Carbon-negative plastics: a breakthrough?

This short note describes a potential, albeit early-stage, breakthrough converting waste CO2 into polyethylene, based on a recent TOTAL patent. We estimate the process could sequester 0.8T of net CO2 per ton of polyethylene. This matters as the world consumes c140MTpa of PE, 30% of the global plastics market, whose cracking and polymerisation emits 1.6T of CO2 per ton of polyethylene.


An exciting array of companies is aiming to convert waste CO2 into materials, as part of the energy transition. We have profiled 27 leading examples in our screen, which is linked here, updated in June-2020. In the past year, we added three new companies to the list. Three companies reached full technical readiness and moved into commercialisation. The pace of progress has been strong. The companies are ranked by sector below.

The most advanced end market for CO2 is in the curing process for cement, a 4bn ton per annum industry, which accounts for 4bn tons per annum of global CO2 (8% of the total). We recently profiled Solidia’s CO2-curing process, which may eliminate 60% of the net CO2, at a c5% lower cost, and could scale up to displace 300MTpa of CO2 globally (below).

Plastics are the second largest opportunity, with 460MTpa of plastic products consumed globally. Aramco and Repsol are already commercialising polyols and polyurethanes derived from CO2, but these are only c7% of total plastics demand. The largest plastic product is polyethylene, at 140MTpa, or 30% of the total plastic market (chart below, data here). Chevron and Novomer also have technologies turning CO2 into carboxylates and acrylates, but again, these are smaller markets.

Hence, one of TOTAL’s 2019 patents stood out to us, as we reviewed 3,000 of the largest Energy Majors’ patents from last year. TOTAL has patented a group of boron-doped copper catalysts for electro-reducing CO2 into C2s, such as ethylene, which is the chemical precursor to polyethylene [1].

The process has a Faradaic efficiency of 80%. It yields two-thirds ethylene, one-third ethanol, and <0.1% C1s. This is a major advance. Pre-existing technologies are described, which have exhibited low selectivity (6-43% C1), low stability (a few hours), low activity and much lower efficiencies (27-39%).

Specifically, boron comprises 4-7% of the catalyst’s molar mass. Chemically, it draws in electrons from adjacent Cu atoms, inducing a positive charge, which lowers the activation energy for carbon-carbon bonds to form. “The invention is remarkable in that it describes the first tunable and stable Cu+ based catalyst”, the patent states.

Stability remains to be proven, and has only been shown to reach c40-hours in the trials described in TOTAL’s patent. This remains an obstacle for commercialisation, and we score the technology’s readiness as Level 5.

Nevertheless, it is interesting to ask “what if”. We estimate that each ton of ethylene produced from CO2 could sequester a net 0.8 tons of CO2 if the process is powered by natural gas (and 2.5T of CO2 if the process is powered by renewables).

An additional 1.6T of CO2 emissions would also be saved, because this is the typical emissions intensity of conventional production methods for cracking ethane and polymerising ethylene (chart below, data here).

TOTAL’s library of speciality chemicals patents is formidable, based on our review of patents around the energy industry, and as outlined in our recent research.

Last year, we profiled another TOTAL patent, using chromium-based catalysts to reduce defects and increase the strength of recycled plastic products (chart below, note here).

We remain excited by the pace of progress in next-generation plastic recycling, turning waste plastic back into oil. TOTAL also screens among the leaders in this area, via a new partnership with Recyling Technologies. Our screen of companies in this space was also recently updated and is linked here.


[1] Che, F., De Luna, P., Sargent, E. & Zhou, Y. (2019). Boron-Doped Copper Catalysts For Efficient Conversion Of Co2 To Multi-Carbon Hydrocarbons And Associated Methods. TOTAL Patent WO2019206882A1

Can carbon-neutral fuels re-shape the oil industry?

Fuel retailers have a game-changing opportunity seeding new forests, ourlined in our 26-page note. They could offset c15bn tons of CO2 per annum, enough to accommodate 85Mbpd of oil and 400TCF of annual gas use in a fully decarbonized energy system. The cost is competitive, well below c$50/ton. It is natural to sell carbon credits alongside fuels and earn a margin on both. Hence, we calculate 15-25% uplifts in the value of fuel retail stations, allaying fears over CO2, and benefitting as road fuel demand surges after COVID.


The advatages of forestry projects are articulated on pages 2-7, explaining why fuel-retailers may be best placed to commercialise genuine carbon credits.

Current costs of carbon credits are assessed on pages 8-10, adjusting for the drawback that some of these carbon credits are not “real” CO2-offsets.

The economics of future forest projects to capture CO2 are laid out on 11-14, including opportunities to deflate costs using new business models and digital technologies. We find c10% unlevered IRRs well below $50/ton CO2 costs.

What model should fuel-retailers use, to collect CO2 credits at the point of fuel-sale? We lay out three options on pages 15-18. Two uplift NPVs 15-25%. One could double or treble valuations, but requires more risk, and trust.

The ultimate scalability of forest projects is assessed on pages 19-25, calculating the total acreage, total CO2 absorption and total fossil fuels that can thus be preserved in the mix. Next-generation bioscience technologies provide upside.

A summary of different companies forest/retail initiatives so far is outlined on page 26.

LNG: deep disruptions?

There is now a potential 100MTpa shortfall in 2024-26 LNG supplies: deeply negative for energy transition, but positive for LNG incumbents. The last oil industry crisis, in 2014-16, slowed down LNG project progress, setting the stage for 20-60MTpa of under-supply in 2021-23. The current COVID-crisis could cause a further 15-45MTpa of supply-disruptions, after looking line-by-line through our database of 120 projects, described in this 6-page note.

Turn the Plastic into Roads?

The opportunity is emerging to absorb mixed plastic waste, displacing bitumen from road asphalts. We find strong economics, with net margins of $200/ton of plastic, deflating the materials costs of roads by c4%. The challenge is scaling the opportunity beyond 20MTpa, as unrecycled waste plastics surpass 320MTpa. Leading companies include Dow (US, public) and MacRebur (UK, private). Full details are covered in our new 6-page note.


Pages 2-3 outline the confluence between the road-building indsutry and the plastic waste problem, covering market sizes and costs.

Page 4 is a table of 15 projects we have screened so far, mainly from 2019-20, using modified mixed plastic waste as a road-binder, including key facts and stats.

Page 5 outlines the economics, by analogy to our recent resarch into plastic pyrolysis (and still extremely exciting) and for road-building more broadly.

Page 6 addresses the challenge of scalability, using data and estimates for the percent of mixed plastic going into road materials.

The future of offshore: fully subsea?

Offshore developments will change dramatically in the 2020s, eliminating new production platforms in favour of fully subsea solutions. The opportunity can increase a typical project’s NPV by 50%, reduce its breakeven by one-third and effectively eliminate upstream CO2 emissions. We have reviewed 1,850 patents to find the best-placed operators and service providers, versus others that will be disrupted. Overall, the theme supports the ascent of low-carbon natural gas, which should treble in the energy mix by 2050. This 22-page note presents the opportunity.


The offshore oil and gas industry’s progress towards ‘fully subsea’ developments, without any platforms or surface infrastructure being necessary, is reviewed in detail in pages 2-5, covering key projects and milestones from 1985-2000.

30% economic savings in both capex and opex are quantified line-by-line, across c50 cost lines, in pages 6-9.

1.5x NPV uplifts and 4pp IRR uplifts are quantified by modelling a representative fully greenfield gas-condensate project on pages 11-12.

CO2 emissions can be virtually eliminated by a fully subsea development solution. Pages 12-13 add up the impacts of higher efficiency, power from shore, fewer materials and the elimination of PSV/helicopter trips.

The key engineering challenges for fully subsea systems, which remain to be resolved, are summarized on page 14.

Who benefits from the trend toward fully subsea systems, is described from page 15 onwards after reviewing 1,850 patents around the industry. This includes both the leading service companies and operators (primarily Equinor, but also TOTAL, Shell).

The leaders in subsea compression technology are assessed on pages 16-17.

The leaders in subsea power systems are described on pages 18-19.

The leaders in next-generation subsea robotics are assessed on pages 20-21.

Others are disrupted, as is described in detail in page 22.

Covered service companies in the report include ABB, Aker, Eelume, GE, Kraken, Oceaneering, OneSubsea, Saipem, Siemens, Technip-FMC, Wood Group, the PSV and helicopter sector, and c20 early stage companies in next-generating subsea robotics.

Could new airships displace trucks?

In 2019, TOTAL co-filed two patents with an airship-technology company, Flying Whales, aiming to lower the logistical costs of moving capital equipment into remote areas. An example is shown above. The LCA60T is envisaged to carry up to 60T of cargo (c4x the capacity of a truck), with a range of 100-1,000km. This short note assesses the opportunity, and whether these new airships could displace trucks, or lower diesel demand. We are most excited by the impact for onshore wind.


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Patent Leaders in Energy

Technology leadership is crucial in energy. It drives costs, returns and future resiliency. Hence, we have reviewed 3,000 recent patent filings, across the 25 largest energy companies, in order to quantify our “Top Ten” patent leaders in energy.


This 34-page note ranks the industry’s “Top 10 technology-leaders”: in upstream, offshore, deep-water, shale, LNG, gas-marketing, downstream, chemicals, digital and renewables.

For each topic, we profile the leading company, its edge and the proximity of the competition.

Companies covered by the analysis include Aramco, BP, Chevron, Conoco, Devon, Eni, EOG, Equinor, ExxonMobil, Occidental, Petrobras, Repsol, Shell, Suncor and TOTAL.

Upstream technology leaders have been discussed in greater depth in our April-2020 update, linked here.


More information? Please do not hesitate to contact us, if you would like more information about accessing this document, or taking out a TSE subscription.

Mero Revolutions: countering CO2 in pre-salt Brazil?

The super-giant Mero field in pre-salt Brazil is not like its predecessors. While prolific, it has a 2x higher gas cut, of which c45% is corrosive and environmentally unpalatable CO2. Hence, Petrobras, Shell, TOTAL and two Chinese Majors are pushing the boundaries of deepwater technology. Our new, 16-page note assess four innovation areas, which could unlock $2bn of NPV upside. But the distribution of outcomes remains broad. $4bn is at risk if the CO2-challenges are not overcome.


Page 2 provides background on pre-salt Brazil, especially the flagship Lula project, which a new super-giant, Mero, is trying to emulate.

Page 3-4 contrast Mero to Lula, based on data from flow-tests. Mero has a 2x higher gas-cut and c8x higher CO2.

Page 5 reviews Petrobras’s own internal concerns over CO2-handling at Mero, and how they are expected to sway the decline rates at the field.

Page 6 outlines our valuation of the Mero oilfield, testing different CO2-handling scenarios. Our full model is also available.

Pages 7-8 review Mero’s FPSO design adaptations, to handle the field’s higher gas and CO2. These will be 2-2.5x larger FPSOs than Lula, by tonnage.

Pages 8-10 illustrate pipeline bottlenecks facing pre-salt Brazil. After considering alternative options (re-injection, LNG), we argue more pipelines may be needed.

Pages 10-12 describe riser innovations, which may help handle the risks of CO2-corrosion at Mero. One option is overly complex. The other is more promising.

Pages 12-16 cover the holy grail for Mero’s CO2, which is subsea CO2 separation. This would be a major industry advance, and unlock further billion-barrel resource opportunities. Upcoming hurdles and challenges are assessed.

Pages 15-16, in particular, cover Shell’s industry-leading deepwater technology, which may be helpful in maximising value from the resource, longer-term.

Does Technology Drive Returns?

Technology drives 30-60% of energy companies’ return on capital. This is our conclusion after correlating 10 energy companies’ ROACEs against 3,000 patent filings. Above average technologies are necessary to generate above-average returns.


For the first time, we have been able to test the relationship between oil companies’ technical abilities and their Returns on Average Capital Employed (ROACE).

In the past, technical capabilities have been difficult to quantify, hence this crucial dimension has been overlooked by economic analysis in the energy sector.

Our new methodology stems from our database of 3,043 patents, filed by the Top 25 leading energy companies in 2018. The data cover upstream, downstream, chemicals and new energy technologies (chart below) . All the patents are further summarised, “scored” and classed across 40 sub-categories.

The methodology is to correlate our patent-scores for each company with the ROACE generated by the company in 2018. We ran these correlations at both the corporate level and the segment level…

Results: patent filings predict returns

Patent filings predict corporate returns. In 2018, the average of the Top 10 Integrated Oil Majors generated a Return on Average Capital Employed (ROACE) of 11%, based on our adjusted, apples-to-apples calculation methodology. These returns are 54% correlated with the number of patents filed by each Major (chart below).

Technology leaders are implied to earn c5% higher corporate returns than those deploying industry-average technologies, which is a factor of 2x.

Upstream patent filings also predict upstream returns, with an 85% correlation coefficient. The data are skewed by one Middle East NOC, which earns exceptionally high returns on capital, but even excluding this datapoint, the correlation coefficient is 65% (chart below).

The curve is relatively flat, with the exception of two outliers, implying that it is hardest to improve general upstream returns using technology. This may be because upstream portfolios are vast, spanning many different asset-types and geographies.

Downstream patent filings predict downstream returns, with an 80% correlation coefficient (chart below). However, our sample size is smaller, as we were unable to dis-aggregate downstream ROACE for all the Majors.

The curve is very steep, indicating that downstream technology leaders can surpass c20% returns on capital, versus c10% using industry-standard technologies.

Chemical patent filings predict chemical returns, with a 57% correlation coefficient (chart below). Again, our sample size is smaller, as we could only estimate chemicals ROACEs for some of the Majors.

The curve is also steep, with technology leaders earning c10-20% returns, versus low single digit returns for less differentiated players.

Overall, the results should matter for investors in the energy sector, for capital allocation within corporates, and for weighing up the benefits of in-house R&D. We would be delighted to discuss the underlying data with you in more detail.

Johan Sverdrup: Don’t Decline?

Equinor is deploying three world-class technologies to mitigate Johan Sverdrup’s decline rates, based on reviewing c115 of the company’s patents and dozens of technical papers. Our new 15-page note outlines how its efforts may unlock an incremental $3-5bn of value from the field, as production surprises to the upside.


Pages 2-3 provide the context of the Johan Sverdrup field, its implied decline rates and how their variability will determine the field’s ultimate value.

Page 4 re-caps the concept of decline rates and how they should be measured.

Pages 5-7 recount the history of Digital Twin technologies, the cutting edge of their application offshore Norway and evidence for Equinor’s edge, as it deploys the technology at Sverdrup.

Pages 8-11 illustrate the upside in Permanent Reservoir Monitoring, comparing Equinor’s plans versus prior achievements deploying the technology off Norway.

Page 12-14 show the cutting-edge technology that excites us most: combining two areas where Equinor has established a leading edge. This opportunity can improve well-level production rates by c1.5x.

Page 15 ends by touching upon other technologies that will be applied at Sverdrup, quantifying Equinor’s offshore patent filings versus other listed Majors’.