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The world’s leading oil company is increasing its investment in synthetic fuels made from renewable energy. This is a strategic move based on the belief that traditional combustion engines will continue to play a vital role in transportation, even as electric vehicles become more popular.
Ahmad Al-Khowaiter, a top executive at Saudi Aramco, mentioned that the worldwide push to electrify road transport “does not make sense” from a climate standpoint, particularly for nations like China, where over half of electricity comes from coal.
“There’s a lot of enthusiasm about how quickly electrification will occur globally,” said Al-Khowaiter, Saudi Aramco’s executive vice-president for technology and innovation, during an interview. “While it has its place, there will always be a necessity for alternatives like internal combustion engines.”
Saudi Aramco’s commitment to internal combustion engines is evident as it holds a 10% stake in Horse Powertrain, a collaboration with Geely and Renault aimed at creating a new engine manufacturer. Additionally, a partnership announced with Chinese automaker BYD will allow Saudi Aramco to share engine technology for use in hybrid vehicles.
The shared goal of these ventures is to minimize emissions from the existing vehicle fleet and extend the lifespan of internal combustion engines.
E-fuels, generated mostly from renewable energy, carbon dioxide, and water, are considered a pathway to decarbonizing transport, potentially closing the emissions gap between electric vehicles and traditional engines.
Manufacturers like Stellantis and Toyota are experimenting with e-fuels to minimize emissions, although executives in the auto industry are cautious to predict when these fuels may become economically viable for widespread production.
Stellantis stated its tests showed that engines released before 2023 could effectively use e-fuels, and all engines introduced after that date are already equipped to utilize these alternative fuels.
The owner of Peugeot and Fiat mentioned that e-fuels could be “a competitive alternative to fossil fuels, helping to decarbonize the existing car fleet — provided financial and regulatory conditions are favorable.”
A significant challenge is that e-fuels are currently very expensive, costing around $14 a gallon — four times the price of gasoline in the US — according to Rob West, an energy analyst at Thunder Said Energy.
Saudi Aramco is currently developing two e-fuel projects. One is located in Spain, aiming to produce 50 barrels a day of e-kerosene for jet engines, while the other in Saudi Arabia targets 35 barrels a day of e-gasoline. However, these figures are minimal compared to the company’s overall refining capability of over 4 million barrels a day.
Al-Khowaiter hopes these facilities will become operational by 2027, noting that Saudi Aramco has invested “several hundred million dollars” into these projects and plans to invest further as they grow.
“The goal is to have a fuel supply available for car manufacturers to test, as well as for Formula 1 and various types of motor racing,” he explained.
He also noted that e-kerosene production would assist regulators in understanding and certifying this new aviation fuel. The EU mandates that airlines begin utilizing e-kerosene by the end of the decade, aiming for it to account for 35% of total fuel use by 2050.
While it may take considerable time for e-fuel prices to decrease, Saudi Aramco believes these fuels will enable hybrid cars to almost match the lifetime emissions of electric vehicles.
The automotive industry is optimistic about a longer future for hybrids, particularly after the EU relaxed emissions standards for gasoline vehicles, and following US President Donald Trump’s proposals to reduce consumer incentives for electric vehicles. In the UK, the government has weakened its EV sales goals and will permit conventional and plug-in hybrids to continue selling until 2035.
Saudi Aramco is observing keen interest from carmakers in the EU and China regarding its e-fuels project and believes that any demand for biofuels could be “easily substituted” by e-fuels by 2050. “We are confident that e-fuels will be price competitive with second and third-generation biofuels,” he stated.
