Getting the e-fuels market back on track

What if countries could simultaneously strengthen their energy independence, and create thousands of new jobs? Enter e-fuels, a cutting-edge solution to some of the most pressing energy challenges. But before we dive into the e-fuels market, we need to understand what they are. E-fuels, are produced using electricity that comes from renewable energy. Some of the more common uses for e-fuels include e-methanol or green ammonia. E-fuels can help industries like maritime shipping and the chemicals industry reduce their emissions. E-fuels can help countries reduce their reliance on imported energy, ensuring greater energy security and promoting energy diversification.

While in some countries like Morocco and Australia the industry is moving albeit at a slower pace, but, in in many parts of the world investments into this nascent industry have slowed down. It was not long ago when governments around the world were announcing ever increasing targets which were coupled with aggressive private-sector commitments to build new production facilities, created excitement throughout the e-fuels sector.

Since then, geopolitics have forced governments to scale back their targets. These policy setbacks, coupled with high interest rates and inflation, led to delays and sometimes cancellations of projects once heralded as gamechangers.

Investment decisions became harder, delaying front-runner initiatives and creating setbacks across the value chain. As a result, a persistent gap remains between ambition and outcomes, delaying the takeoff of e-fuels globally.

But industry and policymakers can still get the market back on track and deliver the economic benefits and energy resiliency it is designed to bring.

Moving towards a diverse, secure, and sustainable energy future means breaking through the stalemate of investments in first-of-their-kind projects that come with risks but also massive potential upside.

At Topsoe, we believe there are three things that need to happen to de-risk our e-fuels market and get it back on track:

1. Ensure Consistent and Long-Term Policy Support

The e-fuels industry is still in its early stages and requires sustained, long-term policy support to reach full maturity.

In the US, the 45V clean hydrogen production tax credit is critical for helping to accelerate the deployment of next-generation hydrogen and ensure the takeoff of the industry and support American energy innovation.

With the tax credit now kept in place the economic benefits are enormous. According to McKinsey, with the right policies in place, the hydrogen industry can generate 700,000 jobs by 2030 and contribute $140 billion in revenue.

In Europe, initiatives like the EU led European Hydrogen Bank help to create investment security and business opportunities for European and global renewable hydrogen production. Since its inception in 2022 the European Hydrogen Bank has allocated EUR 1 billion to projects across the continent.

Initiatives like this, along with other proposals such as Japan’s hydrogen CFD scheme will help to ensure the long-term viability for the industry and allow it to scale.

Absent the required policy support, both Europe and the United States risk falling behind China who is rapidly expanding its investments to dominate the global hydrogen supply chain. For example, in 2024 alone, Beijing committed nearly $680 billion to clean energy investments—almost as much as the U.S. and EU combined, according to the International Energy Agency (IEA).

2. Utilize Innovative Partnerships and Standardized Designs

New clean energy technologies often carry inherent risks due to a lack of operational track record and high costs.

The e-fuels industry must continue to explore new business and partnership models, and bring pioneers together to form new, forward-thinking coalitions.

Public-private partnerships, industry partnerships and consortiums across the value chain can accelerate innovation, investment decisions, scaling of technology and implementation. From collaborating with industrial partners, partnering with universities, national labs, and other research institutes, we pool our collective expertise to speed up development and mitigate risks.

That includes a close collaboration between companies and financial institutions that understand what it means to build a new industry and value chain in record time.

The solar and wind industries achieved an incredible cost-out journey over 30 years. We are now asking some of our most promising e-fuels to do the same within a decade. Longer term benefits mean longer term investments and commitments and patience from investors. That's an important perspective to maintain now and in the future.

At the same time, stability can be reached through modular and standardized designs that reduce the complexity of clean energy projects and make them easier to scale and finance.

At Topsoe, we have put a major emphasis on moving from the bespoke to standardized designs wherever possible. This goes for both the components we're using to build our stacks, as well as the designs and plant capacities we're offering customers. This shift enables faster deployment, lower costs, and improved serviceability.

1. Scaling Promising Technologies with Pilots, Ongoing Testing

Pilot projects help validate new solutions, boosting investor confidence. For example, Topsoe’s pilot facility in Frederikssund, Denmark, demonstrated the excellent performance of solid oxide electrolyzer cell (SOEC) technology. First Ammonia, Topsoe’s customer will utilize the technology at their plant to be built in Port of Victoria, Texas, when they reach final investment decision. They will use the technology to convert renewable energy into ammonia.

Through our own test center and industrial-scale pilot we're demonstrating that the technology works, and we are gathering performance data to support ongoing efforts to fully commercialize it.

Scaling new technologies is never easy.

Their development depends on flexible approaches able to adapt to changing market conditions. E-fuels can and should be part of a dynamic, multi-faceted fuel market, but they must have the necessary support to take off.