Japan E-Fuel Market Overview, 2029

Japan's e-fuels market is an emerging sector aimed at reducing greenhouse gas emissions and transitioning towards a carbon-neutral society. The concept of e-fuels, or synthetic fuels produced from carbon dioxide (CO2) and hydrogen, has gained traction as part of Japan's national energy strategy, which emphasizes the importance of innovative fuel solutions in combating climate change. In 2023, the Japanese government released its national e-fuel strategy, highlighting the role of carbon-neutral fuels in achieving decarbonization goals. Major Japanese companies, including ENEOS and Idemitsu Kosan, are actively investing in e-fuel technologies and establishing partnerships to enhance domestic production capabilities. In September 2023, Japan led international discussions with countries like Germany to create rules for e-fuel quality and to share technical knowledge essential for its widespread adoption. The Japanese government is also working on regulations that will require sustainable aviation fuel (SAF) producers to significantly reduce greenhouse gas emissions by 2030, which may include provisions for e-fuels as part of their strategies. These regulations aim to ensure that e-fuels meet specific quality standards before they can be commercially utilized. Japan's geographical location makes it prone to natural disasters such as earthquakes and typhoons, which can disrupt energy supply chains and infrastructure. The recent increase in extreme weather events has raised concerns about the resilience of energy systems, including those involved in the production and distribution of e-fuels. For instance, disruptions caused by natural disasters can hinder the supply of raw materials necessary for e-fuel production, such as renewable hydrogen sourced from electrolysis powered by renewable energy.

According to the research report, "Japan E-Fuel Market Outlook, 2029," published by Bonafide Research, the Japan E-Fuel market is anticipated to add to more than USD 1100 Million by 2024–29. The e-fuel market in Japan aims to address the growing concerns over carbon emissions and their impact on the environment. As the world shifts towards a more sustainable future, e-fuels provide a crucial solution to reducing the carbon footprint of the transportation sector and other energy-intensive industries. The drivers of the e-fuel market are numerous and varied. The increasing demand for cleaner fuels is a major driver, as governments around the world set increasingly strict regulations to curb carbon emissions. Japan sees the benefit of introducing e-fuel as one of the means for decarbonizing transport fuels in the country, using existing supply infrastructures, however, lowering the cost of hydrogen remains a key issue to date. The sale of electric vehicles in Japan has increased significantly during the forecast period. Hydrogen fuel cell based electric vehicles are another type of electric vehicles which use hydrogen as a fuel to generate electricity. As the sales of electric vehicles increase across Japan, the demand of hydrogen as a fuel for such vehicles is also expected to increase significantly thereby creating opportunity for the growth of the market over the forecast period. The growing adoption of electric vehicles and the need for backup energy sources to complement renewable energy grids is driving the growth of the e-fuel market. The e-fuel market is not without its challenges. The high cost of production and limited availability of renewable energy sources can act as restraints to market growth.

The Japan e-fuel market is highly growing, driven by urgent demands for sustainable energy solutions in the face of climate change pressures and the nation's commitment to reducing greenhouse gas emissions. Of all these e-fuels, the most dominant kind is e-kerosene, or synthetic aviation fuel, given the strong aviation sector in Japan and its pressure to achieve stringent emissions targets. The E-kerosene can be introduced into the present aircraft engines with minor modification, thus it is an appealing option to airlines planning to shift to more sustainable fuels. E-methanol is slowly becoming a more prominent segment of the emerging market. Its adaptability makes it applicable not only in shipping but as a feedstock chemical, making it even more appealing. As companies develop alternate energy sources, e-methanol's ability to reduce carbon emissions and promote multiple uses is well positioned for growth in the future. E-diesel and e-gasoline are part of the mix, but they have a tougher task ahead of them against the much more mature fossil fuels and other renewables. Advances in the production technologies and infrastructure may offer them better chances. In the category of "Other Hydrocarbons" lie all the synthetic fuels that might service niche markets but, at present, are a much smaller share.

Transportation is the biggest application for Japan's e-fuel market, primarily due to the fact that the transportation sector is a major contributor to carbon emissions and thus has an urgent need for cleaner alternatives. Strong infrastructural availability of public transport and increasing sales of electric as well as hydrogen fuel cell vehicles are driving demand for sustainable fuels in Japan. There is likely to be a crucial role played by e-fuels, particularly for the variants of e-kerosene and e-diesel, in this sector's efforts at decarbonization given how minimal of a disturbance these could pose on the extant infrastructures. Industries are an emerging and also burgeoning application area for e-fuels. More industries are eyeing carbon footprint reduction, and e-methanol and hydrogen are being put forward for chemical process applications as well as feedstocks. This pressure toward sustainability, with heavy regulatory emphasis on emission reduction, has accelerated this pattern. The industrial sector is coming to realize the potential e-fuels offer not just as a means of energy but also as a means to and address emissions issues. While power generation represents one of the most important application fields for e-fuel, given the current situation, much more so than in transportation, e-fuels can help stabilize the grid and add to energy diversification, so there is much more to go.

The lead technology in the Japan e-fuel market is hydrogen technology, particularly electrolysis. That is because it mainly uses renewable energy sources, including wind and solar, to break down water into hydrogen and oxygen for producing clean fuel that emits carbon by quite a margin. Japan has especially promoted hydrogen as an anchor of its energy policy, with visible efforts and financial injections: as a result, electrolysis is one of the most developed technologies among those for e-fuels. Although the technology of Fischer-Tropsch synthesis is old, issues of efficiency and feedstock supply usually make it wait in line when speaking about competition with other syngas-conversion-to-liquid-hydrocarbons processes. Yet, this process is still meaningful for syngas conversion to liquid hydrocarbons and is currently applied in transportation and industrial sectors to support the existing infrastructure. The process can make use of different carbon feedstocks, thus introducing flexibility in its usage. The RWGS is emerging as a new category, and the technology that converts carbon dioxide and hydrogen to carbon monoxide and water might be one of the ways of producing carbon-neutral synthetic fuels. Tying this into the main idea, because industries have now begun making efforts towards carbon neutrality, the captured CO2 can find use through a process like RWGS on its journey toward becoming more sustainable.



Considered in this report
• Historic year: 2018
• Base year: 2023
• Estimated year: 2024
• Forecast year: 2029

Aspects covered in this report
• E-fuels market Outlook with its value and forecast along with its segments
• Various drivers and challenges
• On-going trends and developments
• Top profiled companies
• Strategic recommendation

By End-use
• Aviation
• Marine
• Industrial
• Railway
• Automotive
• Others

By Application
• Transportation
• Industrial
• Power Generation
• Others

By Type of E-fuel
• E-kerosene (Synthetic Aviation Fuel)
• E-diesel
• E-gasoline
• E-methanol
• Other Hydrocarbons

By Technology
• Hydrogen technology (Electrolysis)
• Fischer-Tropsch
• Reverse-Water-Gas-Shift (RWGS)

The approach of the report:
This report consists of a combined approach of primary and secondary research. Initially, secondary research was used to get an understanding of the market and list the companies that are present in it. The secondary research consists of third-party sources such as press releases, annual reports of companies, and government-generated reports and databases. After gathering the data from secondary sources, primary research was conducted by conducting telephone interviews with the leading players about how the market is functioning and then conducting trade calls with dealers and distributors of the market. Post this; we have started making primary calls to consumers by equally segmenting them in regional aspects, tier aspects, age group, and gender. Once we have primary data with us, we can start verifying the details obtained from secondary sources.

Intended audience
This report can be useful to industry consultants, manufacturers, suppliers, associations, and organizations related to the E-fuels industry, government bodies, and other stakeholders to align their market-centric strategies. In addition to marketing and presentations, it will also increase competitive knowledge about the industry.
?