How synthetic fuel could save the internal combustion engine

A plan supported by some of the world’s largest car manufacturers could offer a new answer to Australia’s growing fuel challenges. The proposal centers on producing synthetic fuel at the site of a former pulp mill on Tasmania’s north coast, which developers say could both lower petrol prices and strengthen the nation’s fuel supply.

Australia has been facing rising fuel costs, with unleaded petrol approaching $3 per litre as domestic supplies shrink and remaining refineries struggle to meet modern requirements. While electric vehicles are often promoted as the long-term solution, several major automotive companies — including Porsche, Ferrari, and Toyota — are investing in technology designed to keep traditional combustion engines viable.

Their focus is on e-Fuels, sometimes called synthetic fuels. A proposed facility at the former pulp mill site in Burnie, Tasmania, could eventually produce about 200,000 tonnes of e-Fuel each year if the project moves forward.

The project is being developed by HIF Global, a company specializing in synthetic fuel production. Porsche is among its major investors. HIF Global already operates a facility in Chile and plans additional plants in Tasmania, the United States, and another location in Chile as demand for synthetic fuels is expected to increase over the next decade.

The company’s pilot plant in Chile, known as Haru Oni, uses wind power to generate hydrogen from water. That hydrogen is then combined with carbon dioxide captured from the atmosphere. Through proprietary technology developed by HIF Global, the mixture is converted into several types of liquid fuels, including e-Methanol, which can serve as a substitute for conventional petrol.

One of the biggest advantages of e-Fuels is their compatibility with current petrol-powered vehicles. Unlike electric cars, which require entirely new infrastructure and vehicle designs, synthetic fuels could be used in existing engines. That means drivers could potentially switch fuels without changing vehicles.

Vehicles running on e-Fuels would still produce some emissions from the exhaust. However, supporters argue that the carbon released during combustion is offset by the carbon dioxide captured earlier in the production process, making the overall fuel cycle carbon neutral.

Advocates also believe synthetic fuels could be used beyond passenger vehicles. The same technology could potentially replace traditional fuels in airplanes, heavy-duty trucks, and large cargo ships.

Despite the potential benefits, large-scale production remains a major hurdle. Manufacturing enough e-Fuel to supply markets at a competitive price is still a challenge.

A Toyota engineer speaking to Australian media at a 2023 event highlighted both the promise and the limitations of the technology. According to the engineer, carbon-neutral fuel has the advantage of working in existing vehicles, but the current cost of producing it remains high. Lowering that cost will be key if it is to become a realistic option in the near future.

Another factor that could speed development is motorsport. Formula 1 began using synthetic fuels in 2026. While much attention has focused on the sport’s hybrid engines, the shift to sustainable fuels is also seen as an important step.

Historically, technologies developed in Formula 1 often make their way into everyday road cars. Supporters believe the use of carbon-neutral fuels in racing could accelerate research, raise public awareness, and help build acceptance among consumers.

Formula 1’s official website describes the move as a significant statement about the sport’s direction. According to the organization, using advanced sustainable fuels in F1 power units reflects the series’ role in leading technological innovation.

For Australian drivers, the appeal may ultimately come down to price. If synthetic fuels can be produced more cheaply than traditional unleaded petrol, adoption could grow quickly. In addition, local production could improve Australia’s fuel security and reduce reliance on imported oil.

However, the Tasmanian project will take time to develop. The HIF Global plant was originally expected to begin operating by the end of 2026, but plans changed when the company moved the project from a site about 30 kilometres away from Burnie. The revised timeline now aims for the facility to be running before the end of the decade.