The Synthetic Fuel Market is Estimated to Witness High Growth Owing to Trends Towards Alternative Clean Fuel Solutions
The Synthetic Fuel Market is estimated to be valued at US$ 5.60 Bn in 2023 and is expected to exhibit a CAGR of 19.8% over the forecast period 2023 to 2030, as highlighted in a new report published by Coherent Market Insights.
Market Overview:
Synthetic fuel refers to liquid fuels that are synthesized from various
feedstock like coal, natural gas and biomass through chemical/thermal
processes. They have similar energy density and combustion properties as
conventional petroleum-derived fuels. Synthetic fuels provide advantages like
energy security by reducing dependence on oil imports, price stability and
lower greenhouse gas emissions than conventional fuels.
Market key trends:
One of the major trends driving the growth of synthetic fuel market is the
increasing focus on finding alternatives to fossil fuels to reduce carbon
emissions. Synthetic fuels can be produced from a variety of feedstock
including coal, natural gas and biomass through Fischer–Tropsch process. They
provide lower carbon footprint compared to conventional fuels as the carbon
released during combustion is recycled from the atmosphere. Additionally,
synthetic fuels are fungible with existing transportation fuel infrastructure
and have high energy density suitable for use in automotive and aviation
sectors. This is encouraging OEMs and governments to support the development of
synthetic fuel industry.
Porter's Analysis
Threat of new entrants: New entrants face high costs for building production
facilities and establishing distribution networks. This poses major barriers.
Bargaining power of buyers: Buyers have moderate bargaining power as there are
alternative substitutes available. Switching costs are relatively low.
Bargaining power of suppliers: Suppliers have moderate bargaining power due to
availability of alternative raw material sources and suppliers.
Threat of new substitutes: Threat of new substitutes is high as alternative
fuels like natural gas and biofuels are gaining popularity.
Competitive rivalry: Intense rivalry exists among existing players to gain
market share.
SWOT Analysis
Strengths: Growing energy demands and emphasis on reducing dependence on
conventional fuels present huge opportunities. Established production and
distribution capabilities provide advantages.
Weaknesses: High capital requirements for setting up production plants.
Vulnerability to fluctuations in prices of raw materials.
Opportunities: Increasing support from various governments through initiatives
and policies boost adoption. Rapid expansion of transportation sector increases
scope.
Threats: Stricter environmental regulations regarding emissions pose compliance
challenges. Sustainability issues concerning certain feedstock constrain growth
prospects.
Key Takeaways
The Global
Synthetic Fuel Market Size is expected to witness high growth,
exhibiting CAGR of 19.8% over the
forecast period, due to increasing energy security concerns. Countries are
promoting the development and use of alternative fuels to reduce dependence on
imported oil.
North America dominates the market currently owing to presence of major players
and growing investment in the region. Asia Pacific is expected to be the
fastest growing market due to rising energy demands and expanding economies in
the region like China and India.
Key players operating in the synthetic fuel market are Sasol, Shell, Chevron,
ExxonMobil, BP (British Petroleum), Synfuels China, Rentech, Inc.,
Fischer-Tropsch Technology, Linc Energy, DKRW Advanced Fuels. Major players are
focusing on capacity expansion plans and adopting new technologies to cater
increasing demand form applications in automobile and marine sectors.
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