Quo vadis e-fuels? The road ahead for alternative fuels

What role will e-fuels play for the drivetrains of tomorrow? It’s a topic that is being talked about more and more in politics and across society – sometimes in a highly emotional way. After all, many believe that the use of alternative drivetrains hinges on a fundamental question: Will we ever be able to move away from the principle of using combustion engines?

The discussion at the start of the year was an important one, as it shone a spotlight on the important topic of e-fuels and drivetrains of the future. That’s at least how Jens Baumgärtner sees it. He’s a Principal at High-Tech Gründerfonds (HTGF). His portfolio contains a number of start-ups that specialise in driving the implementation and widespread use of alternative fuels. INERATEC is one such start-up. Based in Karlsruhe, the young company is seen as a pioneer in power-to-liquid applications. It delivers and tests sustainable fuels and chemical products. At the start of the year, the start-up successfully concluded an additional financing round. HTGF, Honda Motor Co. Ltd. and other investors are among the firm’s shareholders.

Primary goal: climate neutrality by 2045

The ultimate goal underpinning efforts to promote the use of sustainable fuels is for Germany to become climate-neutral by 2045. But policymakers are also setting intermediate targets, such as reducing greenhouse gas emissions by 65% compared with 1990 levels. That particular goal is supposed to be achieved by as early 2030. “E-fuels can play an important part,” says Baumgärtner. You need to be open to all types of technology, and first and foremost actively consider all types of mobility, he explains. The auto industry is in fact not his primary focus at all. That sector is already on a solid footing with electric powertrains and the potential use of hydrogen, the expert says, noting that short distances of up to 1,000 kilometres are possible.

However, e-fuels have a lot to offer when it comes to ships or aeroplane engines, where going fully electric is simply not an option. Batteries are too heavy and too expensive. And on top of that, they are not able to provide enough power for a sustained period of time. Incorporating the use of sustainable fuels, and then doing so in greater and greater volumes, could lead to a significant reduction in emissions.

More start-ups, more innovation – but does that mean more challenges, too?

The developments over the past few years, and the realisation that we need to transport heavy goods in a climate-neutral way in the future, has really helped the start-up industry, Baumgärtner says. Overall, there are more start-ups on the market, the expert observes. This has been buoyed in part by an industry that has realised how important young companies are.

But there are still challenges to overcome. For example, researchers aren’t just working on a single standard, but a multitude of solutions. What’s more, technological implementation is in many cases very costly. While it is true that there are many investors injecting funding in the seed phase, you tend to find that, particularly in the later rounds, there’s just not enough capital. Many start-ups are then at risk of running out of steam, according to Baumgärtner. In addition, people with the requisite know-how are in short supply, and that’s an issue that is often underestimated. Experienced employees tend to work at large-scale corporations with a lot of funds at their disposal. Young companies have to fight hard for new staff. Sometimes they have to hire from abroad or train up their own employees. That takes time.

We need to up the tempo, says Baumgärtner. To achieve the ambitious climate targets, we need to act now. And, together with industry and research, we need to further ramp up the use of technology.