Synthetic Fuel Market Expected to Reach $22.5 Billion by 2031—Allied Market Research

According to a new report published by Allied Market Research, titled, “Synthetic Fuel Market," The synthetic fuel market was valued at $3.9 billion in 2021, and is estimated to reach $22.5 billion by 2031, growing at a CAGR of 19.7% from 2022 to 2031.

Synthetic fuel or synfuel is a liquid fuel, or sometimes gaseous fuel, obtained from syngas, a mixture of carbon monoxide and hydrogen, in which the syngas was derived from gasification of solid feedstocks such as coal or biomass or by reforming of natural gas. Synthetic fuel works similarly to conventional fuels. They are even produced in a similar manner with just a few changes in the production process. They exhibit the same properties as conventional fuels and are also applicable to the existing infrastructure for transportation. They are also compatible with the present distribution model for fuels.

Synthetic fuels are made from renewable as well as fossil resources. However, the main focus of creating synthetic fuel is to reduce carbon emissions and progress to clean energy. Thus, many synthetic fuel industry players are actively engaging in research and development activities. Such factors act as driving forces for the synthetic fuel market growth.

However, the high cost of fuel raises concerns over soaring oil and gas prices. Since conventional fuels are getting pricier day by day, synthetic fuel costs will still be more than conventional fuels. Thus, it discourages market growth. Moreover, the wide presence of conventional fuels also impacts the availability factor of synthetic fuel and thus acts as a constraint to the synthetic fuel market growth.

The synthetic fuel market size is segmented into raw material, type, application, and region. By raw material, the market is divided into coal, natural gas, food-crop/plant-based, and non-food crop based. Corn stover, softwoods, hardwood, switchgrass, and miscanthus are feedstocks used for synthetic fuel production. The combustion of these feedstocks produces carbon dioxide which is captured for further use in the production process of synthetic fuels.

The same process of methane synthesis or Fisher-Tropsch is used for producing synthetic fuel from nonfood crop-based raw materials. The synthetic fuel hence produced is widely applicable in existing infrastructure that is diesel-based engines working on combustion model. They can be used as fuel additives in diesel, jet fuels, and synthetic kerosene. Such applications drive the synthetic fuel market growth.

Depending on the type, the synthetic fuel market bifurcation is done into extra heavy oils, gas to liquid oils, shale oils, coal to liquid, biomass to liquid, and others. Extra heavy oils are very dense and highly viscous liquids that occur in a solid or nearly solid state. They gain mobility in special reservoir conditions. They pose a great challenge in exploitation, extraction, transportation, storage, and refining activities. They require thermal stimulation of the reservoir for extraction or recovery. They are usually darker or even black in color. Extra heavy oils are one source of synthetic oils or fuels.

Due to their exposure to bacteria, the hydrocarbons in the heavy oils are broken down, which is why they are in different physical forms. The synthetic fuel produced from extra heavy oils is termed Syncrude which needs further refining to be able to use commercially. However, synthetic crude derived from extra-heavy oils is mostly applicable for jet fuel, kerosene, and gasoline.

By application, the market is segmented into gasoline, diesel, and kerosene. Synthetic diesel is made from feedstocks that contain carbon. Synthetic diesel has high cetane content and little to no sulfur. This means it has particularly good properties which can be used to improve engine performance. The studies indicate that synthetic diesel had lower carbon emissions. Synthetic diesel can also reduce dependency on fossil fuels. The existing diesel engines can be run on synthetic diesel. Moreover, synthetic diesel can also be transported, stored, and distributed with existing infrastructure. Such benefits augment the market growth for synthetic diesel.

Region-wise, the synthetic fuel market analysis is done across North America, Europe, Asia-Pacific, and LAMEA (Latin America, The Middle East, and Africa). The synthetic fuel market growth was led by Germany and the UK in the Europe. This was owed to the presence of significant industry players investing thoroughly in the technologies to develop synthetic fuel.

Moreover, the region is witnessing an energy transition away from fossil fuels at a relatively higher rate and thus synthetic fuel production is being boosted by government and industry players. in addition, the impact of the Russo-Ukrainian war has also led the European Union to diversify its primary energy mix away from fossil fuels and thus act as a driving force for the Europe synthetic fuel industry growth.

The key players operating in the synthetic fuel industry are Sasol, Indian Oil Corporation, Shell Plc, Exxon Mobil Corporation, Reliance, Robert Bosch GmbH, Air Liquide, PetroChina, Phillips 66, And SG Preston Company. Ineratec, a power-to-liquid applications company, was provided with a free catalyst by Sasol chemicals for use in the latest Fischer-Tropsch (ft) reactors. Ineratec is going to build a production plant for paraffinic synthetic fuels in Frankfurt, Germany.

Key findings of the study

• By raw material, natural gas is projected to grow at the highest CAGR of approximately 20.0%, in terms of during the synthetic fuel market forecast period
• By type, gas-to-liquid oils dominated the synthetic fuel market share by over 20% in 2021
• By application, gasoline dominated the synthetic fuel market in 2021
• By region, North America dominated the synthetic fuel market and is expected to grow at a CAGR of 19.9% during the forecast period