Carbon Dioxide to Chemicals and Fuels

By Ron Cascone, Principal, Nexant, Inc.

Special to The Digest

Emissions of carbon dioxide by industrial and chemical processes have come under increasing pressure in recent years with regulatory and consumer scrutiny. A number of industrial and commercial consortia and individual companies are committing to major reductions in their carbon footprints. Although technical solutions for the removal or redirection of carbon dioxide streams as well as their sequestration have long existed, the major problem for these displacements of carbon emissions has been the disposition of the carbon dioxide streams with no economic benefit, or with less than viable rates of return.

Carbon capture and sequestration of the captured carbon emissions in underground formations (CCS, so called “Clean Coal”) has no economic use and is very expensive. CSS competes with such as planting of forests and biofuels as economically beneficial sequestration or abatement strategies, renewable electricity (wind, solar, hydropower, etc.), and many types of energy conservation. These latter abate carbon emissions by causing fossil fuels to be left underground. Biofuels of course would benefit from carbon taxes if promulgated, but they are widely supported globally by mandates, subsidies, and like policies in most major industrialized countries, except Russia. Solar and wind renewable electricity generation also have been widely supported by public policies.

Shown here is a current version of an iconic cost curve, or “stack chart” generated in an ongoing analysis started by the Scandinavian utility, Vattenfall, and carried on by McKinsey & Co and the US EPA, of estimated costs and volumes addressable for a wide range of greenhouse gas abatement measures. Many different versions have been published over the last decade.

This suggests that there is an enormous trove of the “low-hanging fruit” to exploit in mundane building energy efficiency measures, low-carbon transportation, agricultural management, waste recycling, and the like, while some of the high tech and CCS solutions being pursued are very expensive (in the order of US$50 to US$100 per ton of CO₂ equivalent). Solar and wind power have rapidly falling costs moving them to join the other fast-payout measures to the left of the chart.

Nexant has published many reports relevant to these issues, including on Electric Vehicles and Advanced Batteries, and in its Biorenewable Insights (BI) program, first and next generation ethanol and diesel biofuels, bio-jet fuel, biogas and LFG, feedstocks such as conventional and cellulosic sugars, carbohydrates and natural oils, the agriculture behind them, and algae technology, besides on a large number of bio-based chemicals and polymers.

Picking up further on this concept, Nexant has published a new report in the BI program, Carbon Dioxide to Chemicals and Fuels. This looks at a selected number of large-scale technologies and/or products that could utilize industrial stack CO₂ as a carbon source, and assesses their production economics, profitability, prospects for growth, ultimate efficacy in taking carbon out of the atmosphere and/or keeping additional fossil carbon emissions from occurring, and Life Cycle issues. One objective of this analysis is to determine how much “bang for the buck” we can get by having a global carbon taxing regime. That is, how large would a carbon tax have to be to incentivize adoption of various levels of these options combined?

Carbon dioxide has been traditionally used as a feedstock for certain chemical processes, such as the synthesis of succinic acid, salicylic acid, and methanol. However, it is widely recognized that these products do not have enough carbon dioxide consumption potential to provide significant impact. As a result, major players in the fuels and chemicals industries have begun serious development of other processes that produce intermediates and finished products from carbon dioxide. One of the most interesting areas is in the many developments that use renewable electricity to convert CO₂ to chemicals or fuels. This study does include a few, but not the most early-stage technologies.

There are also many uses of captured CO₂ as a tool or working chemical, with short-term re-release, which do not result in its permanent sequestration. These include beverage carbonation, supercritical CO₂ as a process or cleaning solvent, EOR for petroleum production (in most cases), turning anhydrous liquid ammonia fertilizer to a solid by reacting it with CO₂ to make urea, etc. While these have economic value, they are not the point of this conversation convert CO₂ to fuels or chemicals.

Conclusions of the Analysis

It is estimated that to stabilize carbon emissions at current levels of about 8 billion tons per year by 2050, another 8 billion tons per year of carbon emissions would need to be avoided. A simple conclusion from Nexant’s analysis is that at current levels of technology and with current oil prices, under 100 million tons of avoidance (a little over 1 percent of what is needed) can be accomplished. With a carbon credit of US$50 to US$100 per ton globally, this can be expanded to around 600 to 700 million tons per year, or 7.5 to 9 percent of what is needed. With carbon credits in excess of US$1,000 per ton (which is highly unlikely) 38 to 50 percent would be obtainable, as between 3 and 4 billion tons of carbon dioxide annually could be utilized. Any of this production that is used as a biofuel and burned in place of fossil carbon could have additional GHG benefits. Any increases in oil prices would likely increase the competitiveness of these mitigation options and reduce the carbon credit required for competitiveness.

In terms of medium-to-long term storage of atmospheric carbon in durable goods, around 12 million tons annually can actually be removed from the carbon cycle at current oil prices, without virtual subsidization through carbon credits. With a carbon credit of about US$50 to US$100, this can be increased to 15 million tons per year reduction of carbon in the carbon cycle, on top of the “utilized” carbon. Even without market growth, 12 million tons per year from 2017 to 2055 would amount to over 450 million tons of carbon dioxide removed from the atmospheric carbon cycle. This is increased to over 550 million tons if 15 million tons are locked away in durable goods.

In short, industrial utilization of CO₂ may play a significant but not controlling role in emissions reductions, and there are current opportunities in various industries to make both a profit and an environmental difference. Any increases in oil prices, or development of new carbon credits will increase the attractiveness of these options.

Technology Analysis

The report provides an in-depth technical review of commercial and emerging technologies to directly convert carbon dioxide to chemicals and fuels, as well as technologies that can reduce carbon emissions by indirect CO₂ consumption. Some of the technologies examined include:

• Organic Carbonates
• Ethylene carbonate
• DMC (dimethyl carbonate)
• Polycarbonates
• Dry Reforming and Syngas
• Methanol
• Soda Ash
• Bioprocess Feedstock
• Succinic Acid
• Algae Technology
• Syngas Fermentation
• Electrochemical Conversion
• Formic Acid
• DMC (dimethyl carbonate)
• Liquid Light/Avantium
• Magnesium Carbonate
• Cement
• Other Uses – Salicylic Acid

Economic Analysis

The following discussion explains the approach without giving specifics. Economics for these different technologies that reduce carbon emissions by direct or indirect consumption of CO₂ are investigated for key geographic regions in Q2 2017: US Gulf Coast, China, Brazil, and Western Europe.

Example 1 shows a “sanitized” summary of modelled costs of production for 13 selected technologies / products including a reasonable return on capital invested (ROCE) in China, compared to the market prices for the products. Technologies 7, 12, and 13 are potentially profitable without any carbon credits, and technology 3 is nearly so, but all the others would need substantial subsidization to varying degrees.

Example 2 presents a “bang for the buck” multi-parameter analysis, for Western Europe in this case, “sanitized” of technology names. Here, CO₂ consumption for total capital employed is represented by bubble size, while the y axis indicates the magnitude of the potential CO₂ capture, as a function of the x-axis, the unsubsidized modelled return on capital employed.   Those most capital-efficient and profitable options, technologies 3, 9, and 11 in green on the lower right of the chart are most attractive to pursue, but have much smaller impact on carbon emissions than technologies 1, 4, 5, and 7.   Technology 12 needs little capital investment, but would need much subsidization to be profitable and would not affect much carbon emission in total.

Carbon Dioxide Utilization and End of Life

The report also compares the amount of carbon dioxide consumed in each conversion process with the carbon credit required for competitive production, examining the following:

• CO₂ Utilization Potential: the amount of carbon dioxide that would be utilized if this process supplied the entire industry (whereas Example 2 is for Western Europe only)
• CO₂ End of Life Potential: The amount of carbon dioxide that remains bound in a durable product, and is not re-released into the atmosphere as carbon dioxide (or other GHG), so liquid fuels made from CO₂ as a carbon source are effective in displacing fossil fuel and thus keeping carbon “in the ground”
• Carbon Credit: The value that the carbon credit would have to be for the process to generate a minimum return on capital employed

Stack Charts

Different versions of “stack charts” were developed for the report by plotting the carbon credit required per ton of a product versus the potential carbon reduction magnitude of the opportunity.   This is like the Vattenfall charts that show a broad spectrum of strategies, with expensive solutions on the right and solutions with negative costs on the left. Feasibility and availability of the solutions also tend to be greater on the left than on the right. As with many of such charts, a “double hockey stick” shape results, as shown in Example 3.   This indicates that somewhere around 2.7 billion tons per year of CO₂ used in a variety of products could be incentivized by a carbon credit of about $750 per ton.   Nexant parses the candidate technologies/products with respect to needed carbon credit and size of opportunity from the viewpoints of regionalism, technology type, and other metrics.

Nexant’s subscription program, Biorenewable Insights (BI), of which this report is one, provides in-depth evaluations and reliable data on the technology, cost competitiveness and business developments across the Bioeconomy value chain, of biorenewable feedstocks, conversion technologies, chemicals, polymers, and fuels. BI was created in response to the increasing activity in this industry segment in recent years, including entrances and exits of players, emergence and commercialization of new technologies, feedstocks, product types, as well as growing interest from companies in the energy, chemical, agricultural, forestry, financial and other sectors. It also looks in general at how the Bioeconomy can help solve society’s most pressing problems.

Reports can be purchased as an annual subscription to the full program or on an individual basis, including reports from earlier program years. For a complete list of all published and upcoming BI reports, please visit the Nexant Thinking here.

Ron Cascone is a Principal in the Energy and Chemicals Advisory at Nexant, Inc. He is a chemical engineer with 50 years of experience in the process industries. Ron has led or assisted in many technical, economic, and business feasibility analyses and in dozens of finance due diligence assignments across a wide range of industries and technologies, and mostly of late, in renewable chemicals, fuels, and polymers technology developments and first-of-a-kind projects. Ron has a broad knowledge of the global chemical and energy industries, biofuels, renewable chemicals, and other bio-based materials, bio-based processing, agriculturally-related sustainable development strategies, and many other industrial and economic sectors. He has authored or advised on numerous Nexant multiclient reports first generation and advanced liquid biofuels, including by gasification, fermentation, pyrolysis and chemical conversion.

Ron majored in chemical engineering at Manhattan College and Columbia University. He has authored many published articles and conference papers and holds two US patents in synfuels.