Category: Report

Our 18-page note models the full-cycle economics of a green hydrogen value chain to decarbonize trucks. In Europe, at $6/gallon diesel, hydrogen trucks will be 30% more expensive in the 2020s. They could be cost-competitive by the 2040s. But the numbers are generous and logistical challenges remain. Green hydrogen trucks will most likely find adoption in niche applications, competing with other technologies, rather than as a wholesale shift to a hydrogen economy.

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Costs of the green hydrogen value chain are summarized on pages 2-3, re-capping why we are relatively cautious on hydrogen in the power sector (note here).

The opportunity in transportation may be much greater, including a lower hurdle for cost competitiveness, and environmental benefits over diesel trucks. (pages 4-5).

The economics of hydrogen fuel retail stations are outlined on pages 6-7, however, we acknowledge our numbers are optimistic for three key reasons.

Hydrogen trucks are compared against diesel trucks on pages 7-11, quantifying the relative differences in costs, ranges, fuelling speeds, functionalities and maintenance costs.

Full-cycle economics are compared on page 12-14, showing the relative costs of hydrogen, LNG, CNG. LPG and diesel; in Europe, in the US, with varying CO2 prices and in the 2040s.

Niche adoption of hydrogen is possible in some contexts, as outlined on page 15, but we think a full-scale shift to green hydrogen trucks is impractical and unlikely.

Technology leaders are profiled on pages 16-18, after reviewing 18,600 patents. We show which companies are commercializing hydrogen vehicles and fuelling stations, and the considerable complexities they are aiming to overcome.

Supercapacitors may eclipse lithium ion batteries? This research report outlines the opportunity for supercapacitors in transport and industry. Their energy density is improving. Potential CO2 savings could surpass 1bn tons per year. IRRs of 10-50% can be achieved, even prior to CO2 prices. This 20-page note presents are our conclusions after reviewing 2,000 Western patents, and identifies leading companies exposed to the theme.

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What are super-capacitors? The underlying physics of super-capacitors and their energy economics are spelled out from first principles on pages 2-3.

The three technical advantages of super-capacitors over lithium ion batteries are argued on pages 4-8.

Commercial deployments of super-capacitors, including case studies, energy savings, capex costs and economics are presented on pages 9-14.

Efforts are underway to improve energy density by tuning ionic electrolytes to better-controlled graphene pore distributions, as outlined on pages 15-17.

Over 20 companies geared to the theme, including “technology leaders”, are profiled based on reviewing 2,000 patents, on pages 18-20.

Downward revisions to our long-term oil demand forecasts, incorporating the impacts of supercapacitors, are presented on page 20.

This report specifically focuses on the use of supercapacitors in transport and industry. Although more recently, we have been getting excited about supercapacitors as a means of smothing short-term volatility.

Additive manufacturing (AM) can eliminate 6% of global CO2, across manufacturing, transport, heat and supply chains. This 21-page note on how additive manufacturing benefits the energy transition via 3D printing quantifies each opportunity and reviews 5,500 patents to identify who benefits, among Capital Goods companies, AM Specialists and the Materials sector.

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Additive manufacturing and its advantages, and how additive manufacturing benefits the energy transition are described on pages 2-4, with reference to a database of a dozen examples, quantifying cost savings and lead time reductions.

Potential CO2 savings are discussed in manufacturing, transport, power, heat recovery, supply chaining and across the oilfield on pages 5-14.

Leading companies exposed to the theme are profiled, based on our screen of 5,500 patents on pages 15-17, ranging from venture stage firms, to listed pure-play specialists, to mega-cap diversified capital goods companies. Oil and Gas companies’ exploration of theme are outlined on page 18.

Implications for the materials sector are most interesting, lowering demand for metals, and ramping demand for thermoplastics. We describe the main products in detail, and the leading companies making them, based on our patent screen, on pages 19-21.

Efficiencies from an imposed CO2 price of $40-80/ton could double the pace of industrial gains in the oil and gas sector, eliminating 15-20% of its CO2 emissions, as outlined in this 14-page note. Cost-curves would steepen in E&P and refining. Technology leaders benefit. Spending would also accelerate, particularly for heat exchangers, compressors, digitization and electrification projects.

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The importance of industrial efficiencies from an imposed CO2 price, particularly within the oil and gas sector, as part of the energy transition, is summarized on pages 2-3.

The mechanism for unlocking efficiency gains with a CO2 price, including the costs of improvement projects, is summarized on pages 4-5.

The opportunity capture waste heat is greatly enhanced with a CO2 price, and leading companies are identified based on reviewing 1,500 Western patents on pages 6-9.

The opportunity to eliminate flaring fully from the US with a CO2 price below $100/ton, including implications for oil producers, is presented on pages 10-11.

Further efficiency gains, such as preventing methane leakages, adopting more digital solutions, and electrifying frac fleets are presented on pages 12-14.

What is the best strategy for oil companies in the energy transition? We think 50% upside can be unlocked on the road to net zero. This means emitting no net CO2, either from the company’s operations (Scope 1&2 emissions) or from the use of its products (Scope 3). This 19-page report shows how a Major can best achieve ‘net zero’ by exhibiting four cardinal virtues. Decarbonization is not a threat but an opportunity.

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Prudence entails shifting portfolios appropriately. Full decarbonization of the world is possible at a CO2 cost below $75/ton. Thus, technologies costing $100-1,000/ton should be avoided as they could prove to be value destructive. The largest, cost effective opportunity for Majors is trebling gas output, displacing 2.5x more CO2-intensive coal, which can save 20% of the world’s emissions (pages 2-5).

Temperance entails lowering CO2 intensity. Scope 1&2 CO2 varies 5-7x between different resources plays and by 2-3x within resource plays. For Oil Majors to achieve net zero they must strive to be among the lowest carbon competitors in every sub-sector where they operate. This CO2-efficiency correlates with cost-efficiency. It is increasingly rewarded by financial markets with c2pp lower WACCs and higher multiples (pages 6-12).  

Courage entails maintaining investment where it is justified by a technical edge. Across a commodity industry, superior returns and CO2 intensities hinge on having superior technologies. Thus, to make the world as efficient and low carbon as possible, companies with industry-leading capabilities should invest. Their growth takes share from less efficient peers, helping the transition (pages 13-16).

Justice entails offsetting all CO2. Nature-based solutions to climate change, such as reforestation and soil restoration, can generate carbon offsets, costing $10-50/ton, near the bottom of the global CO2 cost curve. These offsets can be sold alongside fuels to yield ‘decarbonized fuels’, uplifting retail margins c15-25% (pages 17-19).

Note: the ‘four cardinal virtues’ have been borrowed from Plato’s Republic. The modelling and analysis in the note is our own. Please let us know if you have any questions, comments or would like to discuss the best strategy for oil companies in the energy transition.

Natural gas currently fuels two-thirds of residential and commercial heating, which in turn comprises c10% of global CO2. In this 20-page report, we have assessed ten technologies to decarbonize heat, including heat pumps, renewables, biogas and hydrogen. The lowest cost and most practical solution is to double down on natural gas, alongside nature-based carbon offsets. Global gas demand for heating should continue rising by 3bcfd per year.

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Heating’s contribution to global energy demand, gas demand and global emissions is broken out on page 2.

Natural gas currently supplies two-thirds of heating. Different boiler types, their costs and their efficiencies are reviewed on page 3.

Natural gas can be decarbonized with nature-based solutions. The mechanisms and the costs are explained on page 4.

Other incumbents are contrasted on page 5, including oil furnaces and electric heaters, showing how their costs vary with oil, gas and power prices.

Heat pumps can be cost-competitive, if powered from the grid, and our screen of leading heat pump companies is presented on page 6.

Running heat pumps purely off of renewables is not economical. The numbers and the challenges are outlined on pages 7-9.

Solar rooftop heaters can also be cost-competitive in certain contexts, but not in our base case and not at scale (page 10).

Biogas costs are very high, but landfill taxes can act as a kingmaker for these projects, ramping them to c10-20% of developed world gas grids (page 12).

Hydrogen is least economic of the options we considered. Costs and challenges for blue, semi-green and fully green hydrogen are outlined on pages 13-14.

Capturing more waste heat from industrial processes, finally, holds some potential, and we screen numbers on pages 15-16.

Conclusions and impacts for the global gas market are articulated on pages 17-19.

Which gas resources are best-placed to decarbonize heat are summarized on page-20.