We discussed CCS as a possible enabler for US LNG above and we have noted a substantial increase in stories around CCS plans, projects, etc. since the beginning of the year. But what is missing in the US are actual physical plans – CCS ventures are being formed, like the Aemetis headline below, but they signal intent rather than action. Renewable fuel companies should be very interested in CCS as they can claim the 45Q tax credit for the CO2 sequestered and they can lower the carbon intensity of their fuel by doing so, resulting in a higher LCFS credit also (they are additive). The challenge for many is that the renewable fuel projects are not large and they are often not in locations that have had substantial seismic work done to identify pore spaces. There is also the additional problem of land rights and potential royalty payments – as there would be with an oil or gas find. Most of those who would like to capture carbon and are making statements like the one below have no subsurface experience and will likely need to turn to one of the oil service companies for help.
In our ESG and Climate report yesterday Many Too Many: Ideas, Plans, Proposed Rules and Hydrogen Plants, we spent a lot of time talking about hydrogen and how expectations are too high concerning the availability of renewable power versus other demand for that power. The API makes a good case for blue hydrogen, as a bridge until we have enough surplus renewable power for green hydrogen to make sense without subsidies. Like LNG, this is an important transition step that could create jobs and investment, while moving towards net-zero goals and at the same time either no driving inflation or bankrupting governments or taxpayers because of subsidies. Also, like LNG, blue hydrogen needs regulatory blessing – coordinated with investor and ESG support, or none of the companies that could push this forward today will invest.
Finally, in this section, just to flog the dead horse one more time, there is nothing advanced about “advanced recycling”. It is a rudimentary pyrolysis process that has been well understood for years and it downgrades a potentially highly valued polymer to a fuel. Also, it is not truly recycling, as only 50% of the liquid product made will make it back as a polymer – the rest will become fuel and other chemicals, and even this can only happen when the pyrolysis facility is close enough to an olefins plant for the logistics to make sense. For example, “advanced recycling” in Virginia will likely produce hydrocarbon liquids that have a much higher local value as a fuel than as an olefins feedstock – once you include the cost of getting it to an olefins facility. But, these pyrolysis units are needed, as they are an efficient way of disposing of waste plastic that cannot be recycled directly into the polymer streams – our view is that there simply mislabeled when touted as “advanced recycling”.
Source: American Chemistry Council (ACC)
