The Thermodynamic and Economic Realities of Audi’s E Diesel

A couple of weeks ago Audi made an announcement claiming to have invented a process that manufactured diesel solely from water, carbon dioxide and renewable energy sources. This new sustainable diesel was christened e diesel. Former Oil Drum colleague Robert Rapier (RR) has already run some energy and cost numbers on the process to reveal it in its true colours. Robert I feel was rather conservative in his analysis. In this post I use Robert’s back of envelope calculations as a starting point to expose some of the harsh thermodynamic, economic and social realities.

In summary:

  • Using European electricity prices, the energy cost of e diesel at the refinery gate would be of the order €1.8 litre – excluding manpower, capex, profit, distribution costs and taxes. Adding in the latter might easily take the price to €3 / litre, much higher than Audi’s estimate of €1 to 1.5 € per liter. This compares with a refinery gate price for FF diesel of the order €0.65 per liter. e diesel may cost 2.7 to 4.5 times as much as traditional diesel.
  • The energy return on energy invested (ERoEI) for the process is at best 0.5. For every BTU of e diesel produced about 2 BTUs of electricity are consumed. E diesel is an energy sink or energy conversion where at least 50% of the energy is lost along the way.
  • To convert Europe to run on e diesel would require a 12 fold increase in todays “new renewable” infrastructure and would result in a doubling of the energy consumed in the transport sector.

The Process

While claims are made that Audi have invented a process it appears they have simply repackaged existing and well known chemical engineering techniques.

The end point  involves reacting carbon monoxide (CO) with hydrogen (H2). To get to this point carbon dioxide (CO2) is concentrated from air and hydrogen (H2) is produced by passing electricity through water (electrolysis). RR speculates that the CO is produced via the water-gas shift reaction:

CO2 + H2→CO + H2O

Hence there are three main stages to this process that each carry an energy and financial penalty as detailed below.

Figure 1 The audi process uses well established chemical engineering processes.

RR provides a good description of the Fischer – Tropsch reaction that is employed:

25H2 +12CO→C12H26 +12H2O

This shows how the process produces as much water as it does e diesel. It is not rocket science to understand if you begin with water, destroy it by electrolysis, then simply recreate it, a considerable amount of energy is going to be wasted en route.

Energy Costs and ERoEI

RR describes the energy and finance costs required to produce 1 tonne of e diesel and his figures form the foundation of this analysis. Those needing further information on how these figures were derived should consult the RR article. There are three main components to consider.

1) The energy required to separate CO2 from air. 3.2 tonnes of CO2 are required to make a tonne of e diesel and an energy cost of 250kWh per tonne is identified giving a total of 800 kWh.

2) The energy required to make H2 from water. 294 kgs of hydrogen are required to make 1 tonne of fuel. At this point RR does not give the energy used but simply quotes the cost $4 / kg. Converting that to electricity at 6.9c per kWh (US price) works out as 4 / .069 *294 = 17,044 kWh to make 294 kgs of H2.

3) The thermal energy used in the conversion process is 1750kWh per tonne of CO2 (3.2 tonnes) = 5600 kWh.

In Summary:

CO2 separation = 800 kWh
Hydrogen production = 17,044 kWh
Thermal energy for conversion = 5,600 kWh

Total = 23,444 kWh per tonne

And so how much energy does a tonne of diesel contain? It turns out that a tonne of diesel is not so very different to a tonne of crude oil in terms of energy content and a tonne of crude contains 12 MWh of energy equivalent [1]. What we see here is that 1 tonne of e diesel that used 23.4 MWh to produce contains about 12 MWh of energy. The energy return on energy invested is 0.5 (excluding manpower, capital and transportation energy costs).

Figure 2 Energy Return on Energy Invested (ERoEI) = energy procured divided by the energy used to procure energy. Legacy fossil fuels have had ERoEI over 50 but this has declined over the years as the grade of reserves being tapped has declined meaning that more men, machines and energy are required to extract fuel today. The value of 9 for fossil diesel comes from ref 2. This combines crude oil extraction and refining energy costs.

This process is not an energy source but an energy conversion. Renewable electricity is converted into liquid fuel. An analogy would be a coal fired power station where coal is converted into electricity. 50% efficiency is typical for conversions and is quite good. The trouble for Audi is this. Coal is dirt cheap and not much good for anything else and the power station upgrades its energy to the Rolls Royce of energy flow, i.e. despatchable electricity. Audi’s process takes the Rolls Royce of energy – electricity, and one of the most expensive versions of that electricity ever invented – wind power, and converts it to diesel. E diesel has high value because it is a stable, storable, energy dense liquid fuel but it is not made from coal dust, it is made from gold dust. This of course works through in the economics.


The cost calculation below simply converts the energy used into Euros and cents using an industrial electricity price of €0.09 per kWh for Germany [3].

CO2 separation = 800 kWh * €0.09 = €72/ tonne
Hydrogen production = 17,044 kWh * €0.09 = €1534/ tonne
Thermal energy for conversion = 5,600 kWh * €0.09 = €504/ tonne

Total = 23,444 kWh per tonne * €0.09 = €2110 / tonne

1 tonne = 308 US gallons = 1,165 litres [1]

23,444*0.09c = €2110 / ton = €6.85 / gallon or €1.81 / liter (Germany)

This is a bit higher than the €1 to €1.5 per liter claimed by Audi. At face value, with diesel retailing at €1.24 / liter in Germany [4] this price of €1.81 / liter does not seem to be a game killer. But here’s the rub.  For a start I use the mean price of electricity, made cheap in Germany by burning coal. Arguably a significantly higher electricity price should be used since the input price should be for wind or solar power that are well above the average. Furthermore, this calculation is for the energy cost alone and excludes manpower, capex, profit and distribution costs. Adding in all those other costs, it is not difficult to imagine the real cost of e diesel coming in at over €3 per liter. And then there is tax.

The price paid for diesel at the pump in Europe is enormously distorted by taxes. The refinery gate price for diesel in Europe is of the order €0.66 [5]. Hence e diesel is at least 2.7 times as expensive, perhaps 4.5 times more costly than conventional diesel. And that is a game killer, especially since it’s unlikely that governments will be able to levy taxes on the CO2 neutral fuel.

Impact on Society

The EU currently gets about 6% of its primary energy from other new renewable sources. This compares with 35% from oil that is used mainly in transport. To replace crude oil with new renewable e diesel would require a 12 fold uplift in wind turbines and solar panels, just to provide the transport sector with fuel. It is a 12 fold and not 6 fold uplift since the Audi process is only 50% efficient – twice as much energy is required.

Figure 3 Primary energy consumption in the EU in 2013 [1]. 

In summary 1) converting the whole of Europe’s vehicle fleet to run on e diesel would double the energy used by the transport sector 2) the cost of e diesel is likely in the range 2.7 to 4.5 times more expensive than conventional diesel, 3) it would require a 12 fold increase in the current wind and solar deployment to provide the necessary “carbon free” electricity and 4) it’s unlikely that governments will be able to levy taxes on the new fuel and would therefore lose significant revenues that flow into their coffers from the fossil fuel industries. At the end of the day it makes more sense to put renewable electricity into a Tesla battery.


[1] BP Statistical Review of World Energy 2014
[2] A Set of Coherent Indicators for the Assessment of the Energy Profitability of Energy Systems
[3] statista – the Statistics Portal
[4] Fuel Prices in Europe
[5] FuelsEurope

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23 Responses to The Thermodynamic and Economic Realities of Audi’s E Diesel

  1. Graeme No.3 says:

    The usual “we can save the planet – send money story from Audi. Of course it doesn’t make economic or any other sense. It won’t get past the pilot stage when the project control changes from the Publicity Dept. to the Engineering Dept. They needn’t look for government help, especially as “it’s unlikely that governments will be able to levy taxes”.

    2 minor points; I am unaware of a coal fired station reaching 50% efficiency, although they are getting close, and using intermittent wind power is going to lower the efficiency of hydrogen generation to the mid 30% or lower. Makes hydrogen even more expensive. (even continuous high pressure electrolysis at 82% isn’t economic against methane cracking).

    Look for this to be recycled as a way of getting rid of coal station emissions.

  2. Don says:

    So, is Audi unbelievably stupid? Or just incredibly cynical…

    • Euan Mearns says:

      I really don’t know. I avoided commenting on that. They are giving Greens and the Green political classes hope. They are scaling up to a prototype and that is as far as it will go, for the time being at least. Oil at $200 / bbl will be a game changer.

    • Luís says:

      Naturally not. Expanding on the comment below where I explain why the end price will be much lower than Euan expects: to quote prices as they did, Audi has likely secured some sort of political backing.

      The Federal government spends already thousands of millions of euros every year on their fossil fuel industries. I imagine something is already on the table to make this Audi scheme work, VAT exemption at least, perhaps more than that.

  3. If e diesel plants need a stable supply of electricity then there’s another major item of cost to be considered – the cost of converting the intermittent wind and solar generation that’s supposed to power them into “baseload” generation.

  4. markus says:

    Actually I find four times the cost pretty good, especially as you use the not particularly low European electricity prices as base. With solar and wind we will need and get quite large over-capacities, such a process is ideal to use up electricity when it is cheap. So I look at it as a way to store energy. Yes the ERoEI is pretty horrible, but when you would throw away the energy instead it does not matter.

    Today and tomorrow such a process is irrelevant, oil is too cheap and renewable over-capacities are too sparse. But in the long run (decades) as fossil oil becomes rare and expensive this can well be one of the legs we can stand on for energy storage and distribution.

    • Euan Mearns says:

      I tend to agree with most of what you say. We concluded on The Oil Drum years and years ago that Fischer–Tropsch would take care of liquid fuel production where there were no alternatives, such as aircraft. And lets imagine a 3 fold uplift in price combined with 100% improvement in engine efficiency. Its not so bad.

      But you need to recognise difference between cost and price. Renewable electricity is currently high cost. If you happen to buy it cheap it is still high cost and someone somewhere has to pay. And the ERoEI is actually surprisingly high for an energy conversion. It is better than simply using hydrogen for example.

  5. alexc says:

    I do not see the green/resilient movement buying any of this e-diesel either. Its aimed squarely at those that pay lip service to eco/sustainable practices (Pruis owners who drive on motorways over 60, etc)
    I’d agree with Markus. If married to wind turbines, that run intermittently, i could see some use, as it converts intermittent energy to a stored form.

  6. Luís says:

    For a start I use the mean price of electricity, made cheap in Germany by

    For a start I use the mean price of electricity, made cheap in Germany by burning coal. Arguably a significantly higher electricity price should be used since the input price should be for wind or solar power that are well above the average.

    I still contend on these claims. My advice for the 0.09 €/kWh was not only for it being the price of electricity to industrial costumers, but also because it matches the wining bids of the latest PV auctions held in Germany.

    If in alternative you use the cost of wind electricity you can quickly get down to a price within the range advertised by Audi. The cost of wind electricity from the reference turbine in Gemany is 0.075 €/kWh. Excluding grid connection costs this goes down a bit to 0.0725 €/kWh. By applying this figure to your energy computation we are down to 1.45 €/l.

    After this you can count on tax breaks, that make all the economic sense on a diesel made in Germany. Note that the Federal Government already pays in the order of 50 €/ton in subsidies to the coal mining industry.

    And then are the CO2 permits Audi will be able to sell on the European Climate Exchange. In recent months the price has hoovered between 6 and 7 €/ton.

    Price is not really the problem with Audi’s advertisement, and by focusing on it I believe you are actually hidden what is really wrong with this idea.

    Cheers.burning coal. Arguably a significantly higher electricity price should be used since the input price should be for wind or solar power that are well above the average.

    • Euan Mearns says:

      Luis, thanks for this. I don’t actually focus on price, its about one third of the whole post, but i do think I make some astute observations. €1.81 is not so different to €1.5 that is not so different to €1.24. But this compares an apple an orange and a samsung.

      It comes back to the driving motive to do this.If it is to reduce CO2 emissions then Germany, the whole of the EU and the USA need to go over to use this method or something similar. And China needs to get off coal etc if it is to make the blindest bit of difference. This will never happen and so for Germany to saddle itself with this burden and totally meaningless gesture makes no sense – not to me at any rate.

      If on the other hand it is to provide energy security and protection against future rises in the oil price then it could make sense to have this back up. 20% of motor fuel from this source may help mitigate in a meaningful way. Its still an awful lot of windmills and storage to provide stable supply.

  7. Bernard Durand says:

    Euan, I think you greatly overestimate the energetic efficiency of Audi e-diesel. Look at the numerous successive steps, each one resulting in a loss of energy in form of dissipated heat , which are necessary to produce it: converting AC current in DC current, purification of water, heating of electrolyser, electrolysis with varying intensity, purification, then compression and storage of hydrogen,water shift reaction with stored ( therefore compressed) CO2 to produce synthesis gas, Fischer-Tropsch synthesis of paraffins, isomerisation to produce diesel! Extraction , compression and storage of CO2 (400 ppmv) from air also demands a lot of energy that must come from somewhere. My guess is that the ratio energy in Audi diesel/energy to make it is lower than 15 %. And a storage with 15% efficiency, probably less, is mostly a very costful sink for energy.
    This is the main point. Economics is misleading because it is always possible to subsidise the process with the money of the tax payer, and green politicians are world experts in the matter.

  8. Leo Smth says:

    Broadly similar calcs to mine in this paper.

    If we got our act together and built massive low cost nuclear, then we end up with an interesting scenario that hydrocarbon fuel becomes more expensive than electricity:

    Bulk nuclear off peak should be around 3p-4p a unit, and with a wet finger estimate of 30% conversion efficiency and reasonable plant cost, ‘nukodiezel’ should drip out the back end at around £0.10p a unit or around £1 (€1,6) a litre. Its currently of the order of 40p a litre before tax.

    My prognosis, given the twin provisos that the world wakes up to the fact that renewable energy is a road to nowhere, and that nuclear can be cheap if people want it cheap, because it is the only real alternative – is that the world would then go to massively electric energy apart from transport off grid, which would then more or less treble in relative cost to what it is now.

    The more interesting thing is that this then places a massive premium on commercial transport efficiency, with the opportunity for (driverless?) vehicles under computer control running routes on a physical packet switching model.

    People by and large stay at home to work, since most jobs requiring hands on could in theory be done using remote controlled hands.

    Servos, have steadier hands than brain surgeons…

    I would ask anyone who is genuinely interested to read my paper and comment on it. If I have got the numbers right the only possible scenario is what I describe. And it puts a premium on development of certain sorts of technologies and infrastrucrture investments.

  9. Bernard Durand says:

    @ LE, your paper is a very interesting one. Please note however that between 10 to 15%, not just 1 %, is used to make something else, like plastics, chemicals, road bitumen etc…

    • Leo Smth says:

      yes, but is that raw material, or energy, inputs?

      I’d be very interested in how you derived that 15%, because teh sources that I used – and have forgotten – came up with 1% for actual hydrocarbon usage that was not burnt as fuel.

      For example, Gael Tverberg (finiteplanet) constantly refers to fossil fuel usage in fertiliser production: its true that is the energy source of choice, but the raw materials – nitrogen and hydrogen and oxygen essentially – to manufacture ammonium nitrate, or similar, are not ‘organic’ .

      The Haber process could (easily?) be tacked onto a nuclear power plant using electricity to make the hydrogen and steam under pressure to complete the process.

      Natural gas is currently cheaper, but that’s economics, not chemistry.

      Ultimately any hydrocarbon can be synthesised from water and CO2 given enough surplus energy.

      The issue is always one of cost.

      And that was the point of that paper, to show that IF we had really cheap (nuclear?) power, then given that atomic elements are not destroyed except in rare cases, we could synthesise anything we wanted from recycled or fresh materials. Chemistry without nuclear fission or transmutation, is a zero sum game with respect to the elements.

      Having accepted that point of view, the peak fossil and other stuff problem shifts to a new dimension: Energy. All we need is cheap abundant energy and we can make anything that currently exists ourselves.

      And the midden heaps of the 20th century become the resources of the 21st…

      In short we have but one supreme problem – cheap energy.

      And a secondary fuel problem – high energy density portable fuel. ‘Storage’

      As far as that goes my current best guess is that hydrocarbon fuel as well as batteries will form a solution to ‘off grid power’ but that renewables will never be cheap enough in real terms (EROEI) to compete with nuclear, provided that better understanding of radiation effects leads to a saner simpler and clearer regulatory regimes.

      You can fix costs by taxation and subsidy, but you can’t fix EROEI with an accountants pen.

      And that cheap power means synthetic chemistry becomes the primary way to get access to nearly all manufacturing materials, just as synthetic fertiliser replaced guano..

      It may even be that plants foods and other ‘natural’ materials will in the end be synthetically produced: If land space is at a premium, a floodlit cave can be used to grow plants, or even further, complex organic chemicals themselves like vitamins and proteins could be directly synthesised, so the steak on your plate is entirely synthetic, no animals being harmed, because there are simply no animals left to harm…

      Personally I believe that civilisation stands at a cross roads. One road leads back to the stone age and is signposted ‘renewables’ and the other leads on to an unknown future marked ‘nuclear power’

      It will be interesting to see which road is finally taken.

      • Bernard Durand says:

        My point is only that the proportion of oil and condensates used to make other material is not 1 % but much more. Plastics, solvents, road bitumen… are made of carbon and hydrogen taken to molecules of oil and NGL. The proportion of refined products used to make these materials is somewhere around 12 to 13 % , but since a part of the initial C and H is lost to produce the necessary energy ( EROI), around 15 % of the initial oil+condensate is consumed that way. Of course you can do more or less the same whith carbon and hydrogen taken on other sources, biomass for example.
        But a very cheap energy source is not enough. You need also the quantities of various matters to be transformed in goods thanks to this energy.

        • Leo Smth says:

          I dont think you bothered to read what I wrote. I repeat, do not bundle the energy used to create plastic for example, with et amount of fossil hydrocarbon in the finished products.

          As for raw materials water and carbon dioxide are all the raw materials you need to make hydrocarbons.

          At least for diesel, which is just HnCn..

          All it takes is energy.

  10. albrip says:

    Put as a energy source a MSR nuclear plant, and it’s not even half bad…

  11. oldfossil says:

    Thank you Euan for making the point that the oil industry, though subsidized, is a nett provider of income to the state many times over. Even eminent and highly respected economist Bjørn Lomborg fails to take this into account when he moans about the hundreds of millions of dollars worldwide in fuel subsidies.

  12. David MacKay says:

    Helpful post, thanks! I am delighted to see (in Figure 1) that Audi are now promoting an honest zero-carbon way of making liquid fuels. About 2 years ago when I heard them talking about this, they were calling it “climate neutral” but were I think sourcing the CO2 from a fossil-fuel-burning power station, which in my view meant it couldn’t at all be called zero-carbon. So well done Audi for having integrity and having a go at air-fuel synthesis. Yes, of course it requires lots of energy to inefficiently make liquid fuel [in fact your calculations indicate a remarkably high efficiency!], but this is exactly the sort of option that is required on the table if one seriously wants genuine climate change action, not just fake green fluff.

    • Euan Mearns says:

      David, from my recollection in “Hot Air” that I read a number of years ago now, one of your objectives was to seek energy solutions that enabled BAU continuation of economic growth. That is certainly one thing in common we share – as an aspiration. But I always felt that you failed to appreciate the linkages between energy surpluses and economic surpluses – which are still poorly understood. I could not reconcile the $ economics with BTU economics in this post. But I doubt that a doubling of energy consumption in the transport sector (ignoring other efficiency gains) would be a good thing for the economy as a whole.

      The Audi technology can be viewed in a totally different light if the electricity source is nuclear. Unfortunately, however, the real cost of nuclear power seems to be lost in a sea of HSE concern and red tape that surrounds this safest form of electricity production yet invented.

      “We” were surprised indeed at how efficient the Audi e diesel process was and at how the cost was not outrageous. But, at the end of the day, for short commutes, electric cars must surely make a lot more sense.

      Chained energy efficiency must rule the day.

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