquids—are hydrocarbons or alcohols produced by combining green hydrogen with captured carbon. Common categories are e‑gasoline and e‑diesel (road fuels), e‑kerosene (aviation), and e‑methanol (shipping and chemical feedstock). Costs differ by pathway (Fischer–Tropsch vs methanol route), carbon source (direct air capture vs point‑source), and the price of renewable electricity that drives electrolysis.

The price today

Because most projects are still pilot or early commercial scale, current prices reflect limited volumes and high capital costs. Airlines and shippers often buy via premium offtake deals, while road‑fuel pilots remain niche and heavily policy‑dependent.

Current ranges by fuel type (global, 2024–2025 market conditions)

The following list summarizes typical “ex‑plant” production cost ranges observed in offtake disclosures, analyst estimates, and industry studies; end‑user prices will be higher after logistics and taxes, and lower where subsidies apply.

• E‑gasoline / e‑diesel (drop‑in hydrocarbons): about $3–7 per liter (€2.8–6.5/L), implying roughly $11–27 per US gallon.
• E‑kerosene (synthetic jet fuel): roughly $2–4 per liter (€1.9–3.7/L), or $7.50–15 per gallon, often partially offset by aviation‑specific tax credits where available.
• E‑methanol (for shipping/chemicals): typically $0.9–1.6 per liter (€0.8–1.5/L), equivalent to about $3.40–6.10 per gallon, with best‑resource locations at the low end.

These figures reflect high electricity and capital intensity at small scale. Where policies such as US hydrogen and SAF credits apply, effective buyer prices can drop materially; in high‑tax markets, retail prices can exceed the ex‑plant ranges.

Where prices are headed

As larger plants come online, electrolyzers get cheaper, and projects co‑locate with ultra‑low‑cost wind/solar, most independent analyses project substantial declines by 2030 and further into the 2040s–2050s. Outcomes depend on policy support, build‑out speed, and supply‑chain maturity.

2030 outlook (assuming good renewable sites and maturing supply chains)

The list below outlines typical cost bands cited by industry and research groups for around 2030, excluding local taxes and distribution, and noting that strong subsidies can push realized prices lower.

• E‑gasoline / e‑diesel: about $1.8–3.0/L (€1.7–2.8/L), or $6.80–11.35/gal, in favorable locations.
• E‑kerosene: roughly $1.6–2.5/L (€1.5–2.3/L), or $6.05–9.45/gal, potentially lower where aviation credits apply.
• E‑methanol: about $0.6–1.2/L (€0.55–1.1/L), or $2.25–4.55/gal, particularly in regions with very cheap renewable power.

These ranges presuppose low renewable electricity ($20–40/MWh), high electrolyzer uptime, and multi‑hundred‑kiloton scale facilities. Higher power prices, DAC reliance, or low utilization would push costs to the upper end.

2040–2050 outlook (with widespread scale and very low‑cost renewables)

If clean‑power costs, electrolyzer capex, and plant utilization improve as expected, long‑term costs could approach the following bands, again excluding taxes and logistics.

• E‑gasoline / e‑diesel: about $1.0–2.0/L (€0.9–1.9/L), or $3.80–7.60/gal.
• E‑kerosene: roughly $1.0–1.8/L (€0.9–1.7/L), or $3.80–6.80/gal.
• E‑methanol: about $0.5–0.9/L (€0.45–0.85/L), or $1.90–3.40/gal.

Achieving the low end requires abundant, firmed low‑cost renewables, efficient CO2 sourcing, and high plant capacity factors. Slower learning curves or tight equipment supply would keep costs higher for longer.

What drives the cost

Most of an e‑fuel’s price is set by electricity and hydrogen. The next list breaks down the main levers developers and policymakers watch—and why your local price might differ from headline ranges.

• Electricity price and availability: Power often makes up 50–70% of levelized fuel cost; sub‑$30/MWh renewables are pivotal.
• Electrolyzer capex, efficiency, and utilization: Cheaper equipment and high uptime lower hydrogen cost—the dominant input.
• CO2 source and price: Point‑source CO2 is cheaper; direct‑air capture can add roughly $0.10–0.60/L depending on capture cost and fuel pathway.
• Scale and learning effects: Larger, modular plants spread fixed costs and improve operating efficiency.
• Policy incentives and carbon pricing: Hydrogen and SAF credits, contracts‑for‑difference, and carbon prices can shift costs by $0.30–$1.00+ per liter, depending on jurisdiction and pathway.
• Logistics and blending mandates: Transport, storage, and blend compliance add to end‑user prices.
• Taxes and duties: Road fuels in particular face substantial excise taxes that can exceed production cost.

Together, these factors explain why the same fuel can cost very different amounts across regions—even when produced with similar technology.

How to ballpark your local pump price

If you want a quick estimate tailored to your market, you can use a simple heuristic that starts with ex‑plant cost and adds location‑specific layers.

1. Start with an ex‑plant range from above for the relevant fuel (e.g., $2.2/L for e‑kerosene or $2.5/L for e‑gasoline in 2030).
2. Adjust for local incentives: subtract applicable hydrogen or clean‑fuel credits converted to $/L.
3. Add logistics and wholesale margins: typically $0.10–0.30/L for bulk fuels, more in remote markets.
4. Add or replace with sector‑specific levies: aviation taxes, road‑fuel excise, VAT/sales tax.
5. Compare to fossil fuel parity: note the premium over conventional prices to gauge policy or corporate appetite to pay.

This step‑by‑step approach won’t capture every nuance, but it will place your estimate within a plausible band for planning and comparison.

How synthetic fuel compares to fossil fuel

Understanding the premium over conventional fuels clarifies where e‑fuels are most likely to scale first.

• Aviation: E‑kerosene costs 2–4× conventional jet today; mandates and credits are narrowing the gap on specific routes.
• Shipping: E‑methanol’s premium is modest in favorable locations, and engine conversions are underway, making it an early mover.
• Road transport: E‑gasoline/diesel remain far costlier than fossil at the pump; use cases are likely to be niche (heritage vehicles, hard‑to‑electrify applications) unless policies tighten and costs fall further.

As renewable power gets cheaper and policies tighten, the premium is expected to shrink fastest in aviation and maritime, with road use following selectively.

Summary

Today, synthetic fuels cost roughly $3–7/L for e‑gasoline/e‑diesel, $2–4/L for e‑kerosene, and $0.9–1.6/L for e‑methanol at production, with higher retail prices after taxes and logistics. By about 2030, leading projects could reach $1.5–3.0/L for drop‑in hydrocarbons and $0.6–1.2/L for e‑methanol, and by the 2040s–2050s, $1–2/L for hydrocarbons is plausible in the best locations. Actual prices depend heavily on electricity costs, scale, CO2 sourcing, and policy incentives, so local outcomes will vary.

Is synthetic fuel expensive?

The major downside to efuel is cost. At the moment, creating synthetic fuel is expensive. Different institutes estimate that one litre of synthetic diesel fuel costs around £2.50 to £3.50 per litre (that’s before taxes!). If production ramps up for efuels, then the cost could decrease.

What are the disadvantages of synthetic fuels?

The manufacturing process is complex, costly and energy intensive, which is a major barrier to uptake. As a result, synthetic fuels will remain expensive until infrastructure is scaled up.

Could synthetic fuel be the future?

In many ways, synthetic fuels are a promising future alternative. However, they won’t dethrone EVs anytime soon if they will do so in the future.

How much is a gallon of synthetic gasoline cost?

Finally, there’s the issue of cost. As late as 2020, Porsche CEO Oliver Blume estimated the cost of its synthetic fuels at about $37 per gallon. More recent estimates have brought the cost down as low as $5-$12 per gallon.