On May 28, a driving demonstration of a vehicle with synthetic fuels was carried out at the facility of Toyota in Fuji International Speedway. Synthetic fuels are made of hydrogen and CO2, and those using hydrogen generated by water electrolysis from renewable energy are called “e-fuels.” Takeshi Saito, the president of ENEOS Holdings, Inc., who demonstrated the first run of a commercial vehicle using domestically produced synthetic fuels, stated, “A decarbonized society cannot be achieved just with a single energy source. We are going to establish the technology as soon as possible.” Also, Koji Sato, the president of Toyota, who drove the demonstration car, also commented, “The feel of driving an e-fuel car is the same as that of driving conventional gasoline-fueled cars. Cars with e-fuels will expand the range of options for a decarbonized energy sector including popularization of electric vehicles.”

The most notable characteristics of synthetic fuels are that the conventional internal combustion engines can be used as they are and that fuels with energy density equivalent to that of fossil fuels can be produced massively on industrial scale. Automobile manufacturers all over the world are now shifting their focus to electric vehicles. It is estimated that the share of electric vehicles in new vehicle sales in major automobile markets will reach 60% by 2030. On the other hand, even by around 2030, 90% of the vehicles running all over the world will be engine-powered, and thus synthetic fuels will have a significant role to play in achieving decarbonization on a global level. The fields of large aircraft, large vessels, and the like, where electrification is difficult to achieve will also be potential markets.

In March 2023, The European Union (EU) withdrew its previous policy of banning the sale of new engine-powered cars from 2035, and approved the sale under the condition that synthetic fuels must be used. Prior to this decision, the German government decided to invest in a private synthetic fuel production business and started publicly supporting demonstration projects targeting the aviation industry. Each stakeholder is moving promptly toward the use of synthetic fuels. These trends will greatly expand the business potential of synthetic fuels, and the government’s support and private investment by European countries will be further accelerated toward commercialization of synthetic fuels.

Japan is also rushing to realize the commercialization of synthetic fuels by the early 2030s, ahead of the original schedule of 2040. The biggest challenge is the production cost. Although the cost will be high, there are significant advantages of utilizing existing fuel infrastructures and social capital such as fuel stations. In addition, synthetic fuels can be stockpiled over the long term, and they do not need rare metals that can only be produced in a limited number of countries, both of which are advantageous from the standpoint of economic security. Japanese automakers have lagged behind in rolling out electric vehicles, and the same goes for developing countries. This means that taking the lead in the technology for the commercialization of synthetic fuels will not only contribute to the achievement of decarbonization, but also to the increase of the presence of the nation for the Global South countries. There are various options. I hope to see strategic investment in industry, government, and academia in order to achieve early social implementation of e-fuels.

This Week’s Focus, June 2

Takashi Mizukoshi, the President