The problem with synthetic fuels

Synthetic fuels promise cleaner, drop-in replacements for fossil gasoline, diesel, and jet fuel, but their core problems are steep energy inefficiency, high costs, scarce supplies of truly renewable electricity, and persistent air pollution from combustion; unless they are made with additional renewable power and carbon captured from the air, they often fail to deliver meaningful climate benefits. In practice, most experts see synthetic fuels as a limited tool for hard-to-electrify sectors like aviation and shipping, not a mass-market solution for cars or urban transport.

What synthetic fuels are—and why they’re back in the spotlight

Synthetic fuels (often called e-fuels, power-to-liquids, or RFNBOs in European policy) are made by combining “green” hydrogen produced via electrolysis with carbon (for hydrocarbons such as e-kerosene, e-diesel, or e-gasoline) or nitrogen (for e-ammonia). The carbon can come from direct air capture (DAC) or from industrial point sources; the electricity ideally comes from wind, solar, hydro, or nuclear. The appeal is clear: a liquid fuel compatible with today’s engines, tanks, and distribution systems, but with potentially lower lifecycle emissions.

The main problems holding synthetic fuels back

Energy inefficiency and the opportunity cost of electricity

Converting electricity to hydrogen, then to liquid hydrocarbons, and finally burning them in an engine stacks losses at every step. Well-to-wheel efficiency for e-fuels in internal-combustion vehicles is typically about 15–20%, compared with roughly 70–77% for battery-electric vehicles, according to analyses by the International Council on Clean Transportation and others. That means transporting people or goods with e-fuels can require four to six times more renewable electricity than using the same power directly in batteries. In a world still short of clean power, that inefficiency matters.

High costs and limited supply

Because they rely on electrolyzers, high-purity water, CO2 capture, and multi-step synthesis (e.g., Fischer–Tropsch or methanol-to-jet), e-fuels are expensive. Pilot-scale costs for e-gasoline or e-diesel often translate to several times the price of fossil fuels—frequently in the range of about $3–8 per liter of gasoline equivalent today, depending on electricity prices and plant scale. Synthetic jet fuel is cheaper than road e-fuels on an energy basis but remains well above conventional kerosene. While costs are expected to fall as electrolyzers, renewables, and carbon capture scale, most projections show e-fuels staying relatively scarce and premium-priced through the 2020s and into the 2030s.

Lifecycle emissions and carbon accounting pitfalls

Whether synthetic fuels cut emissions depends on how they’re made. If the electricity isn’t truly renewable, emissions can rival or exceed fossil fuels. If the CO2 comes from an industrial smokestack, the carbon is still ultimately released to the atmosphere; that can be useful as a transition step but is not net-zero. Robust climate benefit requires “additional” renewables (power that wouldn’t otherwise be on the grid), strict temporal matching between power generation and fuel production, and CO2 sourced from DAC or biogenic streams. Without these rules, double counting and hidden emissions are common. There are also non-trivial resource demands: producing a kilogram of hydrogen requires about 9–20 liters of deionized water, and DAC can be energy intensive.

Air pollution doesn’t disappear

Even when made perfectly, hydrocarbon e-fuels burned in engines still emit nitrogen oxides (NOx), carbon monoxide, and can contribute to secondary particulate matter. Ultra-low sulfur and low aromatic content can reduce soot compared with fossil fuels, but they don’t eliminate combustion-related urban air pollution. This is a key reason cities and regulators continue to back direct electrification for road transport.

Scale constraints and feedstock limits

Replacing a large portion of road fuels with e-fuels would require vast new quantities of clean electricity, electrolyzers, CO2 capture, and synthesis capacity. Because the energy per kilometer is so much higher than for batteries, the renewable build-out required is daunting. Meanwhile, sustainable biogenic CO2 or biomass feedstocks are limited, and DAC remains expensive and nascent.

Compatibility and infrastructure realities

Some synthetic fuels are drop-in (e-kerosene) while others require new engines or materials (ammonia, methanol). Blending limits, fuel certification, engine calibration, and safety protocols all matter. Ammonia is toxic and corrosive, methanol is flammable and toxic, and synthetic gasoline/diesel must meet stringent specs to avoid engine and emissions-control issues. These frictions elevate cost and slow adoption.

Policy context: support is growing, but with conditions

Regulators are carving out roles for synthetic fuels—especially in aviation. The European Union’s ReFuelEU Aviation law mandates rising shares of sustainable aviation fuel (SAF), including a dedicated sub-target for synthetic (RFNBO) fuels starting this decade. Separately, the EU has allowed a pathway for new internal-combustion cars after 2035 only if they operate exclusively on CO2-neutral e-fuels, subject to technical verification. In the United States, federal tax credits under the Inflation Reduction Act and updates to lifecycle accounting (e.g., GREET-based guidance for SAF) aim to reward genuinely low-carbon pathways. A common thread across these policies is tightening rules for additional renewable electricity, temporal matching, and credible carbon sourcing.

Where synthetic fuels make the most sense

The strategic niche for e-fuels is where batteries are heavy or impractical: long-haul aviation, deep-sea shipping, and certain industrial chemical uses. For passenger cars, buses, and most short-haul trucks, direct electrification is usually cheaper, cleaner, and easier to scale. That prioritization helps focus limited e-fuel supplies where they deliver the greatest climate value per kilowatt-hour.

The core problems at a glance

The following points summarize the most frequently cited challenges that limit synthetic fuels as a broad decarbonization solution today.

• Low overall efficiency: four to six times more renewable electricity per kilometer than battery-electric transport.
• High cost: multi-step production and scarce inputs keep prices well above fossil fuels in the near term.
• Carbon accounting risks: weak additionality or fossil-derived CO2 can erase climate benefits.
• Persistent air pollution: NOx and other combustion pollutants remain, especially in urban settings.
• Scale and resource constraints: massive new clean power, electrolyzers, and CO2 capture are required.
• Infrastructure and safety: compatibility, certification, and handling challenges for fuels like ammonia and methanol.

Taken together, these factors explain why many analysts recommend reserving synthetic fuels for sectors that lack better alternatives rather than using them to prolong widespread combustion in road transport.

What would have to improve

Several changes could reduce the drawbacks of synthetic fuels and ensure they deliver real climate gains where they are most needed.

• Cheaper, cleaner electricity: rapid build-out of wind, solar, and nuclear to power electrolysis and synthesis around the clock.
• Better rules: strict additionality, temporal and geographic matching, and high-integrity lifecycle accounting to prevent greenwashing.
• Lower-cost carbon: scalable, low-emission DAC and greater access to biogenic CO2 where sustainable.
• Technology learning: higher-efficiency electrolyzers, improved catalysts, and larger plants to drive costs down.
• Sector prioritization: direct support for e-kerosene and maritime fuels, rather than road fuels, to maximize climate impact per unit of clean power.

If these developments materialize, synthetic fuels can play a targeted, high-value role in decarbonizing the hardest corners of the energy system without siphoning clean electricity from easier, more efficient solutions.

Bottom line

The problem with synthetic fuels isn’t that they can’t work—it’s that they are energy- and capital-intensive, remain expensive and scarce, and still produce combustion pollution. They are best treated as a scarce decarbonization resource for aviation, shipping, and specific industrial uses, not a catch-all substitute for fossil fuels across the entire economy.

Summary

Synthetic fuels can enable lower-carbon flight and fuel other hard-to-electrify sectors, but they face structural hurdles: low energy efficiency compared with direct electrification, high costs, complex and often fragile carbon accounting, ongoing tailpipe pollution, and daunting scale requirements for clean power and CO2 capture. With robust policy guardrails and a focus on the right niches, they can contribute meaningfully—but they are not a silver bullet for mass-market road transport.