German Transport Minister Volker Vissing has warned that EU rules risk creating "carbon tourism", where liquefied CO2 from Europe will be needlessly transported to other parts of the world to make e-fuels, which are then re-imported in the EU.
“CO2 will be transported from one country to another to meet regulatory requirements. This practice will do nothing to protect the climate," Vissing warned after an e-fuels conference earlier this week.
Synthetic hydrogen-based fuels, known as e-fuels, play a crucial role in the EU's plans to decarbonise transport. In aviation and maritime transport, the EU has set minimum quotas for "renewable fuels of non-biological origin" (RFNBO) from 2030 and 2034 respectively, including hydrogen and e-fuels.
E-fuels are produced with hydrogen and carbon dioxide either from the atmosphere or from industrial plants suitable for internal combustion engines or aircraft engines.
Although most e-fuels are expected to be produced outside of Europe, where renewable energy will be available on a larger scale, EU rules on CO2 used in e-fuels may force manufacturers to physically transport liquefied CO2 from Europe to production sites outside the EU.
Paradox - Moroccan e-fuel with Spanish CO2
HIF EMEA, an e-fuel manufacturer, is currently planning production facilities in Morocco to supply the European market.
“We are currently investigating where we can get CO2 for several planned projects in Morocco. One of the most promising options is really to capture the carbon in Spain, then ship it to Morocco and put it into hydrogen there," HIF EMEA CEO Torsten Herdan told Euractiv.
This is due to the EU's RFNBO rules, which only allow the use of CO2 captured from the atmosphere, from certain biomass waste or - until 2041 - from industrial sites that are covered by a carbon pricing scheme, such as the system of EU Emissions Trading System (ETS).
Thus, the use of CO2 captured by a Spanish cement factory (which is covered by the ETS) would allow the e-fuel to be considered renewable in the EU.
"But if I now have the exact same cement plant in Morocco, where there are many cement plants, then I have no right to carry out the operation, because this plant will not be subject to emissions trading," Herdan explains the paradoxical situation.
EU rules on the sources of electricity and CO2 used to produce renewable e-fuels such as synthetic kerosene are set out in two implementing rules known as delegated acts.
The Commission argued that only emissions subject to carbon pricing should be included, as the aim was to incentivize the reduction of emissions from unsustainable fuels in the first place.
Environmental NGOs, meanwhile, insist that CO2 from industrial plants should not be used for e-fuels at all, as this would lead to more CO2 entering the atmosphere, undermining the goal of carbon neutrality.
European vs international rules
For the aviation sector, the EU mandates that 1,2% of all kerosene demand be covered by renewable e-kerosene by 2030, with the share increasing to 2050% by 35.
In addition, the Renewable Energy Directive requires EU countries to set a minimum quota for RFNBOs of at least 1% of all fuels used in all modes of transport, including road transport.
However, investment in e-fuel production sites has yet to materialize at scale and, according to Vissing, "we cannot expect blending quotas alone to solve the problem".
“Believing that the state can just set a quota and then e-fuels will be available is something that will not work. This was confirmed by absolutely all experts in the field," Wissing said.
An analysis from January 2024 showed that of 25 planned industrial-scale e-kerosene production sites in Europe, none had yet reached a final investment decision.
"The European Union will not be able to meet its demand for electronic fuels alone. We need non-EU partners and therefore standardized rules," Wissing said.
Although he is concerned that establishing global rules could take a long time, Herdan believes that the EU can solve the problem of "carbon tourism" by creating a law that will set different rules for imported e-fuels.