‘E-fuels’ are catching on as a way to decarbonize air travel

As the global aviation industry grapples with its rising emissions, one potential solution is gaining favor among investors, fuel producers and the airlines that guzzle billions of gallons of fossil-based kerosene every year: ​“power-to-liquid” fuels.

These alternative jet fuels are produced using captured carbon dioxide, hydrogen, heat and lots of electricity — ideally all from renewable sources. Also dubbed ​“e-fuel,” the synthetic liquid can be blended with conventional fuel or can replace it in existing jet engines to potentially reduce the planet-warming pollution from flying. 

Among the latest entrants in the emerging field is Lydian, a startup based in Cambridge, Massachusetts that claims to have developed a way of addressing two big challenges plaguing the power-to-liquids process: high energy intensity and huge costs.

On Wednesday, the 2-year-old company said it has raised $12 million in seed funding to scale its technology, which involves using electric heat and a catalytic cell to produce jet fuel using less energy and fewer inputs than similar fuel-making methods. Lydian’s backers include Congruent Ventures, Galvanize Climate Solutions and other venture capital funds, which invested $3 million last year in a pre-seed funding round.

“We are pulling the energy-efficiency lever,” said Joe Rodden, Lydian’s co-founder and CEO. ​“We believe fuels produced with our technology will consume less energy per gallon than any other e-fuel.” 

The new funding will enable Lydian to go from making ​“small quantities” of jet fuel in its Cambridge-based lab to producing over 5,000 gallons per year at its first pilot plant, Rodden told Canary Media. The startup plans to build the facility in the greater Boston area and begin churning out fuel by mid-2024.

Lydian’s pilot project will join a handful of relatively small operations worldwide that are working to develop and prove out the power-to-liquid approach. Most recently, the California-based startup Twelve broke ground on a 40,000-gallon-a-year, first-of-a-kind facility in Washington state that will make jet fuel from CO₂ and grid power. In June, the English company OXCCU raised $23 million to build its first demonstration plant for its own CO₂-based approach.

E-fuel producers say they eventually aim to use renewables at every step of the fuel-making process. But even if they pull that off, burning e-fuels in engines still results in some carbon dioxide emissions. The companies say the goal is to reduce net emissions from jet fuel by repurposing CO₂ that would’ve otherwise wound up in the atmosphere. 

Lydian hasn’t yet completed a full life-cycle analysis to determine how much CO₂ pollution its approach could help avoid. But other power-to-liquid producers like Twelve or Air Company claim their alternative fuels can cut life-cycle emissions by up to 90 percent and over 97 percent, respectively, compared to petroleum-based kerosene. 

It’s far from certain if power-to-liquid fuels can deliver on such promises. Until more and bigger facilities get up and running, researchers have little real-world data to assess how well the systems will perform from an economic or environmental standpoint, said Maria Fernanda Rojas-Michaga, a doctoral candidate at the University of Sheffield in England and lead author of a new academic paper analyzing the technology.

She said more research is needed to ​“prove how the process could work at large scale.” Solving such puzzles will be key to setting government policies for boosting e-fuel production, as the European Union is currently attempting to do with its ReFuelEU Aviation initiative. Both the EU and global aviation regulators have called for achieving net-zero carbon emissions by 2050. 

“If we don’t start now, I don’t think we can reach that goal,” she added.

E-fuel feedstocks are abundant — and expensive

The seed of Lydian’s approach was planted in 2020, when Branko Zugic, a chemical engineer, built a tiny prototype reactor using a $65,000 grant from the Massachusetts Clean Energy Center’s Catalyst Program and support from the Orca Sciences research group. Initially, Zugic said he was looking for ways to use nanomaterials to help decarbonize the chemical-manufacturing process.

In 2021, he launched Lydian and later met Rodden at a venture pitch competition at Harvard Business School, where Rodden was completing his MBA. Rodden soon came on board as CEO and Zugic stepped into the role of chief technology officer, and the co-founders turned their focus to curbing emissions from jet engines.

“Aviation is a really natural [sector] for us to attack first, because it’s very hard to abate, and its share of emissions is growing year over year,” Rodden said.

Globally, air travel accounts for about 2 percent of annual energy-related CO₂ emissions — the bulk of which come from burning petroleum-based jet fuel. In the United States alone, major airlines consumed over 17 billion gallons of fossil kerosene last year.

Electric planes and hydrogen-powered aircraft could eventually displace some of the industry’s jet-fuel demand. However, both of these carbon-free technologies are limited in how far they can fly and how much weight they can handle, meaning they’ll likely only serve commuter and regional routes. Experts say that, in order to deeply reduce emissions, the aviation industry will need to produce many billions of gallons of ​“sustainable aviation fuel,” or SAF, every year to meet current rates of demand.

In 2022, the U.S. produced 15.8 million gallons of SAF, representing just 0.1 percent of airlines’ total jet fuel demand. Almost all of that was made using animal fats, used cooking oil, agricultural waste and other sources of biomass — materials that are already scarce in Europe and are expected to become less available over time in the United States as biofuel production soars for trucks, ships and planes.

Power-to-liquids are a particularly alluring alternative because their main inputs are virtually unlimited in supply. 

Hydrogen is an abundant element that can be cleanly snatched out of water using electrolysis, and the production of ​“green” hydrogen will soon be heavily subsidized by the U.S. government. An excess of carbon dioxide is smothering the atmosphere, and several industrial processes, including steelmaking and chemical refining, are expected to keep emitting CO₂ in their waste streams for decades to come.

One aggressive scenario says that 57 percent of the world’s SAF production could come from power-to-liquid processes by 2050, as laid out in a 2021 report by ICF, a global advisory and technology services company. Some 41 percent would come from biological feedstocks and the rest from residual waste gases.

Yet if H₂ and CO₂ are plentiful, they’re not always easily accessible or affordable as feedstocks. 

Among the biggest hurdles to scaling power-to-liquids is the high energy intensity and huge expense associated with making ​“green” hydrogen from renewables, and with collecting CO₂ using nascent direct-air-capture plants. Procuring enough clean electricity to power the e-fuel refining operations could also become an obstacle as producers scale their tiny pilots into large industrial plants.

“If I was [Lydian], I’d be looking for a place with abundant renewable energy,” said Corinne Fuller, who manages the biofuels, products and energy research portfolio at the U.S. Department of Energy’s Pacific Northwest National Laboratory in Washington state.

Generally speaking, ​“you’d need about 2 joules of energy to make 1 joule of jet fuel from CO₂. That’s an upside-down kind of process,” she said. ​“And so to have this be ​‘sustainable’ aviation fuel, their biggest challenge is going to be getting renewable power, and a lot of it.”

A better catalyst is key 

For its part, Lydian claims it can reduce cost and supply constraints by developing a more efficient fuel-making process.

The core of Lydian’s technology is an electrothermal reactor that converts electricity into heat and can reach temperatures in excess of 1,000 degrees Celsius (1,832 degrees Fahrenheit). In the first step, hydrogen and CO₂ flow over a structured catalyst inside the super-hot reactor. The ensuing reaction produces a mixture of hydrogen and carbon monoxide known as ​“syngas.” In the second step, Lydian deploys a multi-stage reaction called the Fischer-Tropsch process to convert the gas into liquid, which is then refined into a jet fuel that’s chemically identical to one made from petroleum.

The key difference between Lydian and its competitors lies primarily in that first step. The startup claims its catalyst and proprietary materials can convert almost all of the incoming CO₂ into carbon monoxide, giving the system a ​“single-pass conversion” rate of above 80 percent — an unusually high rate, and one that hasn’t yet been independently verified. Making more CO in one go means the company can expend less energy and hydrogen overall to make the syngas.

“It enables us to get really high throughput in a really small footprint,” said Zugic.

While Lydian works to refine its core technology, it’s also eyeing a slew of federal incentives that could help improve its business case as the company seeks to scale up.

Under the Inflation Reduction Act, fuel producers can receive tax credits worth up to $1.75 per gallon of sustainable aviation fuel. The 2022 climate law includes nearly $300 million in research-and-development grants to initiatives that make, transport, blend or store jet-fuel alternatives. IRA’s Section 45V hydrogen production tax credit also offers $3 per kilogram of hydrogen produced, which could potentially lower the cost of a key input for power-to-liquid producers.

Lydian might eventually expand its customer base to include the roughly $560 billion global petrochemical industry, which produces plastics, fertilizers and countless other chemicals. For now, the startup is just beginning its journey from laboratory to real-world operations. Opening its first pilot plant next year will be a critical step to proving its technology works — and to gathering more of the data that researchers need to understand if and how power-to-liquids can ultimately deliver carbon-free flying to the world.

“It’s a very popular thing to be studying right now, but it’s really far out, in terms of making it real,” PNNL’s Fuller said. When it comes to betting on alternative jet fuels, she added, ​“Don’t put all your eggs in that [power-to-liquid] basket right now.”