E-methanol for transport: how is e-methanol bridging the gap in transport decarbonisation?

E-methanol is emerging as a key solution for decarbonising transport sectors where electrification is not feasible. As a renewable fuel classified as an RFNBO (Renewable Fuel of Non-Biological Origin), it offers a scalable pathway to reduce emissions in shipping, aviation, and transport.

The challenge: decarbonising transport where electrification falls short

Direct electrification is rapidly transforming passenger cars and light urban transport, with renewable sources reaching an estimated 11.3% in 2024 and further goals set for 2030 (EEA, 2025). But for a significant share of the transport sector, such as refineries, heavy-duty road freight, aviation, and shipping, direct electrification is not a near-term option.

These sectors rely on liquid fuels, existing engines, tanks, and distribution infrastructure. And they are increasingly subject to regulatory obligations that require a shift away from fossil-based fuels. Renewable fuels such as e-methanol and other RFNBO fuels offer a path forward. But for that path to be viable at scale, two things are needed: production that is commercially and technically proven, and a regulatory framework that creates predictable demand.

E-methanol processed into conventional gasoline

A recent project in Germany has demonstrated a further use-case for e-methanol: as a feedstock for conventional gasoline engines. As part of the DeCarTrans research project, 86 tonnes of e-methanol from Kassø were transported to the large-scale pilot plant in Saxony. There, using the CAC METHAFUEL® process developed by CAC Engineering GmbH and TUBAF, the methanol was converted into synthetic gasoline.

The Lother Group (NORDOEL) and the eFUEL GROUP subsequently upgraded the product into multiple gasoline grades:

• RON95 E10
• RON98 E10
• RON102

These grades are compatible with existing vehicles and distribution systems, with no modifications required to engines or transport infrastructure. The same e-methanol can also serve as an intermediate for e-SAF (Sustainable Aviation Fuel) production pathways, extending its relevance across transport segments beyond road freight.

Germany: From regulatory signal to market commitment

Germany is playing an increasingly active role in building the market for renewable hydrogen and RFNBO-based fuels — both through regulation and through direct funding of production capacity.

Binding quotas under RED III

Through the transposition of the EU’s RED III Directive into German law, via the Second Act on the Further Development of the Greenhouse Gas Reduction Quota, Germany has introduced RFNBO usage requirements for the transport sector. The quotas are:

Refineries and fuel producers are now operating within a clearly defined regulatory framework that requires a measurable increase in renewable molecules in their output. For industrial buyers, this creates predictable, long-term demand and a reliable basis for offtake agreements and investment decisions.

European Hydrogen Bank award: Germany funds Danish production

Germany’s commitment extends beyond regulation. In May 2026, European Energy was selected as one of three projects to receive support under Germany’s hydrogen auction framework linked to the European Hydrogen Bank (EHB) — a European Commission mechanism designed to close cost gap between renewable hydrogen production and market demand.

The funding supports European Energy’s plans to establish additional hydrogen production capacity at the Kassø site, directly enabling the scaling of supply for Germany and broader European offtakers. The award also underlines the case for hydrogen transport infrastructure between Denmark and Germany, including a planned cross-border hydrogen pipeline. European Energy expects this project to progress as both producers on the Danish side and offtakers on the German side demonstrate market commitment.

Germany’s approach, combining binding consumption quotas with direct production support and cross-border infrastructure planning, represents a model that other European member states are watching closely. As RED III is implemented across the EU, the market mechanisms Germany is putting in place are likely to inform how other governments design their own RFNBO frameworks.