Long-term hydrocarbon trade options for the Maghreb region and Europe-renewable energy based synthetic fuels for a net zero emissions world

Abstract

Concerns about climate change and increasing emission costs are drivers for new sources of fuels for Europe. Sustainable hydrocarbons can be produced synthetically by power-to-gas (PtG) and power-to-liquids (PtL) facilities, for sectors with low direct electrification such as aviation, heavy transportation and chemical industry. Hybrid PV-Wind power plants can harvest high solar and wind potentials of the Maghreb region to power these systems. This paper calculates the cost of these fuels for Europe, and presents a respective business case for the Maghreb region. Calculations are hourly resolved to find the least cost combination of technologies in a 0.45 ° × 0.45 ° spatial resolution. Results show that, for 7% weighted average cost of capital (WACC), renewable energy based synthetic natural gas (RE-SNG) and RE-diesel can be produced in 2030 for a minimum cost of 76 €/MWhHHV (0.78 €/m3 SNG) and 88 €/MWhHHV (0.85 €/L), respectively. While in 2040, these production costs can drop to 66 €/MWhHHV (0.68 €/m3 SNG) and 83 €/MWhHHV (0.80 €/L), respectively. Considering access to a WACC of 5% in a de-risking project, oxygen sales and CO2 emissions costs, RE-diesel can reach fuel-parity at crude oil prices of 101 and 83 USD/bbl in 2030 and 2040, respectively. Thus, RE-synthetic fuels could be produced to answer fuel demand and remove environmental concerns in Europe at an affordable cost.