Alternative transport fuels elements of the European Union’s “Fit for 55” package
Working Paper
The economics and greenhouse gas emissions of renewable hydrogen and e-fuels imported in the European Union
To reduce greenhouse gas emissions (GHG) emissions from certain transport sectors that will be hard to decarbonize, such as aviation and maritime, low-GHG alternative fuels will be critical. In the European Union, renewable hydrogen (i.e., hydrogen produced via electrolysis from 100% renewable electricity) and its derivatives, known as electrofuels (e-fuels), receive support in several EU fuels policies due to their high decarbonization potential and possible application in different sectors.
This study assesses the economic costs and climate impacts of importing renewable hydrogen and e-fuels into the European Union. We focus on Brazil and Egypt, with which the European Union has recently expanded engagement in renewable hydrogen production and export.
We calculate the cost of producing renewable fuels of non-biological origin (RFNBOs) and exporting them from these countries to the European Union as compared with the cost of EU Member States producing these fuels domestically. We project the costs in two scenarios key to the future price development: the price to renewable electricity and electrolyzers.
Mid-level and Pessimistic scenario, reflecting advancement (or not) in renewable electricity and electrolyzers.
In a second step, we assess the GHG emissions associated with the production of RFNBOs in Brazil and Egypt and their shipment to the European Union under two scenarios: one in which verification schemes ensure compliance with EU additionality and matching requirements, and one in which such requirements are not met.
Figure 1. Cost of renewable hydrogen delivered from Brazil to the European Union
Figure 2. Cost of renewable hydrogen delivered from Egypt to the European Union
