Scaling up eFuels supply
The eFuel Alliance supports the EU’s goal of achieving climate neutrality by 2050. To accomplish this objective, the revised Renewable Energy Directive (RED III) must be implemented ambitiously and in full effect at national level by the end of May 2025. Only then can a level playing field be created for all relevant emission-reduction technologies across industry and transport. As it stands, RED III defines the EU’s demand for alternative fuels but fails to reflect the full transformative potential of eFuels, known as renewable fuels of non-biological origin (RFNBO).
Road transport – the key to scaling up renewable fuels
Green hydrogen and its derivatives, such as synthetic fuels, can make a vital contribution to decarbonising the transport sector. Since eFuels replace fossil fuels, even low blending rates can significantly reduce CO₂ emissions. Initially, this can be achieved through drop-in solutions alongside conventional fuels and ultimately by fully replacing them. A 5 % eFuel blend in road transport across Europe could save around 60 million tonnes of CO₂ per year, thus, equivalent to removing 40 million cars from the road.
According to calculations by Fortier Economics, a 5 % eFuel blend would increase fuel prices by just €0.07 per litre (further information and calculations on the fuel price of eFuels). With a reform of EU energy taxation, this 5 % eFuel blend impact could be reduced to only €0.03 per litre.
eFuels serve as a crucial complement to electromobility, especially as the uptake of electric vehicles risks plateauing due to the phase-out of incentives and a lack in the charging infrastructure. At the same time, they offer a renewable solution for the existing vehicle fleet. Beyond road transport, eFuels are also suitable for all modes of transport reliant on internal combustion engines – including shipping and aviation. Notably, RED III includes all transport sectors for the first time, not just road.
- Economies of scale: According to Eurostat, road transport accounts for over 70 % of fuel consumption in the transport sector. The larger the market, the greater the economies of scale – leading to lower costs for renewable fuels.
- Use of co-products: Technologies such as the Fischer-Tropsch process generate by-products that serve multiple markets. This means that producing eFuels for aviation or shipping also yields fuel components suitable for road transport. Without an ambitious RED III implementation, there is little regulatory incentive to produce eFuels for road use. Projects would then rely heavily on premium eKerosene revenues – placing a disproportionate burden on the aviation sector. This contrasts sharply with traditional refinery economics, where eKerosene makes up only a small share of output and is cross financed by road fuel sales.
- Diversification of investment risks: Cross-sector demand strengthens project viability by spreading financial risk across the transport sector, making investments in production facilities more attractive and economically feasible.
Minimising first-mover risks, ensuring investment certainty and positioning Europe as a global leader in future technologies
The investment and job potential along the value chain for synthetic fuels is enormous. eFuels represent a major opportunity for European industry – not only through the domestic development and manufacturing of Power-to-X (PtX) technologies, but also via their export to regions with optimal wind and solar conditions for eFuel production. According to the German Economic Institute, this could generate up to €80 billion in additional annual economic value. Moreover, up to 1.2 million new jobs could be created across Europe.
However, extensive investments require a stable political framework and long-term planning security. Investments in the billions have amortisation periods of up to 20 years. Thus, long-term offtake agreements are essential.
For this reason, a predictable and practice-orientated regulatory framework is crucial for a successful market ramp-up. Unfortunately, RED III only sets targets up to 2030.
Unlocking global renewable energy potential by turning CO₂ emissions into valuable resources
Renewable fuels such as eFuels are the only way to integrate the existing vehicle fleet into climate protection efforts and speed up the decarbonisation of transport. They can easily be blended with conventional fossil petrol, diesel, kerosene or maritime fuel, and even replace them completely in the long term. Alongside the market ramp-up of electromobility, eFuels provide an additional climate friendly option for road transport. For example, an EU-wide blending of just 5% eFuels to conventional fuel, would result in a saving of 60 million tons of CO2 – equivalent to taking 40 million cars off the road for an entire year. This is essential to meet EU climate targets, as a big part of today's more than 300 million vehicles with an internal combustion engine (ICE) will continue to dominate our roads for many years to come. Without ambitious RED targets for sustainable renewable fuels, these vehicles will continue to run on fossil fuels.
Our demands for national implementation: ambitiously transpose RED III and delegated acts into German law
The current greenhouse gas reduction target of 14.5 % for the transport sector by 2030 is insufficient to attract investments in renewable fuels or meet climate goals. To provide the fuel industry with planning certainty and enable the development of sustainable production capacity, the target must be raised to at least 20 %. Likewise, the energy target should be set at a minimum of 23 %. If multipliers are reintroduced as foreseen, the target must be increased to at least 49 % to maintain environmental integrity.
The combined 5.5 % target for advanced biofuels and RFNBOs falls short of creating a viable hydrogen market. To send clear investment signals, the targets should be split, with a dedicated sub-target for RFNBOs of at least 5 % from 2030 onwards. An interim target of 1 % by 2028 is essential to enable the timely build-up of large-scale production facilities. These targets allow for multiple counting, meaning that actual demand will be lower (see chart). Ambitious implementation is key to realising national hydrogen strategies and achieving economies of scale.
Stable policy frameworks are critical to scaling up renewable fuels. However, frequent regulatory changes undermine investment certainty and delay vital project decisions. To avoid penalising first movers, existing support instruments such as the European Hydrogen Bank and H2 Global should be expanded. Moreover, RED III currently sets targets only until 2030. For long-term investment planning, a clear trajectory beyond 2030 is needed. In addition, EU energy taxation rules must be revised to establish effective incentives for the uptake of renewable fuels.
Current production criteria for RFNBOs act as a barrier to market entry and put them at a disadvantage, compared to other technologies. A swift revision of the delegated acts is urgently needed to safeguard investment. Until electrolysis capacity in Europe reaches at least 6 GW, RFNBOs should be fully exempt from electricity sourcing requirements. We also support postponing the additionality requirement to 2035, maintaining monthly temporal correlation, and allowing the temporary free allocation of green attributes within refineries. In a recent study we have analysed the potential of CO2 point sources in Europe for the production of eFuels. If RFNBO production criteria allows the use of unavoidable industrial CO2 sources, up to 36 billion litres of eFuels could be produced in addition.
National transposition of RED III across EU Member States
This map illustrates the varying stages of RED III implementation across the EU. Many countries are behind schedule, and few have taken ambitious action. Only a handful of Member States have fully transposed RED III into national law.
Finland leads by example
Some countries, however, are moving ahead. Finland has already incorporated RED III into national legislation and adopted forward-looking targets: a 4 % quota for RFNBOs by 2030 without the use of multipliers, and a 1 % interim target by 2028. Based on Finland’s current road transport fuel demand, this would require at least 3.5 TWh – not yet accounting for additional needs from aviation and shipping. Such commitments send strong signals to the market, fostering innovation and boosting investor confidence.
Also Spain, Belgium and Ireland are discussing quite ambitious RFNBO targets with up to 2.5% in 2030. In comparison, the REDIII implementation in other member states is more disappointing and often not in line with climate targets as well as national hydrogen strategies. End of 2025, the German cabinet has proposed a target of just 1.2% - like France. The pioneer of renewable fuels, Sweden, just proposed 1%. Italy is transposing the minimum REDIII requirements of just 0.5%. However, if we cumulate all RFNBO targets, which have been presented, a demand of more than 30 TWh in 2030 can be expected. This demand will lead to an industrial production of hydrogen and eFuels.
Position papers
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