Synthetic Fuels Market

Updated on : August 22, 2024

Synthetic Fuels Market

The global synthetic fuels market was valued at USD 48.4 billion in 2023 and is projected to reach USD 70.1 billion by 2030, growing at 5.4% cagr from 2023 to 2030. The push for carbon neutrality and decarbonization in various sectors, including automotive, transportation, and heavy industry, is driving interest in synthetic fuels. Synthetic fuels offer a way to reduce emissions and transition away from fossil fuels, which propels the market expansion.

Attractive Opportunities in the Synthetic Fuels Market

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Synthetic Fuels Market Dynamics

Driver: Investment from private players boosting research and development

As the world seeks sustainable energy alternatives to combat climate change and enhance energy security, private players have emerged as crucial contributors to the growth and innovation in this sector. For instance, Sunfire, a German energy technology company, received private funding to scale up its power-to-liquids technology, demonstrating the potential for synthetic fuel commercialization. These investments from private players are expected to boost the synthetic fuel market during the forecast period.

Restraint: High cost of synthetic fuel

While synthetic fuels offer promising solutions for reducing greenhouse gas emissions and enhancing energy security, the high cost of production remains a significant restraint on the growth of the synthetic fuels market. . Building facilities for synthetic fuel production, especially those employing advanced technologies like carbon capture, gasification, and Fischer-Tropsch synthesis, requires substantial capital investment. Thus, higher pricing of synthetic fuel is expected to hamper the growth of market.

Opportunity: High potential of different applications of synthetic fuels

The synthetic fuels market is poised for significant growth, driven by the high potential of various applications that extend beyond traditional transportation fuels. For instance, United Airlines, Inc. is a major American airline has committed to using sustainable aviation fuels (SAFs) to reduce its carbon footprint, signaling a growing demand for synthetic aviation fuels.

Challenge: Difficulty in achieving economies of scale in synthetic fuel production

One of the significant challenges facing the synthetic fuels market is the difficulty in achieving economies of scale in production.  Smaller-scale synthetic fuel production facilities often experience higher unit production costs, making it challenging to compete with larger, more established facilities. These factors act as a challenge to the further growth of synthetic fuel market.

Synthetic Fuels Market Ecosystem

Prominent companies in this market include well-established, and financially stable manufacturers of synthetic fuels. These companies have been operating in the market for several years and possess a diversified product portfolio and strong global sales and marketing networks. Prominent companies in this market include Shell (UK), SASOL (South Africa), CHN Energy Investment Group Co., Ltd. (China), Chevron Renewable Energy Group (US) and ExxonMobil Corporation (US).

Based on fuel type, the power to liquid fuel segment is projected to register highest CAGR during forecast period

The power to liquid fuel (PTL) segment is estimated to be the fastest-growing segment of the global synthetic fuels market in forecast period. PTL offer several advantages including low consumption of water and land for power to liquid production plants, as well as very low lifecycle emissions. These factores make PTL as the most sustainable option in the long term.

Based on application, the diesel segment held the largest share of global synthetic fuels market in 2022

The diesel segment accounted for the largest share of the global synthetic fuels market in 2022. Manufacturers are focusing on the development of carbon-neutral synthetic diesel produced through renewable energy sources and carbon capture and utilization (CCU) technologies. Thus formed synthetic diesel has the ability to cater to various applications, including heavy-duty transportation, shipping, and off-road vehicles, where electrification may be challenging.

Based on end use, the transportation segment is estimated to account for the largest share in 2023

The transportation segment is estimated to have the largest share of the global synthetic fuels market in 2023 in terms of value. Usage of synthetic fuels has the advantage of producing fewer emissions than traditional aviation fuels. This is essential for reducing the carbon footprint of the aviation industry. Moreover, synthetic fuel can also be employed in internal combustion engines, such as those found in cars, trucks, and ships, without significant modifications. These factors are anticipated to attract consumers towards synthetic fuels during forecast period.

Based on region, Asia Pacific region is projected to be the largest region for synthetic fuels market during the forecast period

Asia-Pacific has been witnessing high growth in the synthetic fuels market and is projected to be the largest region from 2023 to 2030. Several countries in the region such as India, China, Japan, South Korea, and Australia, are actively investing in synthetic fuel technologies. In 2022, Japan's state-backed New Energy and Industrial Technology Development Organization (NEDO) granted 114.5 billion yen (USD 892 million) to support the development of new fuels including synthetic ones that emit lower carbon dioxide. These factors are expected to boost the synthetic fuels market in Asia Pacific.

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Synthetic Fuels Market Players

Shell (UK), SASOL (South Africa), CHN Energy Investment Group Co., Ltd. (China), Chevron Renewable Energy Group (US), ExxonMobil Corporation (US), TotalEnergies (France), Neste (Finland), Petro SA (South Africa), Linde Engineering (Ireland), Synthesis Energy Systems, Inc. (US), Dakota Gasification Company (US), TOPSOE (Denmark), MaireTecnimont S.p.A. (Italy), Sunfire GmbH (Germany), RWE (Germany), QatarEnergy (Qatar), Inner Mongolia Yital Coal Co., Ltd. (China) and others are among the major players leading the market through their innovative offerings, enhanced production capacities, and efficient distribution channels.

Synthetic Fuels Market Report Scope

This research report categorizes the synthetic fuels market based on type, textile type, application, and region.

Based on fuel type, the synthetic fuels market has been segmented as follows:

• Gas to Liquid Fuel (GTL)
• Methanol to Liquid (MTL)
• Power to Liquid Fuel (PTL)
• Others (BTL AND CTL)

Based on application, the synthetic fuels market has been segmented as follows:

• Gasoline
• Diesel
• Kerosene

Based on end use, the synthetic fuels market has been segmented as follows:

• Transportation
• Industrial
• Chemical & Others

Based on the region, the synthetic fuels market has been segmented as follows:

• Asia Pacific
  • China
  • India
  • Japan
  • South Korea
  • Rest of Asia Pacific
• Europe
  • Germany
  • France
  • Uk
  • Russia
  • Rest of Europe
• North America
  • US
  • Canada
  • Mexico
• Middle East & Africa
  • Middle East & Africa
  • South America

Recent Developments

• In April 2023, Envalior started off as a brand-new business, one of the major global providers of engineering materials. DSM Engineering Materials (DEM) and LANXESS High Performance Materials (HPM), two highly complementary market leaders in engineering materials, have merged to become Envalior, which is owned by Advent International (around 60% share), a worldwide private equity firm, and LANXESS (around 40% share), a manufacturer of specialty chemicals.
• In February 2023, Asahi Kasei's Board of Directors approved a Final Agreement regarding the transfer of business related to the development, production, and sale of spunbond nonwoven products to a newly formed joint venture company, which will be established by joint incorporation-type company separation (The Separation) with Mitsui Chemicals, Inc. The Separation is expected to take place on October 2, 2023. Through this joint venture both the companies aim to strengthen their spunbond business in Asia.

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