Fischer Tropsch Fuels: How Today's Innovations Can Help Tomorrow's Markets

by: Dhierin Bechai

Ever since mankind started using fuels it has come across the problems of pollution and exhaustion of resources. Scientists have always tried to innovate and come up with fuels with higher efficiency, but since companies and people became aware of the increased global warming innovation on this field has been boosted (more funds came available).

There have been innovations on the field of:

  1. Solar Energy, since 1975 efficiency of solar cells have been doubled.
  2. Wind energy, academic research is being conducted at the moment investigating a method using kites to generate electricity.
  3. Optimization of existing fuels, reducing the polluting particles in the fuel.
  4. Bio- and synthetic fuels (Fischer Tropsch fuels), which looks most promising for aviation and automotive industry.

In this article I want to focus on the latter, as I think this will be influencing the automotive and airline industry the most.

To address the energy problem it is best to look at what countries pollute the most and what sectors are responsible for that pollution.

As can be seen in the graphs above China is the biggest polluter (pie chart shows CO2 emission from combustion of fuels), part of this high percentage can be addressed to China still using coals, increased wealth, China being a very big industrial country and poor government regulations regarding pollution.

As can be seen from the EU-27 data, the total emission of CO2 relative to 1990 has decreased, but this certainly isn't a worldwide trend. Another thing that can be observed is that the emissions from the transportation sector keep growing. Between 1990 and 2009 emission has doubled for international aviation (EU-27 share).

As can be seen emission from cars has been down considerably compared to 2000. Given that in the coming decades it will be possible for even more people to buy a car, it is important to keep reducing the emissions! Also given the fact that 74% of the emissions of CO2 still comes from road transport it is worth investigating and innovating the fuels for road transport.

It is estimated that for light diesel vehicles the reduction in emission of particulates, hydrocarbons and carbon monoxide will be 40-60% and 5-30% for heavy duty vehicles if synthetic diesel (GTL diesel) is used. This clearly shows that emissions from road transport can still go down considerably. It has to be noted though that GTL Diesel does not seem to be the best alternative fuel for road transport.

The other big polluter in the transport sector is the civil aviation, accounting for 12% of the CO2 emission in the transport sector and 2% of the total human emission of CO2. When the economy recovers, chances are big that the aviation market will grow boosted by higher demand from emerging markets.

As I already mentioned I want to make an analysis on what difference it will make if synthetic fuels (FT Fuels) are used instead of the traditional fuels.

Synthetic fuels can be formed by the applying the Fischer-Tropsch process, converting hydrogen and carbon dioxide into alkenes. Note that the product that comes from the FT-process is not a fuel that emits 0 carbon dioxide upon combustion.


Jet-A1 (traditional kerosene)

Synthetic kerosene (SPK)


Specific energy [MJ/kg]




CO2 emission [kg/L]




Density [kg/L]




So before we start the analysis, what are the benefits of FT fuels?

  1. The synthetic fuel can be made out of a lot of resources like natural gas, biomass and coals as long as the resources contain CO, meaning that oil is not necessarily needed.
  2. Less pollution
  3. More efficient combustion
  4. Less pollution on and around airports
  5. Lower mass density (Not taken into account in the analysis).

I will only do a first cycle analysis for replacement of Jet A1 by SPK fuel for airplanes. The analysis could go on forever as it is a snowball effect (the effect goes on until either a geometrical constraint or a safety constraint is met), but I will only make a quantitative analysis of the fuel reduction. After that I will give a summary (qualitative analysis) of the effects that the fuel reduction has on other parts of the design (in this case for the airplane).

Analysis Boeing 737-800

For this example I will take the required amount of energy as a constant and start preliminary calculations from there. By doing this, possible weight reductions are best visible (the higher specific energy can also be used to extend the range or increase the payload). Furthermore I will assume that mass density and costs are similar to Jet A1 fuel (as no exact information can be found).

As most Boeing 737-800s do not perform flights that are as long as the entire range, an estimate will be used:

Now for a flight with an average flight time of 3 hours the following calculations can be made:

Changing fuel, while keeping total amount of energy constant:

Using the numerical values from the table, it can be calculated that 7760 kg Jet A1 is needed, to store the same amount of energy in SPK only 7575.6 kg is needed. Meaning a weight reduction of 184 kg that is a direct effect of changing fuel type.

Do take into account that in aviation and automotive industry every kilogram counts!

Now assuming that the Boeing 737-800 operates flights at an altitude of 11 km and all flights have the average length of 2469 km (3 hours flying on cruise speed), the following basic 'follow-up' calculations can be made:

If 184 kg does not need to fly all the way to its destination (horizontal displacement and vertical displacement) the saved energy equals 4.52 GJ.

This means that the reduction of 184 kg worth of fuel saves up 4.52 GJ per flight. So the fuel savings due to the fuel weight reduction of 184 kg equals 101.5 kg.

The total reduction due to the change in fuel and the first effect it has (less fuel required) is 285.5 kg.

Keeping costs and density constant:

If 285.5 kg less fuel is needed and assuming that density and price for SPK are the same as Jet A1, this means that 355 L of SPK is saved. Assuming that the price of SPK and Jet A1 is similar (2.78 $ / gallon. 0.73 $/L), the fuel cost reduction is 295.15 dollar per flight or $1.56 per seat per flight. Over the entire life cycle of the airplane this adds up: 19.4 million dollars. Taking into account that the list price of a Boeing 737-800 is 89.1 million dollars, one can conclude that if a company uses SPK on 4-5 of their Boeing 737-800s it can buy a 737-800 with the money that is saved during the entire lifecycle. For a company like Ryanair (NASDAQ:RYAAY) (296 Boeing 737-800s), this could save the airline money worth of 60 Boeing 737-800s.

One has to take into account that the price of GTL (a resource that can be used to produce SPK) is $0.63/L, compared to oil which at this moment costs about $0.89/L. This means that the price of synthetic fuel can be significantly lower than the traditional kerosene.

Using a set of very basic calculations, the following conclusions can be drawn:

1. Direct effect of the difference in energy density is a fuel weight reduction of 184 kg per flight (-0.9%), while maintaining the same amount of energy stored in the fuel.

2. The weight reduction itself results in fuel weight reduction of 101.5 kg. The total weight reduction is almost 285.5 kg, which is about 1.36% of the original fuel weight. Calculations for this step are more complex and cause a snowball effect.

3. Under the assumption of lower fuel prices for SPK, the price per Joule is lower as well!

Now from here the snowball effect starts, which basically means, smaller wings, engines, gear struts and a lighter structure, which again results in even more fuel savings.

For cars and trucks, using biodiesel, similar results can be expected (but in their own scale, smaller fuel savings, but significant nevertheless), but it is hard to perform quantitative analysis due to the absence of key numbers like specific energy, CO2 emission and density. It has to be noted that GTL diesel seems to be increasing the emissions by 9%, while biodiesel seems to be decreasing the greenhouse gas emissions by 68%. This shows that not every synthetic fuel reduces emissions.

Benefits for the user of cars:

At this moment biodiesel is more expensive than traditional diesel, meaning that there is no real benefit for car owners. The only benefit owners have is lower environment taxes if they have a car with a green energy label and when prices for biodiesel will drop.

Benefits for transportation companies (like UPS, FDX, DAL, UAL):

One of the biggest benefits for transportation companies is that the fuel costs will be lower and less volatile:

As can be seen due to economic and political factors the oil prices have been ranging between $142 and $63 during the past 10 years. These big differences put pressure on the quarter and annual results of a lot of airlines and transportation companies. By changing fuel types this volatility can be partly eliminated. This results in steady quarter results and may also imply lower costs for customers.

In order to reduce fuel costs even more airlines (and/or airports) could join efforts to build their own bio fuel or synthetic fuel refineries. Additionally these airlines and airports could sell fuel to other airlines.

Benefits for manufacturers of cars and airplanes (like BA and OTCPK:EADSF):

Benefits for the manufacturers are not that big, especially not for the automotive industry. Changing fuels could have a significant effect on a 'from scratch'-design for airplanes though. In the end the change of fuel means that manufacturers can build lighter planes. Chances are very slim that these reductions will have a significant effect on the price of airplanes or cars/trucks. But on the longer term the reduction in material costs will certainly add up.

The use of synthetic and bio fuels is still preliminary, but once this method will be applied widely, manufacturers of airplanes will benefit slightly, whereas big cost reductions can be expected for the transportation sector and big gains for companies that produce the synthetic fuels. In the end the biggest winner will be the environment…

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.