Sector spotlight: e-fuel solution to hard-to-abate conundrum?

E-fuels are becoming one of the most realistic pathways to decarbonise sectors where electrification is not feasible and batteries alone are not a viable option. Unlike bio-based fuels, which face land-use and scalability limitations, e-fuels rely on renewable electricity and captured CO2, offering a pathway with potential for scale without additional feedstock constraints.

With abundant renewable resources and favourable policy frameworks, North America is emerging as a strategically important e-fuels production hub, positioning companies such as StormFisher Hydrogen to develop solutions to supply both domestic and international low-carbon fuel demand. To talk about e-fuel’s potential and the sort of innovations that might scale, StormFisher CEO Judson Whiteside join Innovation Forum’s Ian Welsh for a live podcast.

Battery-powered electric vehicles are well-suited for road transport, but they are impractical for air travel, global sea-going vessels and for some industrial processes. These sectors need dense, storable molecules and e-fuels can provide them using renewable electricity and captured CO2. Demand is rising as industries seek low-carbon alternatives that fit existing infrastructure while supporting scope 3 and net-zero commitments. This “drop-in” compatibility is a critical advantage, enabling fuel switching without waiting for new ships, planes or pipelines.

StormFisher Hydrogen, is developing facilities that combine green hydrogen – created by water electrolysis using renewable energy – and CO2 to create hydrocarbon molecules in the form of methane, methanol or kerosene. Pure oxygen is by-product of the green hydrogen electrolysis process. The company’s projects are sized in the 100–200 MW range, a scale that matches typical renewable generation assets and avoids the grid-connection challenges that often stall gigawatt-scale proposals.

The e-fuels market is still developing, but concentrated demand provides a foundation for reliable long-term contracts. As Judson pointed out, two ships can absorb an entire year’s production from one of StormFisher’s sites, showing how large buyers can anchor early projects.

North American gas utilities are facing tightening renewable gas requirements, opening a growing domestic market for e-methane. As an example of how producers are responding, Judson noted that StormFisher targets regions with clear policy frameworks, existing infrastructure and committed off takers to secure viable project development.

While e-fuels are still more expensive than fossil fuel derived alternatives, the economics are shifting. Policy frameworks, including hydrogen tax credits in the US and tightening international decarbonisation requirements, are redefining competitiveness. For many businesses under rising pressure to address scope 3 emissions, the cost of inaction is beginning to outweigh initial costs of a switch to e-fuels, Judson believes.

Judson also described how the “hydrogen hype of 2022–23” attracted developers with unrealistic expectations. As regulatory guidance clarified, many exited the market, leaving space for players with more grounded commercial models, he said. This consolidation mirrors earlier phases in renewables where policy clarity strengthened the sector rather than weakening it.

While momentum is building, the e-fuels sector still faces structural challenges. Electricity pricing, grid interconnection timelines and the pace of offtake market development continue to influence project viability across the industry. Many developers are responding by sizing projects to match available grid capacity and by sourcing CO2 from established industrial facilities to reduce exposure.

Judson said that this more measured approach is reflected in StormFisher’s strategy, which focuses on commercially resilient project design rather than rapid scale for its own sake. He emphasised that the market is scaling steadily rather than explosively – a pattern consistent with past energy transitions – and that long-term growth will depend on a mix of solutions, including e-fuels, bio-based molecules, electrification and nuclear power. More green hydrogen projects have reached final investment decisions in the past two years than many industry figures anticipated, signalling gradual but tangible progress across the sector.

Looking forwards, maritime demand will continue to be particularly strong, driven by rising penalties and growing orders for methanol-ready vessels, Judson said. The sector may not be scaling at the pace imagined during the early hydrogen hype, but it is scaling methodically and in line with how real energy transitions unfold.

Judson is clear that he thinks e-fuels must be part of the energy mix, at least for now: “If we’re serious about net zero, e-fuels aren’t optional, they’re the bridge between today’s energy system and the one we need next.”