With its Clean Energy Package, the EU is on the verge of repeating costly energy and climate policy failures of the recent past. Attempting to provide a low-carbon transport fuel replacement alternative to conventional biofuels, the European Commission in its revision of the EU Renewable Energy Directive (RED II) proposes a 2030 target for ‘low-emission and renewable fuels’. The proposed target includes so-called ‘’renewable liquid and gaseous transport fuels of non-biological origin’’. This opens the door for massive public subsidies for synthetic fossil fuels, i.e. renewable hydrogen mixed with fossil CO₂ from emitting industries covered by the EU ETS. In its new report Bellona Europa provides a reality check to the proposed EU ‘Power to Liquids’ policy.

Synthetic fossil fuels will distract from the 2^oC goal

This target will, as its predecessor did for conventional biofuels in the past, act as a policy driver for an alchemical production of ‘low-carbon’ synthetic fossil fuels that are in fact full-carbon, highly energy-inefficient, costly and incompatible with achieving EU climate goals. Like conventional fossil fuels, synthetic fossil fuels emit CO₂ upon combustion. Labelling these fuels as `renewable` and `low-carbon` only serves to encourage the continuation or even perpetuation of fossil fuelled internal combustion engines in vehicles. Consequently, the EU would distract from actual solutions for the timely development of a low- and zero-emission transport sector.

With synthetic fossil fuels the EU is recreating the biofuel policy fiasco 

Synthetic fossil fuel processes are in certain ways analogous to conventional biofuel production: resource intensity, costs and environmental impacts are problematic for both fuel types. The lesson from a decade of EU biofuels policy should be clear enough: flawed climate ‘solutions’ will not retain their social licence for long, meaning stranded assets for investors and society, and reduced trust in EU policy makers and institutions.

Synthetic fossil fuels will require massive public subsidies

Without subsidies, the business case for synthetic fossil fuels would be inviable; rent seekers would profit from developing a product at a both high societal and environmental cost. From a societal perspective, subsidising production of such fuels entails high risks of wasting resources and funds; mal-investments that should not be encouraged by policy makers, and most certainly not using EU climate policy tools.

Synthetic fossil fuels will devour vast amounts of electricity, renewable or not

CO₂ is a waste-product from energy-intensive processes, e.g. combustion, hence has zero energy value. Converting it into energy products will always need vast amounts of energy input. Production of synthetic fossil fuels will induce massively increased baseload demand for electricity. This would make the entire system less flexible and secure, likely extending use of fossil electricity from coal and imported gas.

Far better options exist to decarbonise EU transport at a lower societal cost

To illustrate, powering Europe’s road transport with such fuels would require well more than the entire current EU electricity generation. In comparison, a total shift to electromobility would add just ~24% to current electricity demand and provide flexible grid services, rendering a full and timely shift to renewables far more likely.

Synthetic fossil fuels that dump CO₂ in the atmosphere are not a ‘circular economy’

The alleged ‘circularity’ of synthetic fossil fuel production is bogus. The reuse of CO₂ for fuels, with the CO₂ dumped into the atmosphere upon use, is no more circular than throwing all recycled PET-bottles on the street because they were once recycled, calling them ‘low-plastic’. The only way to render the process circular would be to capture the CO₂ from ambient air, hence closing the cycle of the CO₂. If the technology is to be treated in any EU policy as relevant to the circular economy, air capture should be mandated to avoid the use and emission of fossil-origin CO₂.

Synthetic fossil fuels ‘sneak’ transport into the EU ETS, delaying transport and industry decarbonisation for decades or worse

By counting synthetic fossil fuels as ‘low-carbon’ in the transport sector, claiming the emmited fossil CO₂ has been accounted for in the ETS, the EU would allow car and fuel producers not to decarbonise according to EU transport emission targets. Instead, they could buy industrial CO₂, made ‘CO₂-free’ with relatively cheap emission allowances. This would delay transport sector decarbonisation. Additionally, it would delay real industry decarbonisation, as it entails a lucrative, perverse incentive for industry to maximise CO₂ production for sale to fuel producers.

To make matters worse, a recent ruling by the European Court of Justice (ECJ) enables industry not to account for CO₂ that is used, provided it’s ‘chemcially bound’. This could open for said CO₂ not to be accounted for at all, effectively rendering the EU ETS completely obsolete.

Read the full report here.