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In depth
| 06/27/18

Can there really be carbon-neutral gasoline? A BC firm reckons it might arrive sooner rather than later

TCE

What if instead of having to adopt new types of vehicles that are electric or run on hydrogen—and all the new infrastructure and technological challenges this requires—the vehicles ran on carbon-neutral versions of ordinary gas or kerosene?

This is the idea behind “synthetic hydrocarbons,” or synfuels, or sometimes just “air to fuels.” They can be manufactured by combining CO2 captured from the atmosphere with cleanly-produced hydrogen. When combusted, these synfuels just emit back into the atmosphere what had earlier been drawn down, making the fuel carbon-neutral.

The cost of the technology that could draw down the CO2, direct air capture (DAC)—sometimes called artificial trees—had long been thought to be prohibitively expensive, $600 per tonne of CO2. This month, however, a widely heralded paper in the energy research journal Joule shocked many in the climate solutions community by suggesting that figure could be as low as $94 a tonne. The paper was written by engineers and chemists with a Squamish, BC, startup, Carbon Engineering, that is trying to make a commercial go of the process themselves. It’s still a pricey proposition, but within spitting distance of financial viability.

And DAC could also be used in partnership with carbon sequestration, or burying CO2 underground or under the seabed, to help the global economy go carbon negative at some point later this century, as many analysts are increasingly concluding will be necessary.

The Climate Examiner spoke to one of the co-authors of the paper, Geoffrey Holmes, who is also an engineer with the company, to get a bit more detail about the technology, the business and the policy supports that could make DAC, synfuels and carbon sequestration work.

What is the key significance of the Joule paper for climate mitigation? Why do you think it had such a big impact in the climate community?

There has been more talk about negative emissions in recent years and that’s because a lot of the modelling shows that if we want to hold to 2C, or especially to 1.5C, then we at some point will have to not just stop putting CO2 into the atmosphere, but actively remove it. However, the climate community has little hard data about technologies and systems that can deliver negative emissions. Up till now, nobody has really laid out this level of detail about air capture before.

There is a bit of confusion in some of the coverage of Carbon Engineering, casting direct air capture as producing a carbon-negative product. But there are in fact two roles for DAC: one that is carbon neutral (synthetic fuels), and one that is carbon negative (DAC plus sequestration). Could you explain the difference between the two?

It’s important to keep the two concepts distinct. Direct air capture in its simplest sense is a technology that processes ambient air, absorbs CO2 and purifies it. The carbon balance—staying neutral or going negative— depends on what you do next.

We can make synthetic fuels, and if they displace fossil fuels, then we are reducing emissions but we are certainly not going carbon negative.

But if we use DAC to produce a stream of pure CO2 and then inject it underground, it creates a unit of physical, measurable, verifiable negative emissions today. Or it can be used in the far future, when we have eliminated most sources of carbon emissions, to remove net quantities of CO2 from the atmosphere.

In some of your configurations, the process involves use of natural gas for power. Why not just use clean electricity?

The baseline configuration in the paper is not designed to deliver CO2 for synthetic fuel production, but to deliver CO2 for sequestration or injection. When we look at injection underground, the cheapest way to power that facility right now is with natural gas. And with the injection scenario, we take all the combustion CO2 and inject it down-hole alongside all the CO2 that we’ve captured from the atmosphere. So, we don’t penalize ourselves in terms of the carbon balance when we use natural gas. We’re still going carbon negative overall.

But in the scenarios where we supply CO2 for fuel, we’re not doing that injection, so we have to look a lot harder at supplanting that natural gas with clean electricity to drive the carbon intensity of the fuel as low as possible.

The $94-$234/tCO2 cost is for a pure stream of CO2, i.e., the cost of running your direct air capture system. Do you have a sense of the range of how much extra it would cost to produce the second part of the proposed air-to-fuels product, the synthetic fuel?

When we do the math on what the CO2 as a feedstock costs, what a renewably produced hydrogen feedstock costs and then the cost of converting the two into a liquid fuel, we get a total production figure of around a dollar a litre that can then be blended or refined into final products. That’s obviously more expensive than the bulk production costs of fossil fuels, but it is within striking range of what is economically viable.

How far away are you and other DAC developers from commercialization? What sort of policy support would help you out?

A low carbon fuel standard (LCFS) is the lynchpin of what makes the business case for us. If we’re producing synthetic fuels at a dollar a litre and fossil fuels are closer to 60 cents or so, to make synfuels competitive, they would need a price on carbon of about $200 a tonne.

We don’t see carbon taxes in any jurisdiction yet where they are at that price point. However, an LCFS is specific to fuels and generates credits or deficits for a fuel producer with respect to the carbon intensity of their fuel compared to a ceiling, a maximum carbon intensity that is set out in legislation. Those below the ceiling, such as ethanol, hydrogen or electricity for electric vehicles, receive credits. Those above, such as many types of gasoline and diesel, are in deficit, and so must purchase credits in order to not exceed the ceiling. But the ceiling is lowered each year, constantly ratcheting up the restrictions on carbon intensity.

Currently the credit that has to be purchased in the LCFS regimes in BC and California is getting towards the equivalent of a carbon price of around $200 a tonne. When we sell both the fuel and the credit, we’re competitive.  Then the economics really do make sense under those regimes.

Our go to market strategy is to licence our technology to plant owners, receiving a revenue royalty for the full life of plant operation. This low capital intensity and high margin model can be rapidly deployed through partnerships worldwide. We are actively seeking our first partners to build full-scale commercial facilities, which can be placed in any country and in multiple climates.

Once upon a time, we thought that biofuels were carbon neutral, but we now know that many first- and second-generation biofuels can be worse than fossil fuels once a full life-cycle analysis (LCA) of the emissions are taken into account due to transport emissions and land-use change. How are you avoiding this life-cycle problem? 

The rough LCA we have performed so far is for air capture coupled to sequestration. And we concluded that across the life cycle of that process, we emit 0.1 tonne of CO2 for every tonne we sequester, giving overall net emissions of minus 0.9 tonnes of CO2. We’re actually doing a more robust LCA with some academics who specialize in lifecycle analysis. They’ll probably tweak these numbers a little bit, but we don’t expect any surprises.

Where the challenge with the carbon intensity of biofuels is the land-use change required to produce them. And the land footprint of syn-fuels is about 100 times smaller than biofuels.

Some of the discussion about this technology worries that if we can remove CO2 from the air, then we don’t have to care about GHG emissions mitigation.

We agree wholeheartedly with these concerns. We absolutely do not want to see the world slack off on cutting emissions and improving energy efficiency in the hope that at some point in the future CO2 capture can just fix it all. DAC is just one of many tools that help drive our emissions to net zero as quickly as possible.

But we also only get to succeed as a business, injecting CO2 underground or making carbon neutral fuels, in a world that is effectively putting prices on carbon. And an effective price on carbon will drive these other mitigation actions as well.

In depth

Can there really be carbon-neutral gasoline? A BC firm reckons it might arrive sooner rather than later

The Climate Examiner speaks to BC-based Carbon Engineering about the technology, the business and the policies that could make direct air capture, synfuels and carbon sequestration work.

Climate news and analysis that's relevant for you, every week.