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New horizon as market builds for CO2 utilisation

In the first of two features on CO2 usage, we look at the barriers and opportunities for greater uptake of utilisation in Europe. A second piece on enhanced oil recovery will follow.

For centuries, the strong winds and stormy seas around Cape Horn, where the Atlantic and Pacific Oceans meet, were infamous for the treacherous conditions they created for seafarers. Today, these same strong winds make southernmost Chile the ideal location for the Haru Oni project, set to be the world’s first integrated and commercial large-scale facility for the production of climate neutral e-fuel, or synthetic fuel.

Synthetic fuel is just one of the many uses that can be found for captured CO2 – utilisation that looks set to soar in the coming two decades. Using captured CO2 to make new products can be a win-win: it can help the planet by locking up or at least recycling CO2 while also creating economic value, an important step to making carbon capture cost-effective. Lux Research, the US technology research organisation, predicted in February that the global market for CO2 utilisation would rise from about US10bn in 2019 to $70bn by 2030, before jumping to $550bn in 2040.

CO2 can be used in six broad product types: building materials, chemicals, carbon additives, fuels, polymers, and proteins, Lux notes. It predicts building materials will become the largest sector of CO2 utilisation, accounting for 86% of the total market by 2040, partly because the technical barriers are relatively low. At present, the biggest single consumer is the fertiliser sector which uses CO2 to manufacture urea, followed by Enhanced Oil Recovery (EOR) (see Existing and emerging technologies for CO2 usage, below).
“CCUS is presently one of the most dynamic R&D areas in the energy and chemicals sectors, with different technologies becoming public regularly,” says Diogo Almeida, a senior advisor at Galp Energia, the Portuguese group.

Progress is fastest, however, in the carbon capture part of the chain, says José Carlos Lopes of the University of Porto and chief technology officer at CoLAB Net4CO2. The latter is developing new processes and products using the NETmix technology to support CO2 use in a sustainable circular economy, including synthetic fuels.

“There are definitely new technologies coming on stream for capture but for utilisation, on a relevant scale, new technologies will take longer to establish - there is still a wide range of routes with very different characteristics, each of them with their own barriers,” he says. “Although this seems ‘fair enough’, since we need to capture before we can use, we are reaching the stage where we may end up with captured CO2 and no clear answer as to what to do with it.”
As well as innovation and more technologies to make CO2 a valuable feedstock, consultants McKinsey, in a 2020 article, identified lower capture and supply costs and regulatory incentives as key for acceleration of CCUS.

“The barriers to scaling up CO2 use are commercial and regulatory and also the scale of industry usage, compared to other solutions. [Take up] also depends on the quantification of the benefits,” says Pedro Ávila, director of studies and innovation at REN, the Portuguese electricity and gas network operator.

Developing CCUS value chains - as STRATEGY CCUS is doing - is central to making utilisation both possible and cost-effective. Better linking of sources of CO2 to sinks, either storage or usage, is needed, says Nicolas Peugniez, deputy director to the strategy and regulation at GRTgaz, the French gas network operator and a member of STRATEGY’s industry club. Among other things, GRTgaz has been assessing the value which country-wide and EU-wide pipeline networks can bring to a CCUS value chain.

“We see an emerging interest in CCUS from high CO2 emitting industries, which requires the other elements of the chain to develop. At the moment I think the biggest hurdle [to increased CCU] is limited visibility for acceptable industry-scale sites,” he says. “Such industry-scale sinks can establish CO2 supply streams, on which CO2 use can grow. The North Sea project Northern Lights addresses part of Europe, but we lack visibility in certain areas of Europe, in particular south and east, hence the importance of Strategy CCUS.”

At the same time, improvements in capture technologies could also open the door to smaller projects and spur the circular economy, says José Carlos of NET4CO2.

“The widening of carbon capture technologies to CO2 small-to-medium scale applications will open new opportunities for circular concepts of decentralised utilisation, especially for CO2-based fuels or chemicals, if the cost and environmental benefit of producing them onsite is lower than purchasing it from a further location,” he says.

Developing alternative CO2-based fuels is GRTGaz’s other main area of CCU involvement – via methanation, a means of producing synthetic natural gas, with a view to injecting a controlled hydrogen/methane mix into the EU pipeline network, says Nicolas. The energy source can be electrolysis of renewable electricity as at its Jupiter1000 pilot project or from biomass-based gas production, where several projects are under way.

Further rollout of renewable energy is widely seen as an important enabler of wider uptake of CCUS – José Carlos says it could be a ‘decisive factor’ in its feasibility.

“CO2 capture and use consumes additional energy. At the moment, it is often therefore too expensive to produce a CO2-based product,” says Li Chen of Total’s CCUS R&D team. “New technologies for producing renewable energy, both electricity and heat, for low cost/low environmental impact will influence CO2 use.”

This is where the likes of Chile’s strong winds come in. The Haru Oni project, led by Siemens, is employing them, together with solar power, to produce green hydrogen. This is then combined with CO2 captured from the air to make synthetic methanol, the basis for climate-neutral e-diesel, e-gasoline or e-kerosene for use across the transport sector. These liquid fuels are the best way for this remote part of Chile to capitalise on the export potential of green hydrogen.

Regulators also have a key role to play, both in establishing better legal provisions and in supporting carbon prices by making emissions more expensive.

“First and foremost, we need a real market, with a stable and foreseeable CO2 price. This will create the right incentives for the industry to invest, allow it to create economies of scale and to expand,” says Diogo at Galp.

Among other things, this will require changes to the EU’s Emissions Trading Scheme (ETS).

“One of the main barriers for implementing CCUS projects is the lack of a legal framework and the EU’s ETS legislation,” says Ivica Losso of Petrokemija, the Croatian fertiliser company. “A key driver for realising CCUS projects will be prices for EUAs [one EUA gives the holder the right to emit one tonnes of CO2 under the ETS].”

For example, using CO2 to produce urea at ammonia plants, such as Petrokemija’s, should be recognised in emissions reporting as avoided CO2, rather than requiring EUAs, he says.

Nicolas at GRTGaz agrees that recognising CO2 re-use in avoiding and/or deferred emissions is important.

“We need a mechanism for CO2 traceability across the industry taking into account the value of recycling CO2. It must be harmonised between European countries and contribute to the acceptability of re-used CO2 and the recognition of its value for the transition,” he says. “In the same way that consumers value the fact that a fleece is made from recycled PET bottles, products made out of ‘recycled CO2’ should be identifiable and appraised accordingly.

“CO2 usage is a key enabler in CO2 management and the energy transition at large. The right combination of incentives, research, social acceptability and taxes will need to be found.”

Existing and emerging technologies for CO2 usage

Urea: At present, urea is by far the single biggest market for CO2 usage, accounting for 57% of demand, according to the IEA. A well-established application, fertiliser makers use CO2 generated in ammonia production to manufacture urea on-site. As such, urea production is a prime example of internally sourced CO2 - processes where CO2 is produced and captured in a chemical manufacturing process, and consumed in a later process step. Mainly used in agriculture as a nitrogen release fertiliser, urea has several other uses including as a feedstock for resin and for medical products including skin treatments.

EOR: Another well-established technology, EOR is the second largest user of CO2, accounting for 34% of the total, according to the IEA, with demand greatest in the US. It involves injecting CO2 into existing oil reservoirs to boost recovery rates. Around 20% of global oil production comes from EOR and demand for CO2-EOR has supported investment in the majority of the large-scale CCUS projects in operation. Nevertheless, most of the CO2 used in EOR comes from natural underground sources; the challenge is to boost the proportion coming from carbon capture.

Building materials/concrete: Building materials have the greatest potential to deliver climate benefits per tonne of CO2 used, according to the IEA. New processes could lock up CO2 permanently in concrete. Precast structural concrete slabs could be made with new types of cement that, when cured in a CO2-rich environment, produce concrete that is around 25% CO2 by weight. A second concrete process involves synthetic CO2-absorbing aggregates (combining industrial waste and carbon curing). This can produce concrete which is more than 40% CO2 by weight. CarbonCure and Solidia are among the leaders in these areas.

Synthetic fuels show the greatest potential for CO2 use by volume, according to the IEA. As discussed above, captured CO2 can be combined with hydrogen to create synthetic petrol, jet fuel and diesel. The key is to produce the hydrogen sustainably. The aviation industry, with its high energy consumptions and difficult to abate emissions, is especially keen to see development of synthetics fuels.

Plastics: CO2 can replace fossil fuel-based inputs in plastics production. The chemicals industry is testing a range of CO2-based plastics for widespread use. Green polyurethane, for example, used in textiles, flooring for sports centres and mattresses, is in the early stages of commercial roll-out.

Food and beverages: A typical carbonated soft drink includes purified water that has been impregnated with CO2 gas; the dissolved gas not only adds a distinctive taste and sparkle but also acts against bacteria. CO2 also plays a vital role in extending the shelf life of fresh meat and salads and is used in the bottling and kegging process for beer.

Algae: Among nature-based solutions, Algae is more efficient than trees in capturing CO2 and much easier to propagate – it can be grown without soil or freshwater. Research is ongoing in using algae to produce petroleum substitutes – STRATEGY partner Total, for example, has a pilot project turning CO2 via microalgae into fuel. Algae is also a promising source of alternative, plant-based protein, being developed, for example, by US firm supplements firm iWi.

Biochar/crop production: Created by heating farm biomass waste in an oxygen-poor environment, biochar is added to soil bringing several benefits, including the potential to increase crop yields by 10%. Producing it captures about half of the CO2 that would otherwise escape during waste decomposition. At present, however, the most mature yield-boosting CO2 application is its use in industrial greenhouses, according to the IEA. When applied with low-temperature heat, it can increase yields by 25% to 30%. The Netherlands is the clear leader in this application.

Companies and projects

Haru Oni (see main piece)

Jupiter1000: France’s first industrial demonstration project of power to gas with a power rating of 1 MWe for electrolysis and an innovative methanation process with carbon capture. Green hydrogen will be produced using two electrolysers involving different technologies, from 100% renewable energy. Based on the results, GRTgaz hopes to pave the way for development of full-sized installations.

H2Sines: A pan-European initiative involving Galp, EDP and others, this project aims to create a green hydrogen industrial cluster in Sines, Portugal. It hopes to optimise the value chain in the region and to export hydrogen to northern Europe.

Westküste 100: Partly funded by the German government, this project at STRATEGY industry club member LafargeHolcim’s Lägerdorf plant will convert CO2 into synthetic fuel using green hydrogen. The potential carbon capture from the cement plant is 1Mtpa.

ECCO2-LH – another LafargeHolcim initiative, this time in Spain, this project will capture CO2 from flue gas at the Carboneras plant for agricultural use in accelerated crop production.

North CCU Hub – Based on the Belgian coast in East Flanders, this hub hopes to develop a circular economy to reduce emissions from steel and chemicals. Its first large-scale project and the biggest of its kind anywhere to date - North-C-Methanol – will produce green methanol.

Further reading
IEA: Putting CO2 to use, September 2019.

Photo: Petrokemija fertilizer factory in Kutina, central Croatia. Credit: Petrokemija