Climeworks: direct air capture breakthrough?

Climeworks is a private, Swiss company, founded in 2009, commercializing a direct air capture technology, to pull CO2 out of the atmosphere. It has raised $125M by early-2021.

Its first CO2 removals facility is also running and a second is under construction. Current CO2 removal costs are likely above $1,000/ton. It uses a dry process with much lower water intensity than, say, Carbon Engineering.

The main innovation visible in Climeworks’ patents is a DAC plant with optimized air flow, passing CO2 through layers of fabric housing CO2-adsorbing materials. This is an important breakthrough to avoid steep pressure drops (and their resultant energy penalties) in DAC.

Based on reviewing Climeworks’ patents, we were unable to de-risk sub-$200/ton CO2 costs, which is the base case in our economic models.  

The Top Public Companies for an Energy Transition

This data-file compiles all of our insights into publicly listed companies and their edge in the energy transition: commercialising economic technologies that advance the world towards ‘net zero’ CO2 by 2050.

Each insight is a differentiated conclusion, derived from a specific piece of research, data-analysis or modelling on the TSE web portal; summarized alongside links to our work. Next, the data-file ranks each insight according to its economic implications, technical readiness, its ability to accelerate the energy transition and the edge it confers on the company in question.

Each company can then be assessed by adding up the number of differentiated insights that feature in our work, and the average ‘score’ of each insight. The file is intended as a summary of our differentiated views on each company.

The screen is updated monthly. At the latest update, in February-2021, it contains 200 differentiated views on 100 public companies.

The Top 40 Private Companies for an Energy Transition

This data-file presents the ‘top 40’ private companies out of several hundred that have crossed our screens since the inception of Thunder Said Energy, looking back across all of our research.

For each company, we have used apples-to-apples criteria to score  economics, technical readiness, technical edge, decarbonization credentials and our own depth of analysis.

The data-file also contains a short, two-line description follows for each company, plus links to our wider research, which will outline each opportunity in detail.

Ethanol: hangover cures?

Could new technologies reinvigorate corn-based ethanol? This 12-page  note assesses three options. We are constructive on combining CCS or CO2-EOR with an ethanol plant, which yields a carbon-negative fuel. But costs and CO2 credentials look more challenging for bio-plastics or alcohol-to-jet fuels.

Ethanol from corn: the economics?

This data-file captures the economics of producing ethanol from corn in the United States,  based on technical papers and industry data-points.

Our base case calculations suggest a price of $1.6/gallon of ethanol is needed for a 10% IRR on a new greenfield plant, equivalent to $2.4/gallon gasoline.

This is higher than 2020 ethanol pricing, which was enough to break even on a cash basis, but not for economic returns. Corn prices are the crucial input.

Finally, recent industry data are tabulated, showing how the US diverts c40% of its corn crop into biofuels rather than food and feed (below).

Biomass to biochar: the economics?

This data-file captures the economics of producing biochar from waste biomass that would otherwise be likely to decompose. Other products are bio-oil and bio-gas, with the mix depending on reactor temperatures.

Biochar is a carbon negative material, according to our carbon accounting, locking as much as 0.5kg of CO2 into soils and construction materials per kg of dry biomass inputs.

It can also be highly economical, with a base case IRR of 25%. Our full model allows you to stress-test input assumptions. Our own inputs are derived from a series of technical papers, summarized in the final tab.

Offshore offsets: nature based solutions in the ocean?

Nature based carbon offsets could migrate offshore in the 2020s, sequestering 3GTpa of CO2 for prices of $20-140/ton. In a more extreme case, if CO2 prices reached $400/ton, oceans could potentially decarbonize the whole world. This note outlines the opportunity in seaweed and kelp cultivation. It naturally integrates with maritime industries, such as offshore wind, offshore oil and shipping. Over 95% of the 30MTpa seaweed market today is in Asia, but Western companies are emerging.  

Companies buying nature-based carbon offsets?

This data-file aims to tabulate how 35 leading companies globally are purchasing nature-based carbon offsets, in order to offset their CO2 emissions.

The data-file includes the rationale for the purchases, the projects supported, how they are verified, their scale and their cost.

We find appetite for carbon offsets accelerating. 60% of the projects are reforestation projects, 2.5x more prevalent than forest conservation. 70% are undertaken indirectly through partners, versus 30% undertaken directly. 95% of indirect projects have sought third-party verification, while 60% of direct projects have self-verified.

Companies in hard-to-abate sectors, such as transport and materials were more likely to prefer carbon-offsets, while those in easy-to-abate sectors, such as tech, finance and media have been more likely to purchase nature-based carbon credits as a ‘last resort’ after exhausting other options.

Mangrove restoration: what costs for carbon offsets?

This data-file calculates the economics of carbon-offsetting via mangrove restoration projects, including a full breakdown of costs. This matters as mangroves are a crucial blue carbon eco-system.

In the US, we estimate a $130/ton CO2 price is required for a 10% IRR, of which c30% is the cost of labor (to plant seedlings at $15/hour) and c30% is land leasing.

In the emerging world, a $15-35/ton CO2 price suffices for a c 10% IRR. The lower costs may be an argument for developed world countries to partner with emerging world countries to promote cost-effective carbon sequestration.

Finally, if the projects are viewed as a charitable undertaking simply required to break even (while restoring nature, offsetting CO2 and lifting local people out of poverty), then the best projects in the emerging world can have a CO2 cost as low as $3/ton.

Please download the data-file to stress-test the inputs and assumptions.

CO2 from electric vehicles versus ICEs and hydrogen?

This data-file tabulates the CO2 intensity of producing and charging lithium ion batteries for automotive use, split across 10 different components, informed by the technical literature. Producing the average EV battery emits 9T of CO2 (chart below).

Electric Vehicles should nevertheless have c50% lower emissions than gasoline vehicles over their entire useful lives, assuming equivalent mileages. Although we see gasoline vehicles’ fuel  economies improving.

Manufacturing EVs has an energy deficit, which means the ascent of EVs could increase net fossil fuel demand all the way out to 2037 (note here).

This data-file can be used to calculate the crossover point, which comes after around 3.5 years and c50,000 miles (chart above). The numbers will vary as a function of grid composition, technical improvements and vehicle specifications.