We want to focus on carbon use today, in part because we have written extensively on sequestration recently, in part because of the headline highlighted below, and in part, because we need something fresh for our ESG and Climate report tomorrow! Carbon use does not get much press beyond EOR, but there are emerging technologies and there is a lot of R&D spending – on how to collect CO2 more efficiently and on what it might then be used for. We suspect that almost everything being looked at will have some application, but that there will be limits to those applications and they will likely be niches in nature, but not necessarily unprofitable.
Any process to take CO2 to a hydrocarbon requires a source of hydrogen, and given the competitive need for hydrogen in a low carbon world, using a scarce resource to help dispose of CO2 does not look that promising. For example, the hydrogen contained in any biomass cannot be separated without creating a carbon compound – normally CO2. The Celanese plans to make methanol from hydrogen on the US Gulf Coast, is unique to the location and the product balance on the site – Celanese has the CO2 but also has access to attractively valued hydrogen. There may be other such opportunities but they will be the exception rather than the rule. Other carbon use technologies, either at the pilot plant stage or in the lab (as the one linked here) may be of great value in locations that need a unique solution, but in all cases, however profitable they may be, they will be inconsequential in the grander scheme of carbon abatement because they are too small. We continue to watch these technologies closely as we have clients that could benefit from niche technologies where they have a small carbon footprint, but one that needs addressing.
Source: IEA World Energy Outlook, October 2021
The charts in our ESG section of today's daily report is another back and forth between the EIA and IEA in our view. The EIA is using some version of the “Stated Policies Scenario” to create its forecast of the energy future, which necessarily requires a lot of fossil fuel. The IEA, by contrast, is presenting the “what needs to happen” to get to net-zero, and the chart above is focused on the needed adoption of new technologies. We showed a different version of this chart last week but had the same conclusion – the gap between the scenarios in 2030 looks very troubling.