Environmental Impacts of Synthetic Fuels ^†

Abstract

In 2024, synthetic fuels regained attention as potential low-emission alternatives for internal combustion engines (ICEs), particularly in sectors where electrification remains challenging. This paper compares the estimated CO₂ emission factors of fossil-based fuels and synthetic fuels blended with 20% bioethanol under standardized usage conditions. A key finding is that the emission factor of synthetic fuels is highly dependent on the carbon intensity of the electricity used to produce green hydrogen via electrolysis. Using the projected EU electricity mix for 2030, synthetic fuels show no clear advantage over fossil fuels. However, with a cleaner electricity mix expected by 2050, their emission factor becomes significantly lower. From an economic standpoint, the viability of synthetic fuel production largely depends on reducing green hydrogen costs of €1.50–2.00 per kg through technological advancements and large-scale deployment. This analysis offers a realistic perspective on when and how synthetic fuels could contribute to climate objectives and outlines the technical and economic conditions necessary for their environmental and market viability.

1. Introduction

Technological and Regulatory Background

Since the Industrial Revolution, human activity has driven atmospheric CO₂ concentrations from approximately 280 ppm before 1750 to over 428 ppm by March 2025—an increase of more than 50% [1]. Within this broader trend, the transport sector accounts for roughly 15–20% of global anthropogenic CO₂ emissions. Road transport alone contributes around 12% (with passenger cars responsible for nearly half), while aviation adds approximately 2.5% [2,3].

In the European Union, transport generated 23% of total greenhouse gas emissions in 2022. Road transport was responsible for 72% of this share, with passenger cars producing over 60% and heavy-duty vehicles (trucks and buses) accounting for 26% [3,4]. Notably, the transport sector is the only major domain in the EU where emissions have risen—rather than declined—since 1990, primarily due to sustained growth in traffic volumes.

The European Climate Law sets a binding target of climate neutrality by 2050. From 2023 onward, all new passenger cars and light commercial vehicles sold in the EU must be zero-emission at the tailpipe, although existing internal-combustion vehicles may continue to operate if fueled exclusively with certified climate-neutral e-fuels. This policy shift has prompted major manufacturers—particularly in Germany—to accelerate R&D into ICE powertrains optimized for synthetic fuels, reigniting debate over the long-term viability of ICE technology beyond 2040 [5,6].

However, even by 2030, the EU electricity grid will remain partly reliant on fossil sources, complicating the sustainability credentials of e-fuel production [7]. Against this backdrop, this study evaluates the life-cycle CO₂ emissions and economic trade-offs of synthetic fuels compared with conventional petrol and diesel. The analysis employs both energy-based and mass-based emission factors, assessing multiple grid-mix scenarios and green hydrogen cost sensitivities.

In Hungary, transportation is responsible for approximately 20–22% of total greenhouse gas emissions, with road transport making up more than 95% of this share [4].

Table 1. Transport-related CO₂ emissions in Hungary (2010–2021), in million tons of CO₂ equivalent. * Decline due to the COVID-19 pandemic.

Year	2010	2012	2014	2016	2018	2019	2020	2021
Transport-related CO2 emissions (Mt)	7.4	6.7	6.8	7.5	8.4	8.6	7.9 *	8.3

presents Hungary’s transport-related CO₂ emissions in detail.

It is no coincidence that the European Union places particular emphasis on reducing air pollution and greenhouse gas (GHG) emissions from the transport sector. The European Climate Law [5] establishes a legally binding commitment for the EU to achieve climate neutrality by 2050. Meeting this target requires substantial GHG reductions across all economic sectors, including transportation.

In parallel, the European Commission’s “Zero Pollution” initiative [6] aims to reduce the health impacts of air pollution by 55% and to lower the proportion of people chronically disturbed by transport-related noise by 30% by 2030 compared to 2005 levels. Unlike other major sectors, transport-related pollutant emissions have continued to rise in recent decades [7].

To advance its core climate objectives, the European Union introduced a new CO₂ emissions regulation for passenger cars and light commercial vehicles in 2023 [8]. This regulation effectively mandates that all newly registered passenger cars and light vans must be zero-emission vehicles. While it does not prohibit the continued use of existing internal combustion engine (ICE) vehicles, it restricts the registration of new ones.

Crucially, the legislation permits the continued operation of vehicles powered by e-fuels, provided that these fuels are demonstrably climate-neutral.

Throughout 2024, EU-level communication on this matter evolved significantly. At the beginning of the year, policymakers had not excluded the possibility of advancing the 2035 phase-out date for new ICE vehicles. By mid-2024, however, the discourse had shifted: with the perceived potential of e-fuels, expectations emerged that ICE vehicles could remain part of the transport landscape well beyond 2040. By year’s end, major German car manufacturers announced substantial reallocation of development resources toward ICE technology—specifically targeting engines optimized for e-fuels [9].

2. Environmental Impacts of Conventional Vehicle Fuels

Gasoline and diesel, the primary fuels used in internal combustion engine (ICE) vehicles, are produced through the refining of crude oil extracted from deep underground reserves. The production and utilization of petroleum-derived fuels encompass multiple stages—extraction, transportation, refining, distribution, and combustion—each contributing to CO₂ emissions. Collectively, these processes impose a substantial burden on the natural environment, both through direct greenhouse gas outputs and associated ecological impacts.

The first phase—commonly referred to as the upstream stage—encompasses crude oil extraction, transportation, and refining. While exact emission values vary depending on the crude oil type and the efficiency of the refining process, industry assessments consistently indicate that upstream emissions amount to approximately 0.3–0.5 kg of CO₂ per liter of gasoline equivalent [10,11,12].

The second phase involves the combustion of fuel within an internal combustion engine (ICE) to generate traction power at the wheels. This process produces approximately 2.3–2.5 kg of CO₂ per liter of gasoline equivalent, known as tailpipe emissions. This stage clearly accounts for the largest share of greenhouse gas (GHG) emissions in the entire life cycle of motor gasoline, as it is directly linked to the oxidation of hydrocarbons during combustion [10].

When upstream and tailpipe emissions are combined, the total CO₂ footprint of one liter of gasoline—from crude oil extraction, refining, and transportation to final combustion in an ICE—amounts to approximately 2.6–3.0 kg CO₂ per liter. As a simple illustration, if a car consumes 1000 L of gasoline annually, its CO₂ emissions would be:

1000 L × ~2.6–3.0 kg/L = 2.6–3.0 tons of CO₂ per year.

Diesel, also derived from crude oil, differs from gasoline in its CO₂ profile due to its higher energy density and carbon content. Combustion in an ICE (tank-to-wheel) produces about 2.6 kg CO₂ per liter—higher than gasoline’s 2.3 kg/liter for the reasons noted above. The full life-cycle CO₂ emissions (well-to-wheel), which include crude oil extraction, refining, distribution, and end-use combustion, are as follows:

• Extraction and transportation: 0.2–0.3 kg/L;
• Refining (diesel production): 0.3–0.5 kg/L;
• Combustion: 2.6 kg/L.

Total: 3.1–3.4 kg CO₂ per liter of diesel [10,12].

Table 2. Full Life-cycle CO₂ Emissions of Gasoline and Diesel Derived from Crude Oil (compiled by the author based on [10,12]).

Phase/Category	Gasoline (kg CO2/L)	Diesel (kg CO2/L)
Extraction and transportation	0.1–0.3	0.2–0.3
Refining	0.2–0.4	0.3–0.5
Combustion	~2.3	~2.6
Total	~2.6–3.0	~3.1–3.4

provides a comparative overview of the full life-cycle CO₂ emissions for gasoline and diesel fuels.

Diesel fuel production is more energy-intensive than that of gasoline, leading to higher emissions during the refining process. Consequently, the CO₂ emissions per liter associated with diesel are greater than those of gasoline. Nevertheless, diesel engines typically achieve higher thermal efficiency than comparable gasoline engines due to their higher compression ratios and lean-burn operation. Under certain operating conditions, this can translate into lower CO₂ emissions per kilometer [13,14].

It is also noteworthy that the increasing adoption of direct fuel injection in gasoline engines has been narrowing the efficiency gap between gasoline and diesel technologies. Moreover, real-world emissions performance is influenced by a variety of factors, including driving style, transport infrastructure, and prevailing weather conditions.

3. Calculation of the Ecological Footprint of Synthetic Vehicle Fuels

In recent years, synthetic fuels have gained prominence as a quasi-compromise arising from legislative efforts to achieve the EU’s 2050 climate neutrality targets. The original regulation aimed to phase out the registration of new internal combustion engine (ICE) vehicles by 2035, despite the fact that ICE technology has long been a source of competitive advantage for the European automotive industry in global markets.

A defining characteristic of e-fuels is that their carbon content must originate entirely from non-fossil sources, excluding mined or processed carbon such as coal, crude oil, or natural gas. By definition, and according to typical production pathways, e-fuels are synthesized from green hydrogen—produced via electrolysis using electricity from renewable sources (e.g., solar, wind, hydro, geothermal)—and carbon dioxide captured from the atmosphere or from industrial processes. In principle, ICE vehicles operating on such fuels would be exempt from the post-2035 phase-out.

In practice, however, electricity generation is still far from fully decarbonized. In China, coal accounts for more than 50% of the electricity mix, while within the EU it represents at least 25% of the average energy mix.

A reliable electricity supply without fossil fuel-based power plants—particularly those with large rotating masses that stabilize the intermittency of renewable energy sources—is currently not feasible. Likewise, a stable power grid cannot be maintained without nuclear energy generation, despite strong criticism from certain organizations.

In summary, if the ideal scenario envisioned by lawmakers were achieved—namely, the production of green hydrogen using 100% renewable electricity and the capture of CO₂ directly from the atmosphere—the resulting fuel would have a net CO₂ footprint of 0 kg per liter. This is because the amount of CO₂ emitted during combustion would be exactly equal to the amount captured during production.

While this climate-neutral scenario is theoretically achievable with current technology, its large-scale implementation is not yet economically viable due to high costs and a lack of competitiveness compared with petroleum-based fuel production [15].

This section evaluates the current environmental impact of synthetic fuel production and explores potential pathways for further development to meet the criteria for classification as environmentally neutral e-fuels.

In parallel, it is essential—based on material and energy balance principles—to identify the primary cost drivers of e-fuels. The influence of current hydrogen and electricity prices on synthetic fuel production costs, relative to fossil-based crude oil fuels, should be examined. Furthermore, it is necessary to determine the threshold price levels of hydrogen and electricity at which e-fuels could achieve cost competitiveness with fossil-based alternatives.

Beyond economic sustainability, environmental sustainability is equally critical, as the primary objective of relevant regulations is to minimize emissions. These objectives are pursued through a combination of environmental policy measures and regulatory instruments.

As a first step, the emission factor (EF) of gasoline and diesel is examined. This metric represents the amount of carbon dioxide released during the combustion of a given fuel, expressed either per unit of energy (MJ) or per unit of mass (ton).

An emission factor is a coefficient that quantifies the amount of specific greenhouse gases emitted into the atmosphere per unit of activity, fuel consumed, or product produced. In the context of fuel combustion, EF typically refers to the mass of CO₂-equivalent (CO₂e) emitted per unit of energy content (e.g., g CO₂e/MJ) or per unit of mass or volume of fuel (e.g., kg CO₂e/kg or kg CO₂e/L). This parameter enables the comparison of environmental impacts among different fuels and technologies by providing a standardized measure of emissions intensity [16,17].

Two distinct forms of EF are applied:

• EF_energy—emission factor based on the fuel’s energy content (g CO₂e/MJ).
• EFₘₐₛₛ—emission factor based on the fuel’s mass (kg CO₂e/kg or t CO₂e/t).

In general, the emission factor (EF) can be expressed as follows:

EF_energy = (Mass of CO₂ emitted [kg])/(Energy content of fuel [MJ])

and

EF_mass = EF_energy × Calorific value of fuel [MJ/kg]

For conventional gasoline, the emission factor calculated on an energy content basis is as follows [16]:

EF_energy ≈ 0.0732 kg CO₂e/MJ (i.e., 73.2 g CO₂e/MJ)

On a mass basis (per ton), by substituting the calorific value of gasoline (44 MJ/kg):

EF_mass ≈ 0.0732 × 44 ≈ 3.22 kg CO₂/kg of gasoline (or 3.22 t CO₂/t of gasoline)

According to a 2022 study by Concawe [17], the CO₂ footprint of e-gasoline (e.g., Power-to-Liquid synthetic gasoline derived from methanol) varies significantly depending on the carbon intensity of the electricity grid. Based on the projected 2030 average EU electricity mix, the full life-cycle emissions of e-gasoline range from 80 to 90 g CO₂e/MJ. This could exceed the emissions of fossil-based gasoline if the electricity used in production carries a high CO₂ burden. In such cases, the mass-based emission factor (EF) is approximately 3.5–4.0 t CO₂ per ton of e-gasoline.

In the EU’s 2050 zero-carbon scenario—featuring an electricity grid powered entirely by renewable sources such as solar, wind, and hydro—the electricity used in the process is fully decarbonized. Under these conditions, the mass-based EF drops to less than 5–10 g CO₂e/MJ, or 0.2–0.4 t CO₂ per ton of e-gasoline.

Thus, in the 2050 scenario, the full life-cycle emissions of e-gasoline are significantly lower than those of conventional gasoline.

This section examines the effect of blending 20% bioethanol into gasoline. The life-cycle emissions of bioethanol—particularly second-generation types such as lignocellulosic ethanol—can be 80–90% lower compared with fossil-based gasoline. One liter of bioethanol contains approximately 21 MJ of energy; however, its energy density is lower than that of gasoline, which typically ranges from 30 to 33 MJ/L.

For second-generation (lignocellulosic) bioethanol, an emission factor of approximately 15 g CO₂e/MJ is assumed, based on default life-cycle emission values reported in RED II (e.g., ~16 g CO₂e/MJ for straw) and supported by various LCA studies, which report a range of roughly 10–20 g CO₂e/MJ [18,19].

When estimating the emission reduction from blending, if 20% bioethanol is mixed with gasoline, the resulting emission factor can be calculated as follows:

EFₘᵢₓ = 0.8 × 73.2 + 0.2 × 15 = 58.6 g CO_2e/MJ

This represents an approximate 20% reduction in the emission factor of the total blend.

Taking energy density and blending ratios into account, the mass-based emission factor is the following:

EFₘᵢₓ ≈ 2.5–2.7 t CO₂ per ton of blended fuel

Table 3. Comparison of the Carbon Footprint of conventional and E-Gasoline Transport-.

Fuel Type	Emission Factor (EF) Based on Energy Content g CO2e/MJ	Mass-Based Emission Factor (EF) t CO2/t fuel	Remarks
Fossil gasoline	~73	~3.2	Reference value
E-gasoline (2030 EU grid)	80–90	~3.5–4.0	Could be worse if electricity is CO2-intensive
E-gasoline (2050 EU green grid)	<10	~0.2–0.4	Significant environmental benefit with green electricity
20% bioethanol blend	~	~2.5–2.7	~15–20% reduction compared to fossil fuel

below presents a comparative overview of the carbon footprint of conventional gasoline and e-gasoline.

In Table 3, the emission factor (EF) is expressed in grams of CO₂-equivalent per megajoule of fuel energy content (g CO₂e/MJ) and in tons of CO₂-equivalent per ton of fuel (t CO₂e/t). The term “CO₂e” refers to the carbon dioxide equivalent, which aggregates the climate impact of CO₂ and other greenhouse gases into a single metric based on their global warming potential.

The higher EF value for e-gasoline (2030 EU grid) compared with fossil gasoline is due to the carbon intensity of the projected 2030 EU electricity mix, which will still contain a significant proportion of fossil fuel-based generation. Since e-gasoline production is electricity-intensive, the upstream emissions from electricity generation can outweigh the combustion emissions savings, resulting in a higher overall life-cycle EF compared to conventional fossil gasoline.

4. Comparison of Production Costs of Conventional and E-Fuels

The price of fossil-based vehicle fuels derived from crude oil is determined primarily by three cost components:

• The global market price of crude oil typically accounts for about 50–70% of the retail price.
• Refining costs are generally around 10–15%.
• Distribution and transportation costs are also typically in the range of 10–15%.

The remaining share is influenced by taxes, duties, and other market-related factors; the exact percentage distribution may vary depending on market conditions and fiscal policies. In addition, the final retail price at filling stations includes country-specific taxes and duties, which can add an additional 20–60%.

The crude oil price—determined by global benchmarks such as Brent or WTI—represents the most significant cost component, fluctuating between 70 and 90 USD per barrel in 2024. Since refined product prices are generally proportional to the input crude oil price, crude oil plays a decisive role in determining gasoline and diesel prices.

Operating costs of refineries, which vary in efficiency across the globe, include expenditures on energy, chemicals, labor, and maintenance, typically amounting to 5–15 USD per barrel. Distribution and transportation costs are strongly influenced by local infrastructure and distances, encompassing tanker trucks, pipelines, and storage facilities.

Although taxes and duties are not part of the narrow definition of production costs, they exert a substantial influence on the final retail price [15]. For example, in Hungary, the 27% value-added tax (VAT) and the excise duty constitute significant portions of the final price paid by consumers.

An approximate breakdown of gasoline production costs is presented in

Table 4. Gasoline Production Cost Estimate [20].

Cost Component	Cost (USD/Liter)	Share (%)
Crude oil	0.5	~62.5%
Refining	0.1	~12.5%
Transportation and Distribution	0.1	~12.5%
Other operational costs	0.1	~12.5%
Total	0.8	100%

Note: The production and delivery cost of fossil-based fuels in Hungary is estimated at approximately 0.8 EUR/L, while the final consumer price, due to high taxes and levies, reaches 1.5–1.8 EUR/L. This difference highlights that a substantial share of the retail price is attributable to fiscal charges rather than life-cycle emissions-related costs.

. Assuming a crude oil price of 80 USD per barrel (equivalent to roughly 0.5 USD per liter), the individual cost components can be estimated as follows:

E-fuels (electro-fuels) are synthetic fuels produced by combining hydrogen—obtained via water electrolysis—with a source of carbon, typically captured CO₂. When produced using renewable electricity and carbon from sustainable sources, e-fuels can be considered climate-neutral over their life cycle.

Green hydrogen refers to hydrogen generated through the electrolysis of water powered entirely by renewable energy sources, resulting in near-zero greenhouse gas emissions during production.

The production cost of e-fuels is significantly influenced by the price of electricity and the cost of green hydrogen. The largest share of production costs arises from electricity consumption, as green hydrogen is produced via electrolysis—an energy-intensive process requiring substantial amounts of renewable electricity.

Currently, the production cost of e-fuels ranges from €1.58 to €2.29 per liter. However, with technological advancements and economies of scale, this cost could fall in the long term to €0.99–€1.09 per liter. Achieving such cost levels is essential for price competitiveness, as fossil-based fuels currently range between €0.50 and €1.50 per liter [21].

The cost of green hydrogen is also a critical factor. Current estimates place the cost of green hydrogen production between €3 and €8 per kilogram; however, this figure is expected to decline significantly with improvements in renewable energy availability and electrolysis efficiency.

The production cost of e-fuels can be further reduced if manufacturing is located in regions where electricity prices are low, such as North Africa or the Middle East. These areas provide abundant and inexpensive renewable energy resources, enabling cost-effective e-fuel production. Nevertheless, long-distance transportation and distribution to consumer markets must also be considered, as these can add substantially to both the final cost and the carbon footprint.

In summary, achieving cost competitiveness for e-fuels requires electricity prices to fall within the range of €0.03–€0.05 per kWh, while the cost of green hydrogen must decrease to €1.50–€2.00 per kilogram. Minimizing overall costs will also depend on optimizing production processes and selecting geographically favorable locations for manufacturing.

5. Summary

To mitigate the impacts of climate change, carbon dioxide emissions from the transport sector must be significantly reduced. The previously proposed regulation mandating a complete phase-out of internal combustion engines (ICEs) by 2035 has been relaxed with the emergence of synthetic fuels as a potential alternative.

The price of synthetic fuels is primarily determined by the cost of electricity, green hydrogen, and CO₂ capture. For e-fuels to become price-competitive with today’s fossil-based fuels, the efficiency of electrolyzers—used to produce green hydrogen via water electrolysis—must be substantially improved, while their production costs must be reduced. Simultaneously, the price of renewable electricity must also decrease.

The technological development of CO₂ capture methods still demands extensive innovation, and lowering the associated costs remains a highly research-intensive challenge. Among all factors, the cost of green hydrogen production exerts the greatest influence on the final price of e-fuels; without affordable green hydrogen, synthetic fuels cannot achieve economic competitiveness.

Technological advancements in electrolysis and increased production volumes are expected to accelerate in the coming years. By contrast, substantial reductions in renewable electricity prices and the widespread adoption of energy storage technologies are likely to occur over a longer timeframe.