E-Fueling Flight: How to Increase In-State Production of Electrofuels for Aviation in California and Beyond

Aviation accounts for roughly 3% of the world’s carbon emissions and is one of the most carbon-intensive activities, with emissions growing as demand increases. Currently, no zero-emission technology exists at a commercially and technologically feasible scale to power all aviation trips and meet long-term demand. As a result, advocates and policymakers are looking to carbon-neutral electrofuels (or “e-fuels”) as an option to decarbonize long-distance flights and as an alternative to fossil jet fuel.

E-fuels consist of synthetic petroleum chemically created by combining zero-emission hydrogen produced from carbon-free power (like wind and solar energy) and captured carbon dioxide. This fuel burns like traditional petroleum in existing gas turbine engines, therefore requiring no major modifications to planes or for much of the existing fueling infrastructure. It also adds zero net carbon to the atmosphere and does not contain aromatics and sulfur found in fossil fuels, leading to less air pollution like soot and particulate matter.

But significant economic and policy barriers are preventing large-scale investment in and deployment of e-fuel production technology. As a result, without more volume and scale, the price of this fuel will not become cost-competitive with fossil jet fuel. To address these challenges, CLEE convened experts and stakeholders and researched options to help identify the most pressing barriers that stand in the way of the development of a robust in-state e-fuel industry.

The resulting report, E-Fueling Flight: How to Increase In-State Production of Electrofuels for Aviation in California and Beyond, includes the following recommendations:

• The legislature could create a state-level production tax credit for e-fuels
• The legislature, Infrastructure Bank and California Air Resources Board could develop loan guarantee programs for e-fuels projects to leverage the state’s cap-and-invest proceeds
• The legislature could support e-fuel offtake agreements through a guaranteed revenue certainty mechanism such as a contract-for-difference program 
• The legislature and Governor’s Office could develop a long-term aviation decarbonization industrial plan and designate “e-fuel zones” for production with incentives for facilities that locate within them