Synthetic Fuels Market Report Scope & Overview:

The synthetic fuels market size was valued at USD 6.06 billion in 2024 and is expected to reach USD 27.50 billion by 2032, growing at a CAGR of 20.81% over the forecast period of 2025-2032.

Growth in the synthetic fuels market is attributed to innovations in the sector, such as green hydrogen production, carbon capture technologies, and favorable regulatory support. Synhelion’s solar fuel plant in Germany or Comstock Fuels’ Bioleum-based fuels are just a few synthetic fuels that highlight the industry’s focus on the environment.

The renewable synthetic fuel sector is gathering momentum, as demonstrated by the U.S. Department of Energy’s SAF Grand Challenge, to expand the market to produce USD 93 million gallons of sustainable aviation fuel in 2024 from USD 5 million gallons in 2021.

Renewable fuels also represented a share of 5% of global energy demand in 2023, exceeding that of combined wind and solar PV production. By 2030, between 2.6 billion and 4.9 billion gallons of sustainable aviation fuel could be produced each year, according to projections. These announcements also emphasized that synthetic fuels are playing an increasingly important role in decarbonizing mobility and industry.

Market Dynamics:

Drivers:

• Substantial Decline in Electrolyzer Capital Costs Enables Power-to-Liquid Viability, Fueling Market Growth

Uninstalled capital costs of proton exchange membrane electrolyzer have fallen from approximately USD 1,000 / kW in 2020 to USD 450 / kW in 2023 and according to DOE targets, USD 250 / kW in 2026 and USD 150 / kW in 2030. This 55% reduction makes power-to-liquid conversion of green hydrogen and captured CO₂ crude into Synthetic Diesel and Gasoline competitive with regions that offer low-cost renewable electricity, advancing new project announcements and growth of the synthetic fuels market by eliminating the current hurdle of facility investment.

• Corporate Offtake Agreements Secure Long-Term Demand for Renewable Synthetic Fuel

As large corporations secure supply agreements for low-carbon fuels, the market’s confidence and financing are being driven. In 2023, Amazon signed a contract for 10 million gallons of renewable diesel blends, including synthetic diesel, to decarbonize its logistics network, one of the biggest corporate deals in the renewable synthetic fuel market so far. Off take agreements underpin minimum sales volumes, provide de-risking for plant finance, and reflect strong global market trends for synthetic fuels growth, as part of a well-structured synthetic fuel market for widespread application to transportation and industrial needs.

Restraints:

• Biomass Feedstock Variability Undermines Consistent Production Yields

Biomass-to-liquid channels ±10% moisture and composition variabilities in feedstock batches, negatively affect Fischer-Tropsch conversion rate and downtime for the distributed biomass conversion process. The 2024 international renewables report from the International Energy Agency points out, to stabilise feedstock quality, developers will need to invest in pre-processing and sorting, the cost of which could add up to an additional 15% to operating costs. This latter variation makes supply logistics and GAAP reporting for renewable synthetic fuel market players overly complex causing synthetic fuels market share growth in the biomass category to be retarded.

• Fragmented Carbon Pricing Frameworks Create Investment Uncertainty, Hindering Market Growth

Carbon prices vary widely around the world, from USD 10 to USD 120 per metric ton of CO₂ at August 2024 rates, according to the World Bank’s 2024 Carbon Pricing Dashboard. This fragmentation of policy causes companies involved in synthetic fuels production to be forced to model the business case under several scenarios and reduces long-term capital commitments. It is such regulatory unpredictability that particularly inhibits the financing of green field power to liquid and gas to liquid plants, pushing sanctioning out and slowing the overall synthetic fuels market growth until the certainty of some consistent harmonized carbon pricing is firmly established

Segmentation Analysis:

By Fuel Type

The Gas-to-Liquid (GTL) fuel type dominated the synthetic fuel market and accounted for over 46.2% of the overall market share in 2024 owing to its proficiency in converting natural gas to superior synthetic fuels such as diesel and gasoline. The dominance of this segment is also driven by the increasing investments from top oil and gas companies, which are constructing large-scale GTL facilities. For instance, the Pearl GTL plant, located in Qatar, produces 140,000 b/d, sponsored by Shell and ExxonMobil. This is a major reason for GTL's market-leading advantage.

The Power-to-Liquid (PTL) segment is projected to have the fastest growth rate owing to the development in renewable energy and electrolysis technology. PTL Synfuels production with renewable electricity, which is consistent with global goals for the reduction of carbon. Sunfire and Carbon Clean Solutions are two companies that are spearheading efforts to create power-to-liquid projects, supported by the EU’s Green Deal, which provide support for new and ingenious tech, such as PTL, as a method of decarbonizing the transport industry.

By Raw Material

In 2024, coal accounted for the largest share of the synthetic fuels market at approximately 41%. Coal has ample resources and lower conversion costs and thus is a competitive feedstock for synfuels. Coal-to-liquid (CTL) obviously has been of popular techno-ecological hybridization in many countries especially in the case of China where there are large coal reserves. The Chinese government has strongly promoted CTL projects, such as the Shenhua Group's CTL plant, the largest in the world, which greatly increases the production of synthetic fuel from domestic coal. The low cost and security of supply through CTL are critical for maintaining market dominance.

The Biomass segment is projected to dominate the synthetic fuels market and is growing at a CAGR of 22.23% due to the escalating requirement of renewable synthetic fuels. BTL options, which include agricultural waste and forest residues, are showing increasing momentum, particularly in Europe. This growth is also being driven by the increased funding for biomass research from the European Union and the EU Renewable Energy Directive. BTL production capacities are being gradually increased, for instance, by such companies as Biochemica and BTG Biomass Technology Group, due to these increasing demands, thus playing their part in the growth of the Renewable Synthetic Fuel Market.

By Application

In 2024, the Diesel segment dominated and held the largest share of the market, about 59.8% in the synthetic fuels market. Its ubiquity in heavy-duty transportation and industry has contributed to its popularity. The global demand for cleaner fuel substitutes and carbon reduction programs is helping to sustain environmentally friendly use of synthetic diesel, the product of GTL and CTL. For instance, Sasol's GTL synthetic diesel has been successful in markets including South Africa, consolidating diesel's top position among synthetic fuels.

Kerosene emerged as the fastest growing segment in terms of value with a CAGR of 22.72%, and the largest quantity demand for aviation on account of its properties of efficient combustion. Synthetic kerosene production is rising due to the growing air traffic after the pandemic and efforts by the aviation industry to develop alternative sustainable fuel supplies. Firms, such as Neste and LanzaTech are developing technologies to ramp up production of sustainable aviation fuel (SAF), which relies on synthetic kerosene made from renewable feedstock to cut carbon emissions from aviation.

By End-use

The Transportation end-use industry dominated the synthetic fuels market in 2024 and accounted for the largest share. There are characteristics of synthetic fuel, in particular synthetic gasoline or diesel, which are utilized in transportation because of quite clean combustion in comparison with fossil fuel. Big automakers, notably Toyota and Volvo, have invested in synthetic fuel technology to meet tougher emissions standards. Rising demand for fuel alternatives in the automobile and logistics industries underpins the segment’s market leadership.

The industrial application is growing at the highest CAGR of 22.61% due to the demand for sustainable energy sources in industries. Industries, including manufacturing and power generation, are turning to synthetic fuels as a way to cut carbon footprints. Growing requirement for sustainable and secure energy, along with escalating industrial decarbonization activities, will propel the industry share. This trend is also being fueled by the U.S. Department of Energy's continued support for clean energy solutions.

Regional Analysis:

Asia Pacific dominated the synthetic fuels market, with a substantial share of 41.8% in 2024. The dominance of the region is mainly driven by the significant investments from China in coal-to-liquid (CTL) and gas-to-liquid (GTL) technology. With extensive coal deposits and state-supported projects, such as CTL by Shenhua Group, the country has been at the forefront of synthetic fuel production. Furthermore, energy security drives Japan's development of synthetic diesel and gasoline, too. This is leading the region to concentrate on carbon-neutral fuels to drive significant growth to make Asia Pacific the region of choice for synthetic fuels.

North America is projected to be the fastest-growing region, with a CAGR of 22.27% of the overall synthetic fuels market in 2024. Increasing investments by the federal government in sustainable aviation fuel initiatives are driving regional growth in synthetic fuels. The largest growth in the sector is projected in the U.S. market at a size of USD 731.36 million and a CAGR of 22.18%, as it is being driven by consumption and investment in renewable synthetic fuels, namely synthetic diesel and gasoline. Government programs, such as the Renewable Fuel Standard (RFS) are driving progress on biofuels and synthetic fuels technologies. Carbon Clean Solutions and a significant emphasis on clean energy research by the U.S. Department of Energy are both expected to grow synthetic fuel production. As demand for clean fuels in transport and industry, prominent share of North America, it also fuels this growth.

Europe is the second largest region in the synthetic fuels market, accounting for 22.9% of the market in 2024. European countries, in particular Germany, will be the main force pushing the adoption of synthetic fuel, especially Power-to-Liquid (PTL). EuropeEU Green Deal and carbon reduction targets are a driving force behind Europe's push for renewable synthetic fuels. PTL projects have been developed by companies, such as Audi and Sunfire, and the EU Commission is still funding research for synthetic fuels for road and air traffic. Germany’s push for synthetic diesel underscores how Europe has been leading the way in embracing these technologies.

Key Players:

The major competitors in the synthetic fuels market include Shell Plc, ExxonMobil Corporation, Sasol Limited, TotalEnergies SE, Neste Corporation, Chevron Renewable Energy Group, QatarEnergy, CHN Energy Investment Group Co., Ltd., PetroChina Company Limited, and Dakota Gasification Company.

Recent Developments:

• April 2025: Toyota and partners showcased synthetic fuel vehicles at Expo 2025 using hydrogen-based fuel from ENEOS, aiming to demonstrate carbon-neutral mobility supported by Japan's NEDO initiative.

• January 2025: Lockheed Martin approved synthetic aviation fuels for the F-35 fleet after successful test flights, promoting reduced emissions and enhanced operational resilience through alternative fuel use.

• November 2024: IAG signed a 10-year agreement with Infinium to purchase synthetic aviation fuel made from renewable energy and CO₂, targeting a 90% emissions reduction by 2050.