Global Synthetic Fuel Market 2023-2030

Global Synthetic Fuel Market 2023-2030

Global Synthetic Fuel Market Size, Share & Trends Analysis Report by Raw Material (Coal, Natural Gas, and Biomass), by Type (Coal-to-Liquid (CTL), Biomass-to-Liquid (BTL), Gas-to-Liquid (GTL), Shale Oil, and Extra-Heavy Oil), and by Application (Transportation, Aviation, Power Generation, and Industrial) Forecast Period (2023-2030)

The synthetic fuel market is anticipated to grow at a CAGR of 22.8% during the forecast period (2023-2030). Synthetic fuels, also known as synfuels, are liquid or gaseous fuels made from hydrogen and carbon, or hydrocarbons. They are produced by capturing carbon emissions from industrial processes or the atmosphere and then combining the carbon with hydrogen from renewable sources such as water or biomass. Synthetic fuels can be used in the same way as fossil fuels, without any modifications to engines or infrastructure. Primary factors supporting the market growth includes the rising environmental concerns and the requirement for cleaner energy sources. The increasing carbon footprint has urged the globe to switch over to alternative options like electric vehicles (EVs), hydrogen fuels, biofuels and synthetic or e-fuels. Synthetic fuels are carbon neutral thus a greener step contributing to saving the environment. For instance, in December 2022, Porsche and several partners have started production of a climate neutral “e-fuel” aimed at replacing gasoline in vehicles with traditional internal combustion engines.

Segmental Outlook

The global synthetic fuel market is segmented by raw material, type, and application. Based on raw materials, the market is sub-segmented into coal, natural gas, and biomass. Based on type, the market is sub-segmented into CTL, BTL, GTL, shale oil, and extra-heavy oil. Based on application, the market is sub-segmented into transportation, aviation, power generation, and industrial applications. Among the applications, aviation sub-segment is anticipated to hold a significant share of the market, owing to the rising demand for synthetic fuel. According to the International Energy Agency (IEA), in 2022, aviation was responsible for 2% of all global energy-related CO2 emissions, which is a higher growth rate compared to rail, road, or shipping sectors. Further, post-COVID-19 pandemic, aviation emissions in 2022 reached almost 800 Mt CO2, which is about 80% of pre-pandemic levels. To reduce CO2 emissions, the aviation industry is focusing on technological advancements and investments in sustainable solutions. For instance, in June 2023, Amadeus invested in CAPHENIA, a German renewable energy start-up that will begin producing fuels from synthetic gas by 2024.

Transportation Industry is Anticipated to Hold a Prominent Share of the Synthetic Fuel Market

Among the types, the transportation sub-segment is anticipated to hold a prominent share of the market. Exponentially rising emission of hazardous pollutants in the environment is the propelling transportation industry to opt for synthetic fuels. According to the International Energy Agency (IEA), in 2022, CO2 emissions increased by 3% compared to the previous year, due to the rebound in passenger and cargo transport activity. Transport emissions have grown faster than any other end-use sector except for industry, at an annual average rate of 1.7% from 1990 to 2022. Thus, the segment has witnessed a considerable increase in the introduction of policies and regulations to reduce CO2 emissions. As per the International Monetary Fund (IMF), A highly effective policy for reducing CO2 emissions is a carbon tax applied upstream in the fossil fuel supply chain in proportion to the carbon content of each fuel (with refunds for any downstream capture of emissions by CCS). This tax system fully covers potential releases of CO2 from later fuel combustion.

Additionally, the market leaders are also focusing on technological advancements by increasing investments and collaboration. For instance, in April 2023, Toyota and Exxon Mobil collaborated to develop low-carbon synthetic fuels, which could cut as much as 75 % in greenhouse gas emissions compared with regular petrol.

Regional Outlook

The global synthetic fuel market is further segmented based on geography including North America (the US, and Canada), Europe (UK, Italy, Spain, Germany, France, and the Rest of Europe), Asia-Pacific (India, China, Japan, South Korea, and Rest of Asia), and the Rest of the World (the Middle East & Africa, and Latin America). Among these, the European region is expected to hold a considerable shareof the market owing to the wide presence of end-user industries such as automobile, aviation, and industrial sectors. Additionally, the region has witnessed an implementation of several stringent environmental regulations which in turn is driving the demand for sustainable solutions such as synthetic fuels. For instance, in October 2023, the EU announced the ReFuelEU aviation initiative to reduce carbon footprint, in the aviation sector by providing legal certainty to aircraft operators and fuel suppliers in Europe, ensuring a level playing field across the EU and promoting the production of sustainable aviation fuels (SAF).

The Asia-Pacific Region is Expected to Grow Significantly in the Global Synthetic Fuel Market

Asia Pacific region is the most populated region globally, holding approximately 60% of the global population. With the growing population, the carbon emission rate in the region is also growing significantly due to rapid industrialization, the growing automotive industry, and growing aviation travel among others. To reduce these problems the regional economies are focusing on reducing CO2 emissions by promoting synthetic fuel or sustainable fuel usage, introducing policies and regulations. Also, the region has seen growth in investments and collaboration between companies which help in the growth of the regional synthetic fuel market. For instance, in July 2023, DG Fuels, LLC (DGF), a company that develops facilities to produce sustainable aviation fuel (SAF), closed investment deals with two Japanese companies. With the investments from Aviner & co., inc., Chishima Real Estate Co., Ltd., and an unnamed investor, DGF has now exceeded its minimum investment goal for its final round of parent-level development capital. This capital will be used to fund the remaining expenses needed to reach the final investment decision (FID), including the ongoing FEL 3 and related expenses. Also, in April 2022, Japan's government-backed New Energy and Industrial Technology Development Organization (NEDO) allocated $892 million to help develop new fuels, such as synthetic fuels, that emit less carbon dioxide (CO2). This financial aid is part of the country's $15.6 billion green innovation fund, which was established to promote the development of cleaner energy and technology to help Japan, the world's fifth-largest CO2 emitter, achieve carbon neutrality by 2050.

Market Players Outlook

The major companies serving the global synthetic fuel market are Red Rock Biofuels, SG Preston Company, Sunfire GmbH, Raven SR, Inc., and Carbon Engineering Ltd. among others. The market players are collaborating and focusing on research and development to stay competitive. For instance, in July 2023, GAIL, and LanzaTech partnered to Explore Bio recycling Carbon Waste into Fuels and Chemicals. Under this partnership, GAIL and LanzaTech will explore setting up a pilot-scale CO2 capture and conversion project and explore opportunities in sustainable fuels such as synthetic fuel.

The Report Covers

Market value data analysis of 2022 and forecast to 2030.

Annualized market revenues ($ million) for each market segment.

Country-wise analysis of major geographical regions.

Key companies operating in the synthetic fuel market. Based on the availability of data, information related to new product launches, and relevant news is also available in the report.

Analysis of business strategies by identifying the key market segments positioned for strong growth in the future.

Analysis of market-entry and market expansion strategies.

Competitive strategies by identifying ‘who-stands-where’ in the market.