Even as electric vehicles dominate today’s alternative powertrain market for passenger cars, the future of how we will all someday drive without burning petroleum is cloudier than ever. To decarbonize transportation, governments and companies around the world are promoting various future technologies, including hydrogen and synthetic fuels, as alternatives to the alternative.

In the U.S., the road to a hydrogen future recently hit a few roadblocks. In February 2024, Shell announced it would dramatically scale back its H2 refueling station plans in California and close some of its few stations. This dealt a blow to local H2-vehicle drivers as well as the state’s plans for a robust hydrogen infrastructure. When Hyundai announced in October 2021 that it would support Shell’s plans to add 48 additional H2 refueling stations in California, it said that “hydrogen refueling infrastructure growth is critical to rapidly increase consumer adoption of zero-emission fuel cell vehicles.”

That might explain why, at around the same time as the station closures were announced, some Toyota dealers in California started slapping $40,000 incentives onto one of the only hydrogen-powered vehicles available in the U.S., the 2023 Toyota Mirai, which has a starting price of just over $50,000. Toyota told SAE Media that it remains committed to hydrogen fuel cell technology “and that it can be a zero-emission solution across a broad spectrum of products and vehicle types.” In private presentations, Toyota has hinted that a third-generation Mirai is on the way. The company also offers them in Japan and Europe.

So it’s good news that all things H2 appear to be progressing better in Europe and Asia. The Hydrogen Council, a group of dozens of hydrogen industry companies and supporters, released an update to its regular Hydrogen Insights project in December 2023. The update said that there have been 1,400 hydrogen projects announced globally through 2030, with Europe the site of 540 of those. North America was second with 248. Still, the Council noted that “the clean hydrogen industry is facing headwinds” regarding the cost and expectations of producing renewable hydrogen. The rise has “caused a slower development of the global hydrogen industry than had been previously expected. Such hurdles are reflected in, for instance, a 10% drop in announced clean hydrogen supply through 2025.”

Enter eFuels
This brings us to synthetically produced liquid fuels, sometimes called eFuels. Supporters say these fuels take CO2 from the atmosphere and use renewable energy to produce a climate-neutral replacement fuel, which could mimic gasoline, diesel, airplane fuel, or other liquids that currently require petroleum.

Among automakers, Porsche has been one of the most vocal proponents of synthetic fuels, spending more than $100 million on developing and producing eFuel. Porsche partnered with Chilean company HIF Global (Highly Innovative Fuels) to build a pilot plant to produce synthetic fuels that are “potentially near-carbon-neutral.” The plant in southern Chile creates synthetic gasoline and renewable methanol, similar to how it’s done at other eFuel production sites. Wind power (plentiful in Patagonia) is used to electrolyze water, which creates hydrogen, and CO2 is collected from the air using a ceramic filter (like a catalytic converter). Porsche said it takes three liters of desalinated seawater and 6,000 cubic meters of air to collect the hydrogen and CO2 to make one liter of eFuel. The idea works as long as green electricity is plentiful and there’s water to be had.

Using claims that echo the U.S. biofuels boom of around 15 years ago, eFuel proponents say this process, once fully commercialized, has the potential to massively decarbonize vehicles with combustion engines, something everyone agrees we will continue to see on the roads for decades to come. Christian Schultze, deputy general manager for R&D at Mazda Motor Europe, told SAE Media that even countries with growing demand for EVs should consider eFuels.

“In Germany, we have a little bit more than 2.5% EVs on the market, but 97% or so are conventional vehicles,” he said. “Is it okay to leave them as they are? Or shouldn't we try something to reduce their emissions as well? There's only one way to do that: by changing the fuel.”

Schultze said synthetic fuels are easier to use than advanced biofuels that may be difficult to blend with standard fuels because eFuels can be made chemically identical to petroleum-based fuels. When the fuel is burned, the same CO2 that was taken from the air is released into the atmosphere again. The benefit is that this CO2 isn’t newly extracted fossil-based CO2, as Shultze made clear.

“If I can replace 20% fossil fuels in the existing fleet, that may not sound like much, but this will be ten times more than all our electric vehicles are now achieving, which we have brought to the market with a lot of money, high investments, subsidies, incentives and more,” he said. “What does it say to us? That we should better have a multi-solution approach, that is what Mazda is saying.”

A world with plentiful synthetic fuels also helps car buyers keep the residual values of their current ICE vehicles high, Schultze said. More eFuels would also help countries without substantial EV fleets because the “nearly” carbon-neutral drop-in synthetic fuels could replace traditional fossil fuels without significant infrastructure changes.

Japan, Europe getting on board

In mid-2022, six Japanese companies — Eneos, Suzuki, Subaru, Daihatsu, Toyota Motor Corporation, and Toyota Tsusho Corporation — joined to form the Research Association of Biomass Innovation for Next Generation Automobile Fuels to “study ways to optimize the process of producing fuel.” In March 2023, Mazda joined the group, also known as RABIT.

Other supporters of synthetic fuels have banded together in the eFuel Alliance, which counts Mazda, ZF, Bosch, and Porsche as members, along with oil companies like ExxonMobil and Repsol. Sal Ahmed, the head of Transformation, Strategy and Digitalization for ZF’s E-Mobility Division, told SAE Media that the ZF Group supports a technology-open approach for policies affecting its products, including new transmissions that use alternative fuels.

“Synthetic fuels or e-fuels represent one of several options to decarbonize vehicle fleets for both LDV as well as HDV,” Ahmed said, adding that ZF appreciates the fact the European Parliament and Council of the European Union have tasked the European Commission to examine a methodology of registering both LDVs and HDVs that run on synthetic fuels.

“In the US, legislative and regulatory action on this topic has been less acute, but we support a broad approach to responsibly reducing transportation-related emissions in all vehicle segments, including eFuels,” he said.

Synthetic fuels appear to be on a better path in Europe, driven in part by upcoming changes to European CO2 standards expected in 2026, according to Mazda’s Schultze. These regulations, which first went into force in January 2020, updated older European vehicle CO2 regulations from 2009 (for cars) and 2011 (for vans) and were themselves updated in April 2023. The upcoming changes have been in the works for more than two years, Schultze said, and are part of a broadening look at how best to reduce CO2 in the atmosphere.

“[Electricity remains] one of the possible opportunities, but what we see is simply that the uptake of electric vehicles across Europe is not as big as maybe it was expected to be, and we need to question if they are enough,” Schultze told SAE Media. “Frankly speaking, if you do a one-dimensional solution, then you have to live with all the difficulties.”

Beyond problems with EV charging infrastructure and cost, Scultze pointed out that even if all the cars in Europe were switched to EVs tomorrow, many old vehicles would simply be sold and used elsewhere. eFuels provide a low-carbon solution for all of them, he said, despite Europe’s political hesitancy to embrace petroleum alternatives other than EVs after Dieselgate.

“Even though manufacturers like Mazda were not involved in this scandal, it means there's some kind of reservation on the political side,” he said. “We have been trying to make clear that an engine is nothing bad. The big problem only comes when we put fossil fuels in it because then we bring fossil CO2 into the atmosphere, and that's what we want to avoid.”

Suppliers keep a foot in ICE-land
New vehicles that burn low- or no-carbon fuels still need new components, and ZF is one supplier keeping its ICE facilities running, or even expanding. In February 2024, ZF announced it would invest $500 million in its Gray Court, South Carolina, flex manufacturing facility, where it builds parts for traditional ICE and e-mobility technologies used in passenger cars and commercial vehicles.

ZF builds 8- and 9-speed transitions at Gray Court, which opened in 2010. ZF’s new investment includes $200 million for a new production line that will supply three major U.S. commercial vehicle manufacturers with new transmissions for mild hybrid and plug-in hybrid vehicles. Gray Court produced the first of these PowerLine 8-speed automatic transmissions in late 2023, and

ZF expects to produce 200,000 of these transmissions a year by 2025. As Grey Court’s expansion continues, the site will produce propulsion systems for traditional ICE, PHEV and EVs in both passenger and commercial segments. As ZF board member Stephan von Schuckmann said in a statement at the investment announcement, “[Gray Court] is our first ever to mirror the transition that the industry and the world is now navigating.”

ZF will also build transmissions for passenger cars at Gray Court, including its 8HP Gen4 PHEV transmission (already found on the BMW 7 Series and X5) starting in 2025 as part of ZF’s “local-for-local” strategy. The 8-speed plug-in hybrid transmission can produce up to 160 kW and 332 lb-ft (450 Nm).

The 30,000-foot view of low- and no-carbon fuels in the automotive industry reveals plenty of potential and even more potential problems. Previous liquid fuel alternatives like corn-based ethanol and algae fuels were promoted with big promises but have not yet taken over petroleum products. Mazda’s Schultze said we’re still in the promising stage of eFuels, including the possibility that they could be used as sustainable aviation fuel (SAF), and he’s transparent about the challenges ahead.

“At this point in time, there are no mass-production facilities [for eFuels],” he said. “There are only a few research production facilities and they are producing hundreds or 1000s of liters.”

Right now, with these low volumes, eFuel prices remain high, he said, but airlines could help make synthetic fuels happen.

“Aviation fuel and car fuels, they are not competitors,” he said. “eFuels will be there, at least for SAF, but we hope and we believe it makes absolute sense to have eFuels there also for cars and vans and trucks. Frankly speaking, CO2 is CO2.”