Palm oil: what CO2 intensity?

CO2 intensity of palm oil

Global palm oil production is running at 80MTpa in 2022, for use in food products, HPC products and bio-fuels. CO2 intensity of palm oil is assessed in this short note and data-file.

Palm oil is controversial, as it is linked to destruction of virgin rainforests, c40% of recent production has been associated with deforestation and c20% has been associated with peatland degradation.

The purpose of this data-file is to estimate the CO2 intensity of palm oil production, in tons of CO2e per ton of crude palm oil. We have aggregated data from 12 technical papers, and also constructed our own bottom up estimates.

Excluding land use impacts, we think palm oil production most likely has a CO2 intensity of 1.2 tons per ton, which is also an OK baseline estimate for responsible palm oil producers.

On a global average basis, including land use changes, we think CO2 intensity is around 8 tons per ton, assuming 40% of the land was deforested and 20% peat-degraded. The worst case scenario is a CO2 intensity of 20 tons/ton.

All of this matters for biofuels. Biodiesel sourced from the world’s average palm oil (8 tons/ton) is going to have 2.5x more emissions than burning conventional diesel. Likewise, if renewable diesel is produced from 65% used cooking oil, 35% palm oil, then again, it will have a higher CO2 impact than conventional diesel (model here).

To read more, please see our article here.  Our main conclusion is that bio- and renewable diesel expansion plans may be stymied by tighter feedstock constraints and regulations (note here).

Cross-laminated timber: the economics?

This data-file captures the economics of cross-laminated timber, a fast-growing construction material that is c80% less CO2-intensive when substituted directly for traditional building materials such as concrete and steel, and results in buildings with 15-35% lower embedded CO2.

The economics are exciting. We find potential to generate 20% IRRs purchasing $25/ton timber and converting into $500/m3 CLT in newbuild production facilities costing $800/m3 pa.

The economics can be stress-tested in the model. Underlying capex, opex and case studies and companies are profiled in subsequent tabs.

Tree database: forests to offset CO2?

Nature-based solutions are among the most effective ways to abate CO2. Forest offsets will cost $2-50/ton, decarboning liquid fuels for <$0.5/gallon and natural gas for <$1/mcf (chart below).

The data-file tabulates hundreds of data-points from technical papers and industry reports on different tree and grass types. It covers their growing conditions, survival rates, lifespans, rates of CO2 absorption (per tree and per acre) and their water requirements (examples below).

 

Carbon offsets: costs and leading companies?

This data-file tabulates the costs of carbon offsets being offered to consumers and commercial customers by c30 companies. Prices are surprisingly low, ranging from $4-40/ton of CO2.

Which projects are most economical? Costs are lowest at forestry projects, particularly at companies where you pay “per tree” rather than “per ton” of CO2. They are also lower at non-profits (which also means contributions are tax-deductible). Finally, they are lowest at companies undertaking projects directly, rather than as “middlemen” (charts below).

Are they CO2 offsets real? The also file contains detailed notes on each company, to assess their credentials. Moreover, it tabulates 1,600 carbon offset projects which are assured by agencies such as the ‘Verified Carbon Standard’, Gold Standard and Green-E, for a broader perspective.

Offset your own CO2? We have used the data-file to select and allocate carbon offsetting dollars to Eden Reforestation, One Tree Planted, The Gold Standard and Sea Trees. We are happy to discuss CO2 offsetting with TSE clients and those using the data-file.

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.

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.

Carbon Offsets vs Renewable Diesel?

This short model compares different options for decarbonising diesel, either by substituting it with renewable diesel, or by offsetting its CO2 with carbon credits from reforestation.

We conclude that offsetting the CO2 of diesel fuel could cost 60-90% less than purchasing advanced biofuel, at current pricing. Economically justified premia for biofuels are calculated.

Please download the model to interrogate numbers and run your own scenarios. For more information on our input assumptions, please see our biofuels overview data-file.

Copyright: Thunder Said Energy, 2022.