The Week in Alt Fuels: E-diesel’s commercial dilemma

E-diesel might look good on paper as a green fuel for existing ships, but it doesn’t seem to be an easy commercial choice just yet.

IMAGE: Ineratec's e-fuel plant in Frankfurt. Ineratec

E-methanol, e-ammonia and e-methane tend to dominate conversations around e-fuels. But one lesser-discussed option could offer a far more straightforward path for decarbonising shipping’s existing fleet: e-diesel.

The fuel recently made headlines after German firm Ineratec launched its 2,500 mt/year e-fuel plant in Frankfurt. Part of its output is earmarked for shipping as synthetic marine diesel oil (MDO), or e-diesel.

Ineratec has already signed an offtake deal with MPC Container Ships (MPCC), which plans to run some of its vessels on the fuel.

A green dream fuel

Produced from biogenic carbon dioxide (CO2) and green hydrogen, e-diesel mimics the chemical properties of conventional marine diesel. It can be used in existing engines with no modifications, either on its own or blended with the conventional version.

That marks a sharp contrast to fuels such as e-methanol, e-ammonia or e-methane, which require dedicated onboard infrastructure. Purpose-built engines, specialised storage tanks and fuel handling systems all add to investment costs and technical complexity.

Ineratec notes that e-diesel will still emit CO2 during combustion. But since this CO2 is originally absorbed from the atmosphere by biomass, the fuel can achieve much lower, or even negative, well-to-tank emissions and be considered carbon-neutral across its lifecycle.

For a shipping industry made up of thousands of vessels that will not be replaced or retrofitted overnight, e-diesel theoretically offers an attractive proposition to reduce lifecycle emissions now without waiting on newbuilds or major retrofits.

Yet in practice, it still flies under the radar.

Barriers to scale

To scale e-fuels, we need more low-emission electricity infrastructure, access to renewable CO2 and greater economies of scale in electrolysers and production plants, according to Mærsk Mc-Kinney Møller Center for Zero Carbon Shipping.

Production complexity also plays a role. E-methanol and e-methane can be synthesised via relatively simple processes. E-diesel, by contrast, requires highly technical steps such as reverse water gas shift (RWGS) and Fischer-Tropsch synthesis, along with specialised catalysts.

And it is a very energy-intensive process.

E-diesel production incurs “high energy conversion losses, leading to an overall efficiency of less than 50%, resulting in substantially higher costs compared to using electricity directly,” according to a 2024 report by the Oxford Institute for Energy Studies (OIES).

This feeds into the second challenge: limited availability. While e-diesel has supply chain advantages, actual production capacity remains low. The OIES estimates that combined e-diesel capacity in the US and EU was only around 500 million gallons (1.60 million mt) in 2024. And shipping will need to compete with other industries, like aviation, for its share of this limited supply.

This ties into a third challenge. E-fuels like e-methanol and e-methane are already estimated to be at substantial price premiums over conventional fuels. For e-diesel, we can potentially add even greater production costs and scarcer availability on top, which would render it a tough sell.

E-diesel might tick many operational boxes for shipping’s green fuel ambitions. But for now, high production costs and limited supply likely keep it out of reach for a margin-sensitive industry. It might be a promising option, but it’s not an easy commercial choice yet.

In other news this week, port operator AD Ports Group has partnered with three other companies to explore whether to develop e-methanol bunkering and an export facility in the UAE’s Khalifa Port and Khalifa Economic Zones Abu Dhabi (KEZAD).

Shore power is getting more mainstream in Europe. The French Port of Toulon recently finished installing the country’s largest shore power facility for ships. The Port of Copenhagen has now launched Europe's largest shore power facility for cruise ships and ferries. And container liner Ocean Network Express (ONE) has committed to connect its ships to shore power when they call at Hamburg.

Shanghai’s Maritime Safety Administration (MSA) is working to set up an International Shipping Sustainable Fuel Certification System. The greenhouse gas (GHG) intensities of fuels used by ships will be determined by lifecycle assessments. The work is done with participation from Chinese oil company Sinopec, shipping major COSCO and the Shanghai Maritime University.

By Konica Bhatt

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