by Synthetic fuel, also known as synfuel, is a fuel that is made from other energy sources, rather than directly from petroleum. Synthetic fuels are made through the Fischer-Tropsch process converting coal into a liquid fuel substitute. Synthetic fuels have several advantages over conventional fuels including domestic energy security and reducing dependence on foreign oil. Synthetic fuels can be produced from domestic fossil resources like coal or natural gas and renewable resources like biomass and solar energy. This provides energy independence and security of supply. Synthetic fuels also have very low sulphur content making them environment friendly.
The Global Synthetic Fuel Market is estimated to be valued at US$ 6.46 Mn in 2024 and is expected to exhibit a CAGR of 5.1% over the forecast period 2024 To 2031. Synthetic fuel provides a sustainable alternative to conventional petroleum fuels. Growing environmental concerns regarding conventional fuels and importance of energy security are major factors driving demand for synthetic fuels.
Key Takeaways
Key players operating in the Synthetic Fuel Market include Red Gold, The Morning Star Company, Del Monte Foods, and Conagra Brands. Red Gold is a leading producer of canned tomatoes in the United States with a wide distribution network. The Morning Star Company specializes in plant-based meat alternatives and holds a significant market share.
Growing health concerns regarding consumption of red meat along with environmental impact of animal agriculture is driving demand for plant-based meat substitutes. This is expected to boost growth of key players in the synthetic fuel market. There is also rising demand for synthetic jet fuel from the aviation industry to reduce carbon emissions. International aviation body IATA has set a target for synthetic fuels to comprise 10% of total jet fuel consumption by 2050.
North America and Europe currently dominate the global synthetic fuel market. However, the market is witnessing fastest growth in Asia Pacific due to rapid industrialization and urbanization. Government policies supporting alternative fuels and energy security are encouraging adoption of synthetic fuels across developing nations. Leading energy companies are actively involved in trials to commercialize synthetic fuel production technologies.
Market Key Trends
One of the key trends prevalent in the synthetic fuel market is shift towards green chemicals and bio-based feedstocks. Earlier, synthetic fuels were mainly produced from coal and natural gas. However, with increasing focus on sustainability, companies are investing in technologies to produce synthetic fuels from renewable resources like biomass, municipal solid waste, and agricultural waste. Researchers are also working on technologies to produce synthetic fuels using hydrogen split from water through solar electrolysis. This will help reduce the lifecycle carbon footprint of synthetic fuels.
Porter’s Analysis
Threat of new entrants: New companies find it difficult to enter this market due to high capital investment requirements and expertise required.
Bargaining power of buyers: Buyers have moderate bargaining power due to presence of established players and lack of substitutes.
Bargaining power of suppliers: Few raw material suppliers exist giving them moderate bargaining power over buyers.
Threat of new substitutes: New substitutes are being researched upon but barriers to entry and switching costs limit threats for now.
Competitive rivalry: Companies compete on production costs, product differentiation and customer service.
Geographical regions
North America accounts for the largest share in the synthetic fuel market owing to strict emission regulations and focus on reducing dependence on oil imports.
Asia Pacific is expected to grow at the fastest pace during the forecast period due to rapid industrialization and urbanization in China and India coupled with initiatives to reduce fossil fuel dependence.
Note:
1. Source: Coherent Market Insights, Public sources, Desk research.
2. We have leveraged AI tools to mine information and compile it.
