Japan's Eneos halts CO2-based fuel to focus on biofuel

• Market: Biofuels, E-fuels, Emissions, Hydrogen
• 10/10/25

Japanese refiner Eneos has revised its synthetic fuel (e-fuel) development plan, shifting its focus from CO2-based fuel to biofuel because of a rapid rise in costs.

Eneos told the ministry of economy, trade and industry (Meti) that it will halt development of CO2 and hydrogen-based liquefied e-fuel, Meti said on 9 October. Eneos will instead focus on developing biofuel, which it expects to be more profitable than e-fuel.

The majority of e-fuel production costs come from producing green hydrogen, including renewable power and water electrolysers, Eneos said previously.

The refiner still plans to explore e-fuel in the long term.

Eneos attempted to develop e-fuel using CO2 and renewable hydrogen through the Fischer-Tropsch (FT) synthesis process. This chemical reaction converts syngas, consisting of carbon monoxide, CO2 and hydrogen, into liquefied e-fuel. Eneos' project was selected in 2022 to receive funding from the Green Investment (GI) scheme. The company originally aimed to achieve an 80pc yield of liquefied e-fuel at its larger-scale 300 b/d pilot plant by 2028 and commercialisation by the first half of the 2030s.

But the firm decided not to construct the trial plant and to officially end the project under the GI fund in March 2027. The change in its plan is because of a rapid rise in construction fees, which boosted the costs of the demonstration and building the pilot plant, Eneos said.

Eneos will make use of the research it did on the FT synthesis process for developing biofuel from gasified unused wood chips. Eneos' biofuel will also go through the FT synthesis process.

Eneos has developed cellulose-based bioethanol using inedible wooden biomass and waste paper. But the refiner declined to disclose if its focus on biofuel refers to bioethanol.

Eneos' initial financial support was ¥54.6bn ($357mn) in the April 2022-March 2029 fiscal years, and was raised to ¥79.4bn on the back of a changing business environment. But the fund will be reduced to maximum of ¥13.7bn in 2025-27 given the terminated plan to build the trial plant.

Eneos previously targeted commercial production of 10,000 b/d of e-fuel by 2040 to encourage the decarbonisation of the automobile, aviation and marine sectors.

By Nanami Oki