Unlocking Cost Competitiveness: Accelerating E-Fuel Production in Europe
Key Ideas
  • Analysis by Aurora Energy Research highlights the competitive potential of e-fuel production in Europe driven by hydrogen costs and supportive policies.
  • Focus on ammonia, methanol, e-kerosene, and e-methane with key opportunities identified in Sweden, Spain, and Germany.
  • EU targets like the Renewable Directive (RED) III and upcoming European Hydrogen Bank auctions will accelerate e-fuel uptake and production.
  • Efficient power procurement strategies and well-designed project setups are crucial to unlock cost competitiveness for selected e-fuels.
A new analysis by Aurora Energy Research emphasizes the potential for competitive e-fuel production in Europe, focusing on ammonia, methanol, e-kerosene, and e-methane. The study identifies key opportunities in countries like Sweden, Spain, and Germany, driven by the cost of hydrogen and supportive policy frameworks. The European Renewable Directive (RED) III and upcoming European Hydrogen Bank auctions are set to boost e-fuel uptake and production. Particularly, e-kerosene and e-methanol are highlighted for the aviation and maritime sectors due to ambitious EU targets. Sweden stands out for showcasing cost parity with global competitors. Efficiency in electrolyser operations is key, as over 85% of e-fuel costs are hydrogen-related. The article stresses the importance of optimized power procurement strategies and project setups to enhance cost competitiveness. Penalties for non-compliance will drive uptake in specific sectors, but a mix of demand-side and supply-side measures is crucial. Authors from Aurora Energy Research emphasize the value pockets for electrolysers in challenging hydrogen markets and the potential for Sweden and Spain to lead in e-fuel production. The article concludes that with optimized strategies and ongoing support programs, the gap between production costs and offtakers' willingness to pay can be bridged.
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