ZCA tech explainer series: what are alternative fuels?

Next in our series of tech explainer blogs, we ask the question, ‘What are alternative fuels?’ and outline key examples and their use cases
May 17, 2023

Source: Microsoft

What are alternative fuels?

Alternative fuels (in this study focussed on-road vehicles and logistics) are widely classed as being fuels which act as alternatives to more traditional petroleum products[i]:

“Alternative fuels are those fuels or power sources which serve, at least partly, as a substitute for fossil oil sources in the transport sector. According to the European Commission’s 2050 Long-term Climate Strategy, there is no single fuel solution for the future of low-emission mobility - all main alternative fuel options are likely to be required, but to a different extent in each of the transport mode.”[ii]

When looking at the transport sector specifically, a recent UK Hydrogen Council report found that over 95% of the energy used in road transport is fossil fuel based. Further, when looking at a switch to electric vehicles, they argue that in many regions, energy demand will be hard to cover with locally available renewable electricity: “Thus, we expect that zero-emission vehicles (ZEVs) will be powered by a mix of batteries (using electricity) and fuel cells (using hydrogen). BEVs are rapidly becoming more common and are being used in more and more situations. They are the best solution for multiple use cases, especially in passenger transportation.”[iii]

Perhaps the most comprehensive guidance as to the application of these alternative fuels, at least at government level, is that which has been produced by the EU. Here they outline and classify alternative fuels based on their potential use cases during the green transition. The current AFI directive recognises the following types of alternative fuels:

  • Electricity,
  • Hydrogen,
  • Biofuels,
  • Synthetic and paraffinic fuels,
  • Natural gas, including biomethane, in gaseous form (compressed natural gas or ‘CNG’),
  • Liquefied Natural gas (liquefied natural gas or ‘LNG’),
  • Liquefied petroleum gas (‘LPG’).

The EU also groups the above fuels into three distinct categories- alternative fossil fuels for a transitional phase (CNG, LNG, LPG, and synthetic and paraffinic fuels produced from non-renewable energy), alternative fuels for zero-emission vehicles (electricity, hydrogen, and ammonia), and renewable fuels (biofuels and biomass fuels). In China, the focus has very much turned to electric vehicles, where PWC reported that last year two-thirds of global sales of battery electric vehicles (BEV) stemmed from the country; in fact, BEV sales in China soared by almost 85 per cent, according to the company's analysis of new registration figures[iv].

We discuss the key alternative fuels currently being employed in more detail below.


Electricity as a fuel source for both private and commercial vehicles is becoming increasingly common. Electric vehicles (EVs) can be powered using electricity from the grid, with governments and suppliers increasingly aiming to source this from renewable methods such as wind or solar energy. Plug-in Electric Vehicles (PEVs) are the common terminology for plug-in hybrid electric vehicles (PHEV), and 100 % electric vehicles are termed Battery Electric Vehicles (BEVs). Increasingly favoured and encouraged is the charging of vehicles during times of low demand, such as overnight, to reduce pressure on the electricity grid and incentivise the use of electric vehicles by charging when energy prices are typically lower. There is also the draw of Vehicle to Grid (V2G), where electric vehicles can export their stored energy back to the grid, thus effectively acting as a network of batteries to store surplus energy which can then be used at peak times: “Connecting millions of EVs and coordinating their charging and discharging would minimise the costs of EV charging while allowing the grid to balance the integration of high levels of variable renewable energy sources”[v].

Whilst BEVs can be classed as zero emissions, as they do not produce emissions and can also be charged in some cases by using 100% renewable energy, PHEVs combine more traditional and polluting combustion engines with the capability to utilise battery power to drive an electric motor.

According to RAC estimates, there are roughly 712,000 zero-emission Battery Electric Vehicles on the UK's roads, along with over 400,000 plug-in hybrids[vi]. Yet, to meet current UK decarbonisation targets, it’s projected that as many as 37% of cars and vans will need to be battery electric vehicles (BEVs) by 2030.[vii] Interestingly, whilst in the EU, the automotive market has been on the decline, with sales falling year on year, EVs have been bucking the trend with 413,500 registrations in December 2022 alone, up 46% on the month prior[viii].


Touted as a renewable and clean fuel source, most hydrogen produced at present is, in fact, ‘grey hydrogen’ produced from fossil gas. An alternative to this process is so-called ‘blue hydrogen’, which uses carbon capture to reduce emissions, but this method reportedly fails to capture between 5% and 15% of the CO2. The most promising method is ‘green hydrogen’, which is produced by splitting water using electricity from renewables with minimal emissions.

Source: The Guardian[ix]

There are several proposed use cases for hydrogen, with these extending across many industries and sectors, ranging from public transport services to shipping and delivery.

Potential Hydrogen Use Cases:

Source: UK HFCA

The Hydrogen Council argue that Hydrogen has some key advantages that make it more suitable for certain scenarios when compared with electric vehicles. For example, in areas that see constraints on renewable energy, and thus a need for imports, hydrogen can be kept in molecular form until needed. Furthermore, “hydrogen is well positioned for wherever large amounts of energy are needed for the vehicle performance due to the higher energy storage density of fuel cell systems. This is why we expect adoption both in passenger vehicles and, at a large scale, in commercial vehicles.”[x]


Biofuels are those made from plant or animal products, and the two most common forms of such fuel in use today are ethanol and biodiesel. Ethanol (CH3CH2OH) is a renewable fuel which can be created from plant materials, collectively known as ‘biomass’.[xi] Ethanol, itself an alcohol, is then used as a blending agent with gasoline; thus, it is not a zero-emission fuel, but rather a less polluting alternative. According to the US Department of Energy, “Most ethanol is made from plant starches and sugars—particularly corn starch in the United States—but scientists are continuing to develop technologies that would allow for the use of cellulose and hemicellulose, the non-edible fibrous material that constitutes the bulk of plant matter.”[xii]

Biodiesel, similar to ethanol, is a liquid fuel produced from renewable sources such as new and used vegetable oils and animal fats. It is a cleaner-burning replacement for petroleum-based diesel fuel- “Biodiesel is nontoxic and biodegradable and is produced by combining alcohol with vegetable oil, animal fat, or recycled cooking grease.”[xiii]

As with traditional petroleum-based diesel, biodiesel is used with a combustion engine, and whilst it can be found in a blend termed ‘B100’ (pure biodiesel), more commonly, it is blended with diesel, usually as ‘B20’ (a blend containing 20% biodiesel and 80% petroleum diesel). However, there are concerns that biodiesel emits other pollutants such as nitric oxide: “Compared to conventional diesel fuel, use of biodiesel is generally found to reduce emissions of hydrocarbons (HC), carbon monoxide (CO), and particulate matter (PM); but to increase oxides of nitrogen (NOx) emissions.”[xiv]

Synthetic and paraffinic fuels

Synthetic, or so termed ‘E-fuels’, such as e-kerosene, e-methane, or e-methanol, are created by combining hydrogen produced from renewable or CO2-free power with CO2 emissions that have been absorbed. When used in an engine, the fuels emit CO2 into the atmosphere. Yet, the claim is that these emissions will balance out the amount of CO2 removed from the environment to make the fuel, making the fuel overall CO2-neutral. Recent research by the US Department of Energy, however, found that reductions are more like 57-65%[xv]

E-fuel production is not yet scaled up. The first commercial plant in the world, financed by Porsche, debuted in Chile in 2021 with a goal of producing 550 million litres annually. Other plants include Norsk e-Fuel in Norway, which will start producing in 2024 with an emphasis on sustainable aviation fuel[xvi]. Most recently, E-fuels have become the centre of a debate over stricter emissions regulations in the EU.

Natural gas ‘CNG’

Compressed natural gas is produced by compressing the fossil fuel to less than 1% of its volume at standard atmospheric pressure; it is claimed that the use of CNG can reduce emissions by up to 23% when compared with more traditional diesel[xvii]. According to Gas Networks Ireland, CNG is becoming an increasingly prevalent source of transport fuel, with more than 28 million gas-powered vehicles worldwide and almost two million in Europe[xviii]. Yet there is concern that a key market, India, is stagnating as gas prices have risen[xix]. As with LNG below, it is particularly well-suited to deliver the high performance and distance requirements of larger vehicles such as HGVs and buses[xx].

CNG can be seen as a stepping stone towards another alternative fuel which would utilise the same infrastructure- renewable natural gas (RNG) in the US, or more commonly, ‘biomethane’. This is a pipeline-quality vehicle fuel produced by purifying biogas, itself generated through the anaerobic digestion of organic materials. This includes matter such as waste from landfills and livestock or through thermochemical processes, such as gasification. RNG qualifies as an advanced biofuel under the Renewable Fuel Standard.[xxi][xxii]

Liquefied Natural gas ‘LNG’

LNG is natural gas in its liquid form. LNG is produced by purifying natural gas and cooling it to -162 oC (-260°F) to turn it into a liquid. The process, known as liquefaction, sees natural gas cooled below its boiling point, removing most of the extraneous compounds found in the fuel. The remaining natural gas is primarily methane with small amounts of other hydrocarbons[xxiii]. LNG's relatively high production cost and the requirement to store it in expensive cryogenic tanks to keep it in its liquid state means that the fuel's use in commercial applications has been limited. Applications for LNG are mainly in haulage, as the greater density of the liquid (when compared with gas) sees more energy stored by volume, thus making it more efficient for long journeys completed by heavy-duty vehicles. The shipping sector is also exploring LNG. However UCL Energy Institute researchers argue that this industry could end up costly. “If policies that incentivise shipping to decarbonise in line with the Paris Agreement were in place by the end of the decade, the LNG-capable fleet would compete against zero emissions shipping”, “Whilst policy and competition would affect all ships built to use fossil fuels, the analysis suggests that more expensive LNG-capable assets (also known as LNG dual-fuel) would see reductions in their value to match the value of similar aged but lower cost conventional vessels designed to use fuel oil.”[xxiv]

Liquefied petroleum gas ‘LPG’

LPG boils at a low temperature and, to avoid it evaporating, is typically stored in pressurised steel vessels such as gas bottles or bulk LPG tanks. At present, there are around 21 million vehicles worldwide running on LPG, with over 10 million in Europe and more than 100,000 in the UK[xxv]. South Korea has traditionally been a strong market for LPG. However, data suggests this is declining[xxvi].

Like CNG, there is a more environmentally friendly variant which uses the same infrastructure and could have implications for not only transport but the heating of homes. BioLPG, as it is known, is often a co-product of sustainable aviation fuel production or gasification processes. Feedstocks for bioLPG include cooking oil, animal fat, vegetable oil, waste, plant dry matter, sugar and starch[xxvii].


[i] Alternative Fuels (fueleconomy.gov)

[ii] Alternative fuels | European Alternative Fuels Observatory (europa.eu)

[iii] Transport-Study-Full-Report-Hydrogen-Council-1.pdf (hydrogencouncil.com)

[iv] Two-thirds of global BEV sales in 2022 registered in China - Chinadaily.com.cn

[v] V2GB-Public-Report.pdf (esc-production-2021.s3.eu-west-2.amazonaws.com)

[vi] The road to electric - the UK's adoption of electric cars in charts and data | RAC Drive

[vii] https://www.theccc.org.uk/wp-content/uploads/2020/12/Sector-summary-Surface-transport.pdf

[viii] 25% BEV Share In Europe! | European Alternative Fuels Observatory (europa.eu)

[ix] Green hydrogen could counter energy crisis, says British firm | Green economy | The Guardian

[x] Ibid

[xi] Biofuel Basics | Department of Energy

[xii] Ibid

[xiii] Ibid

[xiv] Review of the effects of biodiesel on NOx emissions - ScienceDirect

[xv] Life Cycle Analysis of Electrofuels: Fischer–Tropsch Fuel Production from Hydrogen and Corn Ethanol Byproduct CO2 (Journal Article) | OSTI.GOV

[xvi] New EU legislation on CO2 emitting vehicles is agreed with the German government effectively arguing the case for E-fuels. Critics say the technology is a “diversion away from the proven case for electric vehicles. | Zero Carbon Academy

[xvii] Compressed Natural Gas (CNG) (gasnetworks.ie)

[xviii] Compressed Natural Gas (CNG) (gasnetworks.ie)

[xix] ICRA Research

[xx] The role of natural gas and biomethane in the transport sector (transportenvironment.org)

[xxi] Alternative Fuels Data Center: Natural Gas Fuel Basics (energy.gov)

[xxii] Biomethane (europa.eu)

[xxiii] Alternative Fuels Data Center: Natural Gas Fuel Basics (energy.gov)

[xxiv] The shipping sector’s costly affair with LNG as a marine fuel | UCL Energy Institute - UCL – University College London

[xxv] What Is Lpg — Liquid Gas UK: The trade association for the LPG and biopropane industry in the UK

[xxvi] Korea Registered Motor Vehicle: LPG: Passenger | Economic Indicators | CEIC (ceicdata.com)

[xxvii] Ibid

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Lauren Foye
Head of Reports

Lauren has extensive experience as an analyst and market researcher in the digital technology and travel sectors. She has a background in researching and forecasting emerging technologies, with a particular passion for the Videogames and eSports industries. She joined the Critical Information Group as Head of Reports and Market Research at GRC World Forums, and leads the content and data research team at the Zero Carbon Academy. “What drew me to the academy is the opportunity to add content and commentary around sustainability across a wealth of industries and sectors.”

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