Carbon Funds to Decarbonize Natural Gas

This economic model illustrates a carbon fund to decarbonize natural gas by planting new forests, while also generating passable economics, attracting investment and incentivizing CO2 savings.

The mechanics are that the fund collects carbon credits, which are bundled into the contractual sales price of natural gas (typically costing less than $1/mcf). Part of the carbon credits are used to plant forests. The remainder are kept as financial reserves, to ensure the fund can meet its future offset obligations. Once these obligations have been met, the financial reserves can be disbursed to the fund’s limited partners.

Please download the data-file to stress-test forestry costs, carbon pricing, gas pricing and optimisation opportunities.

CO2 from plastics and petrochemical facilities?

This data-file aims to quantify the CO2 intensity of producing plastics, across the entire value chain from oil and gas inputs, to cracking, polymerisation, extrusion and end-of-life treatment.

Granular data are tabulated on 70 chemicals facilities around the US. Most facilities are not directly comparable. However, we have derived meaningful CO2 intensity data (per ton of product) for c20 of them. We find large and integrated petchem facilities tend to be more efficient (chart below)Beneficial energy economics for plastics are confirmed in the work. For example, our numbers suggest the CO2 emissions for a single-use plastic bottle would be c90% lower than a single-use glass bottle. Numbers could be further improved by next-generation technologies turning plastic back into oil.

 

Ten Themes for Energy in the 2020s

This short presentation describes our ‘Top Ten Themes for Energy in the 2020s’. Each theme is covered in a single slide. For an overview of the ideas in the presentation, please see our recent presentation, linked here.

Fugitive methane: what components are leaking?

This data-file looks through 35 different technical papers and data-sources to tabulate the methane leaks from different components around the oil and gas industry.

The largest leaks per event are from losses of well control, which can emit 10-1M tons per annum. Next are mid- and downstrseam facilities at 1-10kTpa.

The largest leaks by upstream component are compressor seals (1-100Tpa) and millons of pneumatic devices (0.01-10Tpa), which each comprise c20-30% of total upstream leaks.

Potentially overlooked categories include wellheads, storage tanks and workover practices. All are quantified in the data-file. The theme is addressed in detail in our note, mitigating methane.

CO2 emissions from batteries: when do EVs break even?

This data-file tabulates the CO2 intensity of producing 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.

Electric Vehicles should have c40% lower emissions than gasoline vehicles over their entire useful lives, assuming equivalent mileages.

But 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.

Should fuel retail stations sell carbon credits: the economics?

This model calculates the uplift in FCF and NPV for a fuel-retail station that offers CO2-offsets at the point of sale, alongside selling fuel. The rationale, and the different models that could be employed are outlined in our recent deep-dive research note.

In both models shown above, annual FCF can be uplifted by 15-30%, while fuel retail stations’ NPV can be uplifted by 15-25%, depending on the portion of consumer that purchase the carbon credits.

Gross profits from selling $50/ton carbon credits may be around 3x the typical EBIT margins of retail stations, hence we explore a particular sales model that can at least double fuel retail NPVs.

Forests to offset CO2: the economics?

This model quantifies the economics and carbon-costs of a US-based forestry project, purchasing pasture, and converting it into forest-land over a 40-year period.

Our base case is for a 10% IRR at a $50/ton carbon price. You can stress test the economics by flexing land prices, capex, opex, growth rates, timber prices, pre-commercial thinning rates and other more granular details.

Molten Carbonate Fuel Cells: capture carbon, generate electricity?

Molten carbonate fuel cells (MCFCs) could be a game-changer for CCS, and fossil fuels. They are electrochemical reactors with the unique capability to capture CO2 from the exhaust pipes of combustion facilities; while at the same time, efficiently generating electricity and heat from natural gas. The first pilot plant is being tested in 1Q20, by ExxonMobil and FuelCell Energy. Economics range from passable to phenomenal. The opportunity is outlined in this 27-page report.

Leading Companies in Redox Flow Batteries

We have compiled a database of 25 leading companies in Redox Flow Batteries, starting by looking across 1,237 patents filed about the technology since 2017 (all patents are summarized in the second tab of the data-file).

For each company, we summarize its technology, its recent projects news, its size, its location and whether it is public/private. Covered companies range from public Asian conglomerates to public/private redox flow pure-plays.

Exciting progress is visible from Redox Flow batteries, rapidly progressing toward technical maturity, constructing demonstration facilities and offering ultra long-life battery storage, which could greatly surpass lithium ion economics in grid applications.

Molten Carbonate Fuel Cells: CCS plus Power? The Economics?

Molten Carbonate Fuel Cells could be extremely promising, generating electrical power from natural gas as an input, while also capturing CO2 from industrial flue gases through an electrochemical process.

We model competitive economics can be achieved, under our base case assumptions, making it possible to retrofit units next to carbon-intensive industrial facilities, while also helping to power them.

Our full model runs off 18 input variables, which you can flex, to stress test your own assumptions.