You spent years at CATF on the policy side, helping secure over $10 billion for carbon capture. Now you're inside a developer, trying to build. What does the advocacy world still get wrong about deployment?
I changed my position from a think tank and NGO perspective to the private sector because I wanted to understand what it really takes to bring technologies to scale and deploy next-gen climate tech and clean energy tech. The most important piece is durability. How can we create policy and investment environments that cover the full project life cycles? It takes four to five years to develop a project at scale, to reach final investment decisions, to move through commercial transactions, and then another three years to build the project before you're operating.
Infrastructure timelines are very different from policy timelines, and as soon as you have a policy or political swing within those timeframes, it introduces uncertainty on top of what we're already seeing in the macroeconomic and geopolitical environment.
We're also in a time where we need as much energy as possible. There are 600 million people in the world without access to any energy, prices are high, and we should expect more economic and population growth. We need more energy sources, and if they can be cleaner, that's great, but we should cherish every marginal emissions reduction over having either bad or good sources of energy. In the U.S., next-gen clean energy is not really a story about emissions reductions. It's a story about innovation.
E-fuels are a clear fit for aviation, shipping, and heavy road transport, where batteries hit physical limits. Where do you draw the line on what e-fuels are for and what they aren't?
Let me back up. E-fuels are synthetic hydrocarbons, chemically equivalent to hydrocarbons, produced from clean hydrogen mixed with captured CO2. We can create e-gasoline, e-sustainable aviation fuels, e-jet fuel, or e-methanol that can be dropped into the existing infrastructure we have today.
There's a lot of focus on electricity in the clean energy sector, but 60 to 70 percent of primary energy demand is provided by fuels, oil and gas. So how can we bring additional supply on while complementing these sources and remaining clear-eyed about what the energy system looks like and where we get our energy from today?
You've evolved from your plant in Chile to a $6 billion facility in Texas. That's a category change, not a scale-up. Working with Bechtel and Topsoe, what has the engineering work actually unlocked?
For us, what's really important is to reduce the cost of these solutions and find ways to scale them. We're in a high energy price environment, and to be competitive we have to bring costs down. That happens mostly through learning by doing. You more efficiently design the plants and understand the components. For an e-fuel plant you have to think about the clean electricity going in, the methanol plant, the hydrogen plant. How can you modularize and standardize those to enable not just a single build but repeat builds while reducing cost?
Since HIF started in this business, costs have come down strongly across the value chain. We've seen strong cost reductions on the hydrogen electrolyzer side and modularization on the methanol plant side. Location is also really important, and it goes back to energy security. Not all places on earth may have access to oil and gas, but some have excellent clean electricity potential from wind and solar that they can't otherwise use because they're far from where the electricity is needed. You can bring in e-fuel production in those locations to create an exportable or consumable product in liquid form.
Can we get some objective parameters on how strongly costs have come down and to what extent that gets us to real competitiveness?
What needs to happen next is deployment at scale, because as you're building these plants you really understand how much cost can be reduced through learning by doing. When you think about the cost of solar panels and how they've come down, only a small part was through R&D in the lab. Most of it was learning by doing and repeat builds. You see that in all sectors.
What we also don't want to underestimate is that these are industrial facilities. There are still hard costs, steel and other materials, that have a constant component. Policy is very important in the meantime, until the economics become really competitive.
You're German-American, working on the Washington-Brussels axis. Do you see converging or diverging policy tendencies on e-fuels?
Just as HIF is in the business of building first-of-a-kind clean industrial facilities, policymakers have been in the business of making first-of-a-kind e-fuels policies, especially since 2020. The policy framework has emerged quite sensibly. In the U.S. you have the tax credits for hydrogen production. In Europe you have the REDIII Renewable Energy Directive and the framework for how e-fuels count within it. What's creating a lot of confusion is the lack of aligned policy and the lack of policy clarity.
Take Europe. It's the biggest energy importer in the world, so I would expect it to need to import some of the clean fuels it wants to consume. But it's not clear to producer countries how they qualify in the framework, which was designed mainly for production inside the EU. Policymakers are waking up to the need to clarify policy, make it more durable, and introduce grandfathering so projects can move forward assuming the current policy framing applies over the asset's life. You can't upgrade an industrial facility just because Brussels changed its mind. The road ahead is about aligning policy so the end vision is a globally liquid market for e-fuels, just as exists for other fuels today.
Given Europe's energy sovereignty problem and the U.S. shale advantage, do you see Europe as the natural market for e-fuels?
Right now it's actually the biggest market for e-fuels because there's policy clarity and clear intention. There's also a focus on domestically produced e-fuels, but soon there will be a focus on what the import strategy looks like.
Against this backdrop of energy security, South Korea and Japan are also focused on alternative energy sources they can import. More and more governments are looking at blending domestically produced e-fuels into their gasoline or fuel mix to reduce dependency on others and have a more diverse mix.
What advantages does the U.S. still possess that will remain as you consider future production sites in the midterm?
Texas in particular is preferable because of the speed of permitting and approvals for energy production, and the long history of the state in energy production. The focus on exports has come down and the U.S. can produce a lot of energy and deliver it to others. We've already seen this playbook in the energy crisis after the Russian invasion of Ukraine.
There's a big opportunity, but at HIF we focus on a range of solutions and fuels. There are other opportunities in the United States as well, including fuels derived from renewable natural gas, that tap into the abundance of energy the U.S. has.
There are more than 200 methanol-ready ships on order. Aviation is louder politically but slower in practice. How do you sequence the demand, and does shipping end up funding the aviation story?
HIF produces methanol in the first instance. Once we have that e-methanol, it can be used in shipping or further synthesized into sustainable aviation fuel or gasoline. In Haru Oni we produce gasoline that is exported to Europe for use in the Porsche Mobil 1 Supercup and Formula 1, and used locally in shipping for Antarctic tourism out of Patagonia.
It will come down to how REDIII is implemented in Europe, whether through road transport or aviation quotas. Right now we're thinking the next phase will export methanol to the end market, where it can be synthesized further at refineries. Shipping has been a leader, with long-term offtake from major shippers, and the IMO is considering a global framework, though that will take time. I can also see aviation pick up from emerging policy frameworks in Europe and Asia. We remain flexible as a producer. We've built strategic value chains with Porsche on gasoline, with Japanese companies on shipping, and we're working on the same for aviation. I wouldn't say one sector is funding the other.
Looking to 2035 or 2040, where do e-fuels stop being a niche and become a structural part of the energy mix?
The most important part is bringing cost down and deploying the solution, then thinking through where they can be used. It's most helpful for fuels produced this way to be used locally. Which governments are looking at their energy security strategy and recognizing they have an abundance of clean energy that can be used to produce fuels? In those places you'll see more and more. Europe will emerge as a big importer. China has recently announced a big focus on methanol production in the near to medium term, as part of its energy security strategy but also as an export market, having already locked in some biomethanol long-term offtake with shipping companies.
E-fuels will emerge locally but converge globally alongside other energy solutions. When you say 2035 or 2040, in infrastructure timelines that is not far away. If we want scale-up by 2035, we have to see a lot of offtake in the near term. It often feels far away, but in infrastructure years it isn't, and more complicated technologies like nuclear are even further out.
