Leveraging green hydrogen to decarbonise the aviation industry : A case study on electrofuels in Sweden

Sammanfattning: For the EU to reach its 2050 climate targets the aviation industry that is highly dependent on fossil fuels needs to drastically reduce its emissions. In the decarbonisation of the aviation industry drop-in sustainable aviation fuels (SAFs) have been identified as a promising solution to abate the industry’s emissions. To increase the adoption of SAFs, The EU has announced a proposal called ReFuelEU Aviation, introducing obligated blend mandates for SAFs that airlines and fuel suppliers need to comply with, starting at 2% in 2025 going up to 70% by 2050. A subset of SAFs called electrofuels, made from green hydrogen and carbon dioxide, could become essential in the sustainability transition with an emission abatement potential of up to 95% compared to fossil jet fuel. However, there exist no large scale production of electrofuels and previous research suggests that they will be several times more expensive to produce than their fossil counterparts, highlighting that the production and adoption will be challenging. In this thesis we first study how and under which conditions electrofuel value chains can develop in Sweden and second to which extend locally-produced electrofuels may be economically feasible. The former was studied qualitatively and the latter quantitatively, which together identified challenges and opportunities for electrofuels to decarbonise the aviation industry. The qualitative analysis was researched by conducting semi-structured interviews with industry actors, researching the current policy landscape and analysing the findings from a theoretical lens of ‘complementarity formation mechanisms in technology value chains’. The quantitative analysis was researched by a techno-economic assessment of e-kerosene production in Sweden using an alkaline electrolyser, different carbon capture technologies and a Fischer Tropsch fuel synthesis. In the qualitative analysis we found, in contrast to previous research, that the incremental cost associated with adoption of electrofuels is not necessarily the greatest concern. Instead, the value chain development of electrofuels is dependent on synchronised development of the input sectors renewable energy, hydrogen production and carbon capture technologies. Industry actors may not invest in large scale electrofuel production until they have secured a supply for renewable energy. There is also a liability of limited scalability in these, affected by slow permit processes and construction of new renewable energy, risking that electrofuels are not produced sustainably and at a high cost. We also found that producing bio-electrofuels, utilising lignocellulosic biomass from e.g., forest residue, can become important for Swedish fuel production. In the quantitative analysis the results show a levelised cost of e-kerosene of 3.8-6.1 times higher than the fossil jet fuel price of April 2023, sensitive to changes in energy price and capital expenditures of electrolysers for hydrogen production. We also found that the source of carbon capture affects the price, where direct air capture (DAC) increased total costs by 32% and 25% compared to bioethanol and pulp and paper, respectively. The levelised cost yield emission abatement costs between 457-1,042 €/tonne CO2e, depending on energy scenario and emissions abatement potential. In conclusion, we have found that the production of electrofuels for aviation is contingent on low energy prices, point-source carbon capture and economies of scale in hydrogen production. This highlights that renewable energy in combination with technological developments in hydrogen and carbon production is essential to establish a sustainable value chain. This can become challenging as other industries, such as green steel, will require similar inputs for production, emphasising that the location of electrofuel plants highly impacts the business case and possibility to produce relatively sustainable and cost competitive products.