Decarbonization of aviation and maritime shipping requires low-carbon fuels—including biofuels and synthetic fuels—with higher energy density than hydrogen and electricity. However, clean hydrogen can complement electrification in other hard-to-abate sectors, such as steelmaking and chemicals.

Due to intense cross-sector competition for limited sustainable biomass feedstock, synthetic fuels such as ammonia, methanol and synthetic kerosene are expected to become the main sources of low-carbon fuels supply in the long term, enabling the decarbonization of aviation and shipping.

Synthetic fuels: key to decarbonize aviation and maritime shipping

Deloitte’s outlook explores the uptake of synthetic fuels as key enablers of decarbonizing aviation and maritime shipping, leveraging a data-driven and model-based quantitative analysis, using Deloitte’s global clean hydrogen and synthetic fuels supply and trade model HyPE (Hydrogen Pathway Explorer). In this outlook, aviation experiences stagnating CO₂ emissions until 2030 and around 75% of emission reductions by 2050, while shipping reaches almost net zero by 2050. These emission reductions are mainly due to efficiency measures and the adoption of low-carbon fuels, in particular synthetic fuels.

Synthetic fuels, which are almost absent from the current fuel mix, would have only a marginal role in 2030, providing 1.6 exajoules (out of the 26 EJ consumed) in Deloitte’s outlook. Nevertheless, they appear as the main source of energy by 2050, accounting for nearly 16 EJ of fuel consumption.

Such levels of synthetic fuel production require about 150 million tons of low-carbon hydrogen and 700 million tons of biogenic or air-captured CO₂. This represents a major industrial and technical challenge, as the low-carbon hydrogen sector is still in its infancy and CO₂ capture technologies have not yet been developed on a large scale.

Important technological, economic and financial challenges yet to overcome

Although synthetic fuels hold the key to decarbonizing aviation and shipping, they are still at an early stage of deployment with almost non-existent regulatory frameworks and significantly higher costs than fossil fuels.

As a first step, a globally harmonized regulatory framework is essential for their development in the inherently international aviation and shipping sectors. Reaching such levels of synthetic supply comes with significant investment needs; almost US$130 billion on average annually through 2050. While it remains a small fraction of the global fossil fuel investments (US$1.1 trillion in 2024), it is comparable with the overall spendings on aviation and maritime shipping fuels.

Without public support, however, synthetic fuels will remain two to ten times more expensive than conventional fossil fuels due to the limited availability of low-cost climate-neutral CO₂ feedstocks, inefficiencies in their production processes, and inter-sectoral competition for clean hydrogen.

The cost of producing low-carbon hydrogen and climate-neutral CO₂ is highly variable from one region to another, with significant uncertainties regarding the costs of the technologies and the processes for their production. Due to the limited potential for biogenic CO₂ supply (such as bioethanol and biomethane production processes’ by-products), the production of methanol and synthetic kerosene will require CO₂ from direct air capture, estimated to be significantly more expensive. Depending on the location and origin, switching from biogenic CO₂ to DAC-based CO₂ can increase the cost of methanol and synthetic kerosene by more than 40%.

The cost competitiveness of synthetic fuels is only one part of the broader technological challenges of decarbonizing aviation and shipping. While the decarbonization of the aviation sector does not require major changes to refueling infrastructure or aircraft engines, the decarbonization of maritime shipping follows a multi-fuel future composed of methanol and ammonia. This requires both the use of existing infrastructure during the transition and the development of new bunkering and engine technologies and refueling infrastructure. The technological challenges associated with decarbonization therefore go beyond only fuel supply.

Transitioning away from fossil fuels in aviation and shipping requires coordinated and ambitious efforts from all actors in their value chain: