Enhancing the economic viability of e-fuels for aviation and shipping decarbonisation through market-based policy interventions
File(s)
Published version
Author(s)
Guinane, Eva
Gumuruh, Shifa
Tran, Thien
Bakkaloglu, Semra
Oluleye, Gbemi
Type
Journal Article
Abstract
This paper examines how market-based policy interventions can enhance the economic viability of e-fuels for aviation and shipping, two hard-to-decarbonise sectors. A novel optimisation-based market penetration assessment model is developed and applied to three case studies, one based on a global shipping scenario with e-Ammonia and e-Methanol, and two based on national scenarios: UK aviation with advanced SAF and e-SAF. The optimisation model quantifies the effectiveness of Contracts-for-Difference (CfD), Carbon Contracts-for-Difference (CCfD), and optimised policy mixes in reducing e-fuel costs. Findings reveal that a combined policy approach can close the price gap between e-fuels and conventional fossil fuels. For instance, a carbon tax of $33.6–$162.8 per tonne CO2, paired with subsidies of $32.3–$79.15 per MWh, could lower e-Ammonia costs by 24%, and e-Methanol by 29% in shipping. In the UK aviation sector, CfD schemes designed to stabilise advanced SAF prices have the potential to reduce government support costs by up to 30%, making advanced SAF more competitive. Moreover, implementing CCfDs linked to emissions reductions for e-SAF could achieve cost parity by 2040 when combined with carbon pricing projected at $150 per tonne CO2. This research supports a more informed and data-driven policy design, ensuring that economic barriers to synthetic fuel adoption are addressed through a balanced, market-driven approach.
Date Issued
2026-01-14
Date Acceptance
2025-10-13
Citation
Clean Technologies and Environmental Policy, 2026, 28 (2)
ISSN
1618-954X
Publisher
Springer Science and Business Media LLC
Journal / Book Title
Clean Technologies and Environmental Policy
Volume
28
Issue
2
Copyright Statement
© The Author(s) 2026 Open Access This article is licensed under a Creative Commons Attribution 4.0 International License, which permits use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons licence, and indicate if changes were made. The images or other third party material in this article are included in the article's Creative Commons licence, unless indicated otherwise in a credit line to the material. If material is not included in the article's Creative Commons licence and your intended use is not permitted by statutory regulation or exceeds the permitted use, you will need to obtain permission directly from the copyright holder. To view a copy of this licence, visit http://creativecommons.org/licenses/by/4.0/.
License URL
Publication Status
Published
Article Number
37
Date Publish Online
2026-01-14