War, geopolitical tensions, and disruptions in trade flows, combined with the escalating effects of climate change, are compelling Europe to replace imported fossil based energy and raw materials with domestically produced fossil free alternatives. Domestically produced eFuels could become a cornerstone of Europe’s energy security and climate strategy.
While climate and security policy objectives may be challenging to combine elsewhere, in Europe they work in synergy and reinforce each other. Europe imports about 95% of its crude oil and only requires Member States to have fuel reserves equivalent to 90 days’ imports of oil to cope with disruptions in the world market.
This is not just an energy statistic. It is a strategic vulnerability that leaves Europe exposed to the turbulence of global markets, to geopolitical blackmail, and to shocks that undermine both industry and citizens’ daily lives.
Replacing imported fossil fuels with domestically produced renewable and low carbon alternatives will significantly strengthen European resilience. Securing domestic production of renewable eFuels should therefore be considered a strategic security objective.
eFuels are produced from electricity and captured carbon dioxide (CO₂). Because they can serve as direct replacements for fossil fuels and use the existing supply chain, they are particularly well suited to reduce emissions in sectors that are difficult to electrify directly, such as aviation and maritime transport. They can be produced at scale in Europe and are easy to store and handle.
The main challenge today is high investment and production costs, which limit competitiveness versus fossil fuels and biofuels. The only way to advance these technologies and bring the high costs down is through commercialisation and scale-up. Globally, the direction is clear: in the coming decades, hard-to-abate sectors like shipping and aviation will transition to eFuels as they are the only liquid fuels that can be produced at the scale needed.
Through the Clean Industrial Deal, the EU has reaffirmed its commitment to the 2050 netzero objective, aligned with an increased focus on security and competitiveness. As noted by Mario Draghi in The Future of European Competitiveness, decarbonisation offers an opportunity for Europe to lower energy prices, take the lead in clean tech, and become more energy secure.
Draghi also points out that although Europe is comparatively weaker in digital innovation, it is a leader in clean tech innovation. EU companies are first movers in sub-sectors of sustainable transport such as eFuel production. The EU holds a significant share of global high value patents and tops rankings for innovation in low carbon fuels, essential for decarbonising aviation and maritime transport in the medium term and, potentially, heavy duty vehicles.
Resilience: DualUse Benefits for Defence and Civil Sectors
In its Military Mobility Package, the EU-Commission acknowledges that access to fuels for military transport operations remains a challenge. The former President of the Republic of Finland and Special Adviser to the President of the European Commission, Sauli Niinistö, writes in his report, Safer Together, that defence organisations need to enhance resilience and preparedness, including for climate change and the clean energy transition. Niinistö concludes there is an opportunity for enhanced dual use and civil military cooperation using the EU framework. “The low-carbon energy transition can reduce Europe’s militaries’ dependence on foreign fuel imports and exposure to commodity price shocks, while improving operational effectiveness, ensuring reliable sources of green energy and managing any supply chain dependencies.”
The potential role of eFuels in military applications is underscored by NATO’s growing focus on environmental sustainability. Through the NATO Climate Change and Security Action Plan (2021), the Alliance pledges to contribute to climate mitigation and to examine the feasibility of scaling innovative low carbon technologies through its own procurement practices.
The NATO Energy Security Centre of Excellence (ENSEC COE) has published several reports on eFuels. In Unlocking Potential: Synthetic Fuels in Modern Military Operations, ENSEC COE concludes that eFuels can become a longterm pillar of sustainable defence, provided that challenges in scaling production, reducing costs, and securing supply chains are addressed.
In Mission NetZero: Charting the Path for eFuels in the Military, the Centre compares eFuel production pathways and evaluates their applicability across land, sea, and air domains. The report urges military planners to collaborate with governments, industry, and researchers to mobilise resources and accelerate deployment.
Despite their strategic importance, current European policy and financing frameworks have not sufficiently incentivised investment at the scale required to foster eFuel production. Projected output remains inadequate to meet industrial demand, placing the EU at risk of falling behind in another vital green sector. China currently leads in eFuel production capacity, particularly in eMethanol and eAmmonia.
Analyst firm GENA Solutions estimates the European eMethanol project pipeline at 6.8 Mt. However, only 3% of these projects have reached FID, primarily due to the absence of longterm offtake agreements. During 2025, several large European shipping companies communicated longterm offtake agreements with Chinese producers of renewable fuels. GENA Solutions notes that 87% of all binding offtake agreements for renewable methanol have been signed with Chinese suppliers. In the fall of 2025, China announced its first national green hydrogen subsidy framework, allowing China to further accelerate its lead.
While eFuel production is entering a pivotal commercialisation and scale-up phase, existing EU funding instruments primarily reward either innovation (e.g., the Innovation Fund) or cost efficiency (e.g., the Hydrogen Bank). This leaves a critical gap for projects transitioning to industrial scale. To bridge this, the EU and its Member States must develop targeted instruments that support large scale commercialisation of eFuel production.
To scale private investment in production capacity, new public funding mechanisms are needed in Europe:
Europe must fully leverage civil-military cooperation and strategic public procurement. Supporting eFuel uptake in shipping and aviation will build domestic capacity, strengthen commercial resilience, and enhance military readiness. Alongside public procurement, mechanisms like CfDs and double-sided auctions can de-risk investment and accelerate scale-up.
Embedding these tools in upcoming EU legislation would advance Europe’s strategic objectives, strengthening energy security, industrial competitiveness, and climate neutrality.
eFuels offer Europe a unique opportunity to turn decarbonisation into competitiveness, vulnerability into sovereignty, and climate ambition into industrial strength.