Carbon economy emerging
CO2 capture and utilisation looks set to create a $550bn market by 2040, driven by the building sector, according to a Lux Research report.* Research Analyst Runeel Daliah and other Lux Research analysts explain.
The global market for CO2 utilisation looks set to reach $70bn by 2030, climbing to $550bn by 2040, according to a new report by Lux Research. The market will be led by new building materials, capturing 86% of the total market value because CO2 utilisation has low technical barriers. However, adoption could be impeded by regulatory constraints, which are likely to ease post-2030.
The polymers and protein sectors are likely to remain niche applications for CO2 utilisation despite the development of new technologies in this area. CO2 utilisation for polymer production has been proven commercially and successfully deployed at scale. But the market for polycarbonates is likely remain small. CO2 utilisation for proteins is still at the development stage, but adoption is forecast to be driven by rising demand for alternative protein feed.
New aviation fuels, chemicals and carbon additives have vast potential for CO2 utilisation, but will not be reached without extensive
innovation and/or regulatory support. Demand for synthetic aviation fuels (SAF) using CO2 is likely to rise. Although there are high production costs, SAF is considered to be essential for the aviation sector to decarbonise.
Despite having a vibrant start-up landscape, CO2-based chemicals will likely be outrun by bio-based chemicals and recycling due to high production costs. As for carbon additives, the sector is unlikely to become a major market for CO2 utilisation due to the high costs of production, long timelines for performance validation and lack of valuable applications.
CO2 emissions growth
While CO2 emissions growth stalled between 2014 and 2016, increased industrial activity across developing nations reversed the trend and 2019 witnessed a record 38 Gt of CO2 emitted globally. China is the world’s largest emitter, contributing 30% of global emissions. The US contributes 13%, the EU 8% and India 6%. The power generation sector remains the most flagrant emitter, contributing 36% of the world’s CO2 emissions, followed by industry with 22% and transportation 21%.
CO2 capture can be sub-divided into applications with varying concentrations of CO2 in the gas mixture. Pre-combustion is the separation of CO2 from non-combustion gases, eg natural gas or process gas from ethanol/ ammonia plant, which contains 50–90% CO2 concentration. During post-combustion CO2 is separated from combustion flue gas, which contains 5–30% concentration. Direct air capture (DAC) involves the separation of CO2 from ambient air, which contains 0.04% concentration. After separation, the resulting CO2 will have a concentration near 100%.
Pre-combustion currently dominates the carbon capture and storage (CCS) industry, with post-combustion expected to gain commercial traction post-2020. Commercial-scale CCS projects today are mostly used for industrial gas separation in natural gas processing and fertiliser production. To date, only two post-combustion capture projects have been built at commercial-scale – the C$600mn ($496.5mn) Boundary Dam CCS plant in Canada and the $1bn Petra Nova CCS facility deployed at a coal plant in the US.
So far, over 36mn t/y of post-combustion CO2 capacity has been announced to come online in the 2020s. These facilities will be in the US, Norway and UK, among others, with the captured CO2 used in enhanced oil recovery (EOR) applications or sequestered in dedicated geological resources (see the 2021 Global CCS Institute report for project details).
DAC is expected to remain niche, with over 1.4mn t/y of capacity set to come online by 2030. Nevertheless, this figure will increase as technology developers announce more projects and scale up.
The main companies active in DAC are Carbon Engineering in Canada, and Climeworks based in Switzerland. Other companies such as Global Thermostat in Canada, and Soletair Power in Finland, are at an earlier stage of development and lag in terms of commercialisation momentum. So far about $280mn of publicly disclosed funding has been raised by DAC companies over the past five years.
The principle of DAC is similar in all these initiatives. A capture medium separates CO2 from ambient air. However, the type of media varies from company to company. Carbon Engineering uses a potassium/calcium cycle, while Climeworks uses solid adsorbents. Carbon Engineering is at the pilot-scale, while Climeworks is at the pre-commercial scale. Carbon Engineering is operating a 350 t/y CO2 capture pilot unit in Canada and is planning a 1mn t/y commercial facility in the US. Climeworks launched a 900 t/y demonstration unit in Switzerland and is building a 4,000 t/y commercial facility in Iceland.
Reducing the cost of CO2 capture is paramount for projects to meet mass scale in coming decades. Lux Research Analyst Holly Havel says: ‘Novel technologies are targeting costs of sub-$80/t of CO2 but have yet to validate such claims at scale. Near-term deployment will, therefore, rely on aggressive carbon pricing and financial incentives to drive momentum.’ Nevertheless, CO2 capture is essential for a carbon-neutral energy system. And there are promising developers in anticipation of stronger penalties likely to be implemented this decade in countries aiming for carbon neutrality.
Solvent-based CCS (currently being used in the Petra Nova plant) will likely remain the dominant form of carbon capture technology. Petra Nova uses an amine-based solvent, and start-ups such as Carbon Clean and C-Capture are developing improved solvents to reduce the cost of capture. Svante has developed solid adsorbents for its carbon capture technology and is planning to launch its first commercial-scale 2,000 t/y CO2 capture facility in the US. This promises to be the world’s first commercial-scale CO2 capture facility using solid adsorbents.
Global CO2 consumption is projected to grow to 272mn t/y, driven by urea production and EOR applications, according to the IEA.
Basically, CO2 can be converted into six types of products:
• Building materials – where CO2 is used to produce aggregates or to cure wet concrete mix.
• Chemicals – to produce C1 chemicals such as methanol and formic acid.
• Carbon additives – to produce advanced carbon materials such as nanotubes and graphene.
• Fuels – using CO2 to produce fuels such as diesel and methane.
• Polymers – to produce polymers such as polycarbonates or polyhydroxyalkanoate.
• Proteins – using CO2 to produce single-cell proteins for feed applications.
Research Analyst Drishti Masand maintains that: ‘CO2 utilisation provides an avenue for the concrete industry to close its carbon loop. On top of sustainability benefits, performance advantages can also be gained. Though there is low commercial activity today, rapid commercialisation is expected due to low technology barriers.’
In fact, there are about 500 patent publications in the field of CO2 -based materials, including over 40 patents filed in 2020.
‘As building materials, CO2 can either be used for producing aggregates or to cure wet concrete mix. The latter option is currently at the commercial-scale and is led by CarbonCure, based in Canada. The CarbonCure system is currently deployed at over 300 plants worldwide. For aggregates production, the technologies are still largely at the pilot scale, but two companies are leading the pack. Carbon8, based in the UK, and Blue Planet in the US, have both reached the commercial stage with their systems,’ says Masand.
The main barriers to adoption are regulatory. ‘The building materials industry is quite conservative about innovation and new technologies such as CO2 utilisation face an arduous path to regulatory approval,’ comments Masand. ‘One approach to overcome these barriers (which CarbonCure is using) is to partner with organisations that have pledged to be carbon-neutral and will require low carbon concrete to offset their emissions. Overall, we expect the potential size of this opportunity to reach $450bn by 2040.’
‘CO2 utilisation can provide the chemical industry with a fresh source of carbon feedstock in the transition from fossil resources,’ comments Lux Research Analyst Runeel Daliah. ‘However, CO2 utilisation for chemicals is at an early stage of development and highly energy intensive.’
It is hard to decarbonise the chemical industry since carbon is an inherent part of the process.
The goal of CO2 utilisation in the chemical industry is to replace the fossil carbon atom with one that is captured from ambient air. There are several technology platforms. The most advanced is CO2 hydrogenation, where CO2 combines with hydrogen to form methanol. Carbon Recycling International has demonstrated this technology in Iceland. Other platforms, such as CO2 electrolysis for production of syngas or formic acid, are still at laboratory scale.
There are a lot of commercial-scale sustainable aviation fuel (SAF) projects utilising bio-based feedstock, but none using CO2 feedstock yet. The demand for SAF is currently driven by airlines rather than regulatory pull. While there are strong regulatory promoters for road transportation fuel, it is still lacking for the aviation sector.
SAF made from CO2 is estimated to be about five times more expensive than from fossil fuels. As such, you would need a carbon price above $300/t CO2 to break even. Such a high carbon price in the global aviation sector is unrealistic in the near-term, hence SAF adoption is likely to be slow, forecasts Lux Research.
‘Single cell protein has the potential to produce large quantities of protein using less resources in terms of land and water, and in less time compared to conventional protein sources. However, scaled production requires significant investment and technical challenges abound,’ says Analyst Laura Krishfield.
Microbial platforms can convert CO2 and hydrogen to protein material using microbes. But this is an early-stage technology and leading companies like NovoNutrients in the US, Deep Branch Technologies in the UK and Solar Foods in Finland, are all currently at the laboratory stage. NovoNutrients is expected to be the first to scale by 2025.
ExxonMobil is also focused on algae technology for fuels and chemicals, not feed.
Ultimately, CO2 utilisation could be a $550bn market by 2040, driven by the building materials market. But there are big question marks over other markets in the short-to-medium-term.