Pumps Could Soon Replace Costly Petrol With New Japanese Fuel Made From Air

Japan’s largest oil refiner ENEOS Corporation has successfully demonstrated the production of a new replacement for petrol/diesel using carbon dioxide captured from the air and hydrogen extracted from water, according to official project disclosures and industry reports.

If approved, the new fuel could be a cheap/discounted alternative to the expensive petrol used in countries like Pakistan, India, Bangladesh and Sri Lanka as well.

The company built a synthetic fuel demonstration plant at its Central Technical Research Laboratory in Yokohama, capable of producing approximately one barrel (around 160 litres) of fuel per day.

How the Fuel Was Produced

The demonstration system combines several established technologies:

• Direct Air Capture (DAC) technology collects CO₂ directly from the atmosphere.
• Hydrogen is produced from water using electricity, typically sourced from renewable energy.
• The gases are then converted into liquid hydrocarbons through synthetic fuel processes such as Fischer-Tropsch synthesis.

ENEOS confirmed it began DAC demonstration testing in 2023 to evaluate large-scale feasibility and future deployment potential.

The resulting fuel is chemically similar to conventional petroleum products and can be used in existing internal combustion engines and infrastructure without modification. It can be commonly described in the industry as a “drop-in” synthetic fuel.

Testing

Fuel produced at the Yokohama facility has already been used in transportation trials, including operation of an Expo 2025 Osaka shuttle bus powered by synthetic fuel, demonstrating real-world usability beyond laboratory experiments.

Project Status

Despite proving the technology works, large-scale commercialization has not yet moved forward.

Recent reporting indicates the project was paused after the demonstration phase, mainly due to high production costs and scalability challenges rather than technical failure. Synthetic fuels currently require significant electricity input, making them economically less competitive than conventional fuels.

Industry

Synthetic fuels made from captured CO₂ and renewable hydrogen are being explored globally as a low-carbon solution for sectors where electrification remains difficult, including:

• aviation
• shipping
• heavy transport
• industrial energy use

ENEOS continues research into carbon-neutral fuels as part of Japan’s decarbonization strategy.