Global CO2 emissions are around 50GTpa on a fully loaded basis in 2021. Without intervention, it is likely that global CO2 emissions would surpass 80GTpa by 2050. Our decarbonization research covers opportunities to achieve an energy transition and abate CO2.
Generally, we label data-files under the ‘decarbonization’ category when they are directly about decarbonization opportunities, and when they do not fit squarely into other research categories on our website, such as wind, solar, coal-to-gas, efficiency technologies, CCS or nature-based CO2 removals.
Examples of decarbonization research include our roadmap to net zero, screens tracking the decarbonization targets of companies, or screens of companies’ purchases of nature-based CO2 removal credits.
Other examples cover the relative CO2 savings (aka CO2 abatement) that might be achieved by deploying other technologies in the energy transition. For example, an EV has 70% lower CO2 emissions than an ICE over its entire operating life-cycle.
This data-file provides an overview of the 3.5Mbpd global biofuels industry, across its main components: corn ethanol, sugarcane ethanol, vegetable oils, palm oil, waste oils (renewable diesel), cellulosic biomass, algal biofuels, biogas and landfill gas.
For each biofuel technology, we describe the production process, advantages and drawbacks; plus we quantify the market size, typical costs, CO2 intensities and yields per acre.
While biofuels can be lower carbonthan fossil fuels, they are not zero-carbon, hence continued progress is needed to improve both their economics and their process-efficiencies.
Our long-term estimateis that the total biofuels market could reach 20Mboed (chart below),ย however this would require another 100M acres of land and oil prices would need to rise to $125/bbl to justify this switch.
The data-file also contains an overviewof sustainable aviation fuels, summarizing the opportunity set, then estimating the costs and CO2 intensities of different options.
Energy transition is a triple challenge: to meet energy needs, abate CO2 and increase competitiveness. History has now shown that ignoring the part about competitiveness gets you voted out of office?! We think raising competitiveness will be the main focus of the new administration in the US. So this 15-page report discusses overlooked angles around energy competitiveness, and updates our outlook for different themes. ย
Metal organic frameworks (MOFs) are an exciting class of materials, which could reduce the energy penalties of CO2-separation by c80%, and reduce the cost of carbon capture to $20-40. This data-file screens companies developing metal organic frameworks, where activity has been accelerating rapidly, especially for CCS applications.
Sorbents are classes of materials that are useful for separating industrial mixtures, as they adsorb some compounds but not others. They can be disposed on specialized membranes, or in tanks, where compounds can be adsorbed and later desorbed by pressure swings.
Metal organic frameworks could be particularly useful for CCS or DAC. Today’s CCS and DAC processes are only 5-10% efficient, compared to their thermodynamic minimum energy, and we increasingly wonder whether AI engines can help develop sorbents with materially better performance. Hence, the number of patent filings into MOFs has been rising at an exponential pace, growing at 25% pa in the past decade.
The state space of metal organic frameworks is very large. MOFs were first described 20-years ago by US chemist Omar Yaghi. Over 40,000 MOFs had been identified mid-2018. Over 90,000 have been identified by 2021. The total state space reaches 10^16.
Metal organic frameworks can also be highly porous. Some fit the entire surface of a football field into a teaspoon of powder weighing less than 1 gram, e.g., 10,000 m2/g, which is c1,000x a typical zeolite.
The challengeis finding MOFs that are stable and water-resistant, then synthesizing them in continuous, mass-scale processes that do not require expensive solvents. In an earlier iteration of this data-file, we tabulated the challenges for MOFs, based on patent filings.
Costs of metal organic frameworks, for example, are in the range of $10-70/kg, which is 1-2 orders of magnitude more expensive than today’s commercial zeolites, such as 13X, which typically range from $1.5-3/kg (tabulated here). However, the high costs can be compensated by higher performance and porosity.
This data-file screens companies developing metal organic frameworks, based on their disclosures, news flow, patents and partnerships. Most are small, private companies, founded in the last decade. Yet momentum seems to be building, especially for using metal organic frameworks in CCS applications, most famously by Svante.
Recently, we have also screened exciting progress from Montana Technologies, using metal organic frameworks to lower the energy costs of air conditioning units by 50-75%.
Also includedin this data-file are our notes from technical papers, and an economic model for MOF-based CCS, which can bridge to CO2 capture at around $40/ton, due to lower complexity and lower energy penalties than amine-based CCS. It has been quite nice to take this analysis back to first principles, including Langmuir Isotherms and MOF capture rates (tons of CO2 per kg of MOFs per year) as inputs.
Full details on the different companies developing metal organic frameworks, and their underlying progress is in the data-file.
Over 400 CCS projects are tracked in our global CCS projects database. The average project is 2MTpa in size, with capex of $600/Tpa, underpinning over 400MTpa of risked global CCS by 2035, up 10x from 2019 levels. The largest CO2 sources are hubs, gas processing, blue hydrogen, gas power and coal power. The most active countries are the US, UK, Canada and Europe. Project-by-project details are in the database.
An amazing acceleration has taken place in the global CCS industry in the past half-decade. In 2019, there were about 30 historical CCS projects in the world, with a combined capacity of 40MTpa. Today, there are well over 400 projects in various stages of planning and construction. This is verging on being too many to count. The CCS Institute does a fantastic job of following many of the projects. We are also trying to gather details on these projects and count up their capacity.
We have attempted not to over-count the CCS projects, however. About 200 of the projects are in an early stage of planning/development and therefore need to be risked. We are using an average risking factor of 30% in our models, based on mathematical rules and subjective assessments.
We have also attempted not to double-count them. About c100 of the projects are hubs, which gather someone else’s CO2. Clearly, if I capture 1MTpa from my auto-thermal hydrogen unit, feed it into your 1MTpa CO2 pipeline, and you pass it to a third party’s 1MTpa CO2 disposal facility, then the total quantum of CCS is 1MTpa and not 3MTpa.
Our risked forecasts underpin 325MTpa of global CCS by 2030 and 415MTpa by 2035. This would be a dizzying increase from 40MTpa in 2019. But for perspective, our roadmap to net zero requires 7GTpa of CCS by 2050, and a straight-line journey from 2024 to 2050 would therefore require 3.5GTpa of CCS by 2037. So we would need about 10x more CCS projects to enter the pipeline. New projects are being scoped out over time, and will continue layering in on top of what we have quantified in this data-file.
CCS breakdown by region? 85% of risked CCS capacity in the data-file by 2035 is seen coming from the developed world, led by the US (40%), the UK (17%), Europe (16%), Canada (11%) and Australia (4%). The UK ambitions are perhaps boldest, rising from nil today to a risked potential of 65MTpa by 2035 (the official UK target is 20-30MTpa by 2030).
CCS breakdown by disposal method? A shift from CO2-EOR to geological storage is also seen in the database. Today, 80% of all CCS is associated with EOR activity, while by 2035, 80% is seen being for geological storage.
CCS breakdown by CO2 source? The biggest change seen by 2035 is the emergence of CCS hubs, which handle 40% of risked CCS by 2035. To the extent that we are including these hubs in our risked forecasts below, it indicates that the CO2 source has not yet entirely been locked down, but will be gathered from regional emitters.
The biggest clear source of CO2 for CCS, in tonnage terms, is still for gas processing, although its proportionate share declines from 55% today to just c15% by 2035. The second biggest clear source is via the rise of blue hydrogen and blue ammonia projects, which are the source for 11% of risked CCS by 2035. Ethanol projects are most numerous, but also tend to be smaller at 0.2MTpa, and thus only underpin 4% of our risked total by 2035. Note that these are all pre-combustion or non-combustion sources of CO2 and bypass the potential risk of amine degradation and emissions.
Almost 20% of risked CCS is associated with power generation, in a split of gas (8%), coal (7%), biomass (2%) and waste (1%). For more details, see our overview of CCS energy penalties. For further analysis, this is the category where we are most interested to delve deeper, perhaps with a dedicated note looking at leading case studies and whether they are proceeding on time and on budget.
The full database is available for download below, or for TSE full subscription clients, in case you want to interrogate the numbers, or look into the underlying project details and riskings that we have been able to tabulate and clean up.
The energy intensity of plastic products and the CO2 intensity of plastics are built up from first principles in this data-file. Virgin plastic typically embeds 3-4 kg/kg of CO2e. But compared against glass, PET bottles embed 60% less energy and 80% less CO2. Compared against virgin PET, recycled PET embeds 70% less energy and 45% less CO2. Aluminium packaging is also highly efficient.
Global plastics production now stands at 500MTpa and will likely rise to 1GTpa by 2050, in our models of global plastics use. So, what is the energy and CO2 intensity of plastics and plastic products?
Answering this question is actually quite complicated. To see why, consider the complexity of the value chain shown below, which captures the PET used in a standard plastic water bottle. Our sense is that there are a lot of LCA studies out there, but most of them are simply guessing at an end number, without doing the necessary work on each step of the process.
It is a wonderfully complex overall-build-up, which makes a mockery of the idea that there is some immutable number for the CO2 intensity of plastics. Clearly, there is scope for variation within all of the industrial processes described above. Nevertheless, we can construct a base case for the energy intensity and CO2 intensity of PET bottles, as a nice case study. And all of the numbers can be varied and stress-tested in the model.
Our conclusion is that a cold, 500ml PET bottle that is pulled out of the fridge and enjoyed contains 23 grams of plastics, embeds 0.7 kWh of primary energy and about 90 grams of CO2. If the same bottle was made from recycled PET, then it would embed 0.2 kWh of energy and 40 grams of CO2. The energy saving is 70%, although the steps of injection molding, transport and refrigeration are common to both processes.
Plastic bottles embed 60% less energy and 80% less CO2 than glass bottles, within our build-up, and holding all other variables equal. The key reason is mass. A 500ml PET bottle might weigh 23 grams while a 500ml glass bottle weighs 250 grams, over 10x more. And the deltas would be ever starker with longer transportation distances. Plastic packaging is not the root of all evil!
Aluminium packaging can also be highly energy and CO2-efficient. We have assumed a global average grade of aluminium, embedding about 9 tons of CO2 per ton of aluminium, but note there is also a wide distribution of CO2 intensities among different aluminium producers. But the lowest CO2 and energy use is found for paper packaging.
Granular data are also tabulated on 70 chemicals facilities around the US, using EPA FLIGHT data. 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).
Generally, the CO2 intensity of plastic products will run to about 3-4 tons/ton, using other broader-brush build-ups in the data-file, which draw on the reported CO2 emissions from actual petrochemical facilities. Differences are also visible in different plastic products, on one of the model’s tabs (charts below).
Navigating the energy transition in 2024 requires focusing in upon bright spots, because global energy priorities are shifting. Emerging nations are ramping coal to avoid energy shortages. Geopolitical tensions are escalating. So where are the bright spots? This 14-page note makes 10 predictions for 2024.
What is the most likely route to net zero by 2050, decarbonizing a planet of 9.5bn people, 50% higher energy demand, and abating 80GTpa of potential CO2? Net zero is achievable. But only with pragmatism. This 20-page report summarizes the best opportunities, resultant energy mix, bottlenecks for 30 commodities, and changes to our views in 2023.
This 16-page report beaks down global CO2 emissions, across six causal factors and 28 countries and regions. Global emissions rose at +0.7% pa CAGR from 2017-2022, of which +1.0% pa is population growth, +1.4% pa rising incomes, -1.4% pa efficiency gains, -0.5% renewables, 0% nuclear, +0.2% ramping back coal due to underinvestment in gas. Depressingly, progress towards net zero slowed down in the past five years. Reaching net zero requires vast acceleration in renewables, infrastructure, nuclear, gas and nature.
Biogas costs are broken down in this economic model, generating a 10% IRR off $180M/kboed capex, via a mixture of $16/mcfe gas sales, $60/ton waste disposal fees and $50/ton CO2 prices. High gas prices and landfill taxes can make biogas economical in select geographies. Although diseconomies of scale reward smaller projects?
Biogas is a mixture of 50-70% methane and 30-50% CO2, produced from the anaerobic digestion of organic matter, such as manure, sewage or crop residues, or other organic waste. Archaea notes that 72% of US renewable natural gas comes from landfills, 20% from livestock, 5% from organic waste and 3% from wastewater.
This economic model captures the costs of biogas production, informed by 20 case studies, covering yields, capex, opex, IRRs and sensitivities.
Biogas yields average around 4 mcf per ton of input material, although smaller plants may find it easier to source high-quality feedstocks, with greater quantities of volatile organic matter, and greater conversion of that matter into biogas (chart below).
The capex costs of biogas plants are also tabulated from the 20 case studies in this data-file. Costs vary. But good rules of thumb might be $200/Tpa of feedstocks. In energy industry terms, this is equivalent to around $180M/kboed, or around 6x the costs of offshore hydrocarbons, or around $2,500/kW-th, which again is around 2x higher than the per kW-e costs of solar or onshore wind.
Biogas production facilities need to earn around $35-40/mcfe of methane-equivalent production in order to generate a 10% IRR on their up-front capex. There are four main revenue streams: gas, waste disposal fees, CO2 prices or incentives, and the value of residual digestate, which can be used as fertilizer or bedding in agriculture.
Our base case biogas cost model sees a 10% IRR from a combination of $16/mcf methane, $60/ton disposal fees and a $50/ton CO2 incentive. However, $120/ton landfill taxes can take the methane-equivalent price down to as little as $2.5/mcf. Hence the economics depend on landfill taxes and gas prices in different countries.
Biogas production in Europe currently comprises around 1-2% of the total gas grid, although some studies have estimated that total biogas production could reach 10-20% of total, or around 50-100bcm pa in Europe, via a “huge scale-up”.
One interesting observation from the charts above is that unlike other economic models in our library, biogas facilities may not benefit from economies of scale. Smaller facilities seem to cost less in capex terms and achieve higher yields. This suggests an opportunity for middle-markets private equity and companies with many small facilities?
Please download the data-file to stress-test biogas production costs. We are also constructive on some of the economic opportunities in landfill gas and biochar.
How would CO2 abatement costs end up being distributed, if they matched the distribution of US incomes? Or to phrase it another way, what if all Americans hypothetically gave up precisely 3% of their household’s post-tax incomes, in order to decarbonize the country? 90% of all decarbonization would have to cost less than $80/ton. There would be a 600MTpa market for higher cost CO2 abatement at $80-135/ton (CCS?), a 60MTpa market for high cost CO2 abatement at $150-350/ton (DAC?), and a 6MTpa market for ultra-high cost abatement at $350-1,000+/ton (green hydrogen, e-fuels?).
CO2 abatement costs as a semi-liquid commodity?
Liquid commodity markets tend to have a single market price (e.g., $/bbl for oil, $/mcf for gas, $/Oz for gold), which is theoretically available to all producers, and tends to fluctuate around long-run marginal cost. Low cost producers earn excess returns selling at the market price. High cost producers may need to shut down when market prices cannot cover their variable cash costs. Very high cost producers usually do not get to develop their projects at all.
Is CO2 abatement a liquid commodity? Many readers will be familiar with our roadmap to net zero (note below), which is based on a cost curve of technologies that can decarbonize the world 3x over. We think it will be easiest to decarbonize the world by choosing as many options as possible from the lower-end of the cost curve, which yields an average CO2 abatement cost of $40/ton globally, an upper bound around $100/ton, and all of our various supply-demand models cohere with this decarbonization scenario for reaching net zero by 2050.
CO2 abatement is only a semi-liquid commodity in this roadmap. The global energy system is too complex for a ‘winner takes all’ approach to apply. Important considerations extend beyond simply cost. And there will always be a few downright lunatics who actually consider building small-scale wind turbines or drilling the bore-holes for a ground-source heat pump at their future home in Estonia, even though the CO2 abatement costs make their analytical eyes water.
Methodology: calculating the distribution of affordable CO2 abatement costs?
The purpose of this data-file is to quantify how CO2 abatement costs might end up being distributed, if they follow the income distribution in a typical, large, wealthy country such as the United States. Specifically, our data-file asks: “how would the US’s tolerable CO2 abatement costs be distributed, if every American committed precisely 3% of their household’s post-tax, per person income, to offset the nation’s CO2 emissions?”
To estimate this, we have downloaded data on US household incomes, percentile by percentile, converted into post-tax per person income, using data from the IRS, estimated the CO2 emissions in each income bracket (based on data and charts below). Then we simply calculate 3% of that post-tax per person income and divide by our estimate of CO2 emissions per capita in each income percentile (reference charts below).
Conclusions: market sizing for energy transition technologies?
20% of all US decarbonization, or 1.4 GTpa, must cost below $20/ton, if the distribution of CO2 abatement costs is to match the distribution of household incomes. This is because 20% of American households have a post-tax income per person below $10,000 per year. Generally, the lowest cost technologies in our roadmap to net zero are energy efficiency technologies, where the up-front costs of deploying these technologies are paid back by future energy savings. Many of these technologies are highly economic in their own right. As a rough conclusion, we expect over 20% of all the decarbonization will come from efficiency technologies, which matches our roadmap to net zero.
Half of all US decarbonization must cost <$45/ton, because the median American household earns $24,000 in post-tax, per person income, while the individuals in this household tend to emit 16 tons of look-through CO2 per person per year. There are still some forecasters in fantasy land (note below), thinking that the world can be decarbonized without paying for pragmatic decarbonization solutions, or rather by deploying technologies that cost several hundred dollars per ton, and would absorb over 30% of the average income of the median American. The best examples in the 4GTpa middle ground of pragmatic decarbonization technologies costing $20-80/ton of CO2 abatement include wind, solar, expanding power grids, scaling up natural gas and nature based CO2 removals.
Higher cost decarbonization technologies, costing in the range of $80-140/ton could scale up into the range of 600MTpa in the United States, if the distribution of CO2 abatement costs ends up matching the distribution of incomes, and we run up to the 99th percentile. This is an interesting number, because we think CCS and blue hydrogen are most often going to be in the range of $80-140/ton. And we have also estimated, in bottom-up analysis, that this is the kind of market size that US CCS could achieve (note below).
High cost decarbonization opportunities that cost around $150-350/ton could find a limited market of around 60MTpa (1% of total US decarbonization) if the distribution of CO2 abatement costs matches the distribution of post-tax incomes in the country. An example of a CO2 abatement technology in this approximate cost and size category might be DAC. Some buyers may be willing to pay a premium for DAC CO2 removal credits over reforestation removal credits due to higher perceived quality, especially around the dimension of CO2 permanence.
Ultra-high cost decarbonization opportunities that cost $350-1,000+/ton could find an even more limited market of around 6MTpa (0.1% of all decarbonization), if the distribution of CO2 abatement costs paid to decarbonize the United States matches the distribution of incomes. We think that green hydrogen will most likely fall in this abatement cost range, in the ‘upper 0.1%’ of CO2 abatement by cost; a kind of energy technology equivalent of the ‘upper 0.1%’ of households with a pre-tax income above $2.6M per year ($770k per household member). And indeed, there will probably be some niche deployments of green hydrogen. Some niches can also be economically interesting. And some rough maths is that 6MTpa of CO2 abatement from green hydrogen might require 1MTpa of hydrogen, absorbing 50 TWH of renewable electricity and supporting 18GW of electrolysers by 2050, while displacing 100 bcf of natural gas (0.3 bcfd, versus today’s 100bcfd US gas market). Whether these are big numbers or small numbers depends entirely on your mindset.
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