Casey Handmer May 3 2021 (original post)
Would you like to win one hundred million bucks from Elon Musk? Carbon capture (CC) is all the rage these days, with dozens of companies springing up to remove CO2 from the atmosphere and help stabilize the climate.
I am not an expert on carbon capture but I do get asked about it from time to time. As a public service, therefore, I am offering the following rubric as a means to organize our thoughts, refine our strategy, and champion quantitative rigor when it comes to developing and evaluating a wide variety of carbon capture systems.
Is our carbon capture scheme any good at all?
Let’s examine our hypothetical CC machine from two angles: physics and finance.
Is our machine secretly a perpetual motion machine?
In a previous life I spent a few years designing maglev systems and quite often would see concepts from other designers whose performance was too good to exist in the real world. If the system has negative drag, it is a perpetual motion machine.
If the system concentrates CO2 for less energy than releasing it back into the air, it is a perpetual motion machine. If our machine compresses a gas stream with no expenditure of energy or generation of waste heat, it violates the laws of thermodynamics. Perpetual motion machines obviously do not exist. Check the math!
What do we know that no-one else does?
What’s a non-obvious controversial true fact? How does our system exploit this?
How much energy does our system actually use?
CC systems sometimes use thermal cycling of sorbent beds or electrochemical separation to increase the concentration of CO2 from ambient 420 ppm to close to 100% CO2. Does our system require lots of electricity or thermal energy to operate? How is it being provided?
If the system is electrochemical, does it use more or less power per mole of captured CO2 than aluminium smelting? This is about 1500 kJ/mol. Is the power provided high current, low voltage? Do we have a homopolar generator handy? How much copper does the power system need? If we need X electrons per molecule of CO2 at a cell voltage of Y, this works out to be about X*Y*95 kJ/mol. How close is our current system to this limit?
Does our system net reduce CO2?
If our CO2 capturing system works by weathering Calcium Oxide (quicklime) that is produced by thermal calcination burning natural gas, it will emit more CO2 than it captures over a lifetime. Whoops!
More generally, how many years of operation are needed to offset CO2 emitted during production?
How are we thinking about theoretical limits?
The Gibbs entropy of CO2 dissolution in the atmosphere is about 19.4 kJ/mol. This is not much energy, which is why no-one generates power by leveraging the osmotic gradient of concentrated CO2 in the atmosphere. Does our system get anywhere near this? Does it have to? Can it? If we’re doing electrochemical separation, how are we capturing ohmic heating and viscosity as limits to our ultimate efficiency?
Is electrical efficiency even a major constraint to our system? Does it need to be efficient, and what’s the opportunity cost for increasing efficiency by 1%? If electricity gets 1% cheaper every year, is that equivalent to a free virtual 1% increase in efficiency?
Is our machine actually concentrating atmospheric CO2?
Our machine has flashing lights and a pipe that emits CO2 at a million parts per million. We’re good, right? Well not quite. Does the machine contain carbon? Are we sure we’re not accidentally combusting part of our machine? How sure?
I think the gold standard here is that CO2 produced by concentrating atmospheric CO2 should have a radiocarbon age of zero (relatively radioactive) while CO2 derived from, say, accidental electrolysis of a mined carbonate salt will be very, very old with no radioactivity. Testing samples for Carbon-14 requires a mass spectrometer. There are numerous labs in the US which will perform tests for a few hundred dollars, though they generally have to convert samples to graphite first.
Carbon dating isn’t foolproof, however, as organic sources of carbon, such as vegetable oils, wood, or charcoal, are also radiocarbon young. So if our machine uses crisco as a lubricant, we should double check the math, and also our life choices.
Can we defend our results?
Do we understand our test system? Have we quantified every aspect of its operation? If we’ve produced a video showing how it works, will it confuse potential investors? Are the key points obvious? Can someone watching the video easily imagine themselves building the same system and running the same test? Are test information data and results documented well enough to enable independent verification? Do we have a good understanding of what a well documented experiment looks and feels like, or do we need to go and read a biology paper or two?
There are plenty of very confused people out there in the area of CC, and we need to normalize a high level of rigor in our approach to documentation. We’re not planning on posting our trade secrets online (or are we?) but it’s unreasonable to expect investors to part with their money on a hope and a prayer.
Can we scale it?
Are there any fundamental physical limits on deployment? If we’re going to capture 10 GT of CO2 a year by planting trees, how much water will we need to irrigate them? More generally, how can photosynthesis keep up with fossil fuel extraction? What are the fundamental constraints on scaling? Capital availability? Indefinite returns on investment (ROIs)? Rare reagents? Flaky co-founders? Utility energy supply? Legal status of carbon taxes?
Is our CC machine ready to escape the lab?
The AC propulsion prototype used at Tesla in the early days was notoriously unreliable, using dozens of analog op amps to drive an AC induction motor. History is littered with projects whose costs were unsustainable because they were insufficiently mature to be put into production.
Do we have a desktop demo we can show people? Does it actually work? Is it quite clear which parts are hacks and which parts actually matter? Is it safe enough to put in a room with members of the public?
Is the tech ready to put into production? Can we hand the prototype to an average mechanical engineering graduate and say “make 10,000 of these” and have reasonable confidence that they’ll come off the line functional, reliable, and with decent yield? Have we worked out the bugs before the major capital investments, or is it still a science experiment?
What is our CO2 price?
Can we produce CO2 for $1000/tonne, $100/tonne, or $10/tonne? Where are we? Where do we want to be? Where do we need to be? How do we stack up against the competition? How credible is our path to improvement?
How expensive is our CC machine?
What is the CAPEX structure? How many tonnes of CO2 does the machine have to capture to pay only for the machine, less opex, financing costs, depreciation? How long does that take?
If our machine captures 1kg a day at a $100/T price point, it will earn $36.50 a year. If our machine costs $500 to build, it will take 15 years of operation just to cover construction costs. $500 for parts and labor falls somewhere between a nice cake and a very basic dishwasher in terms of overall scale and complexity. A half decent technician should be able to assemble half a dozen per day, which means our production rate must be at least 1500/year. Even then, total additional revenue will be about $50,000 which is barely enough to put one person through grad school.
If CAPEX is amortized over a decade or three of operation, how are we estimating our capital costs? Do we expect/rely on congress to underwrite big loans to ensure low interest rates, like with home mortgages? Are we going to become the underwriter for our customers’ loans to buy devices from us? How are we going to diversify risk in this sector given that many risks (technology, regulatory) are extremely correlated?
Or, can we make back the cost of construction in a few months or a couple of years, and thus access short term financing or even self-finance?
How quickly does our machine wear out? Do we have to depreciate it more quickly than we can pay it off? Are we going to self-cannibalize with version 2 and strand our early customers? Are they okay with that?
How expensive is our CC machine to run?
What are the operating expenses (OPEX)? Do we require labor for maintenance? What are the machine’s expendables, such as reagents, valves, fittings, pumps, electrodes, software?
How do operating expenses compare with the amortization schedule for CAPEX? Are we spending more on operations than CAPEX payments, and thus could justify adding complexity to the system to reduce ongoing expenses? Or is the machine so reliable, so set and forget, that NASA will use it for atmospheric regulation on a Moon base?
Are we deploying in our backyard or in the middle of the desert somewhere? How do we access and support customers with hardware in remote or difficult to access places?
Are energy costs important to the financial picture? Ten years ago, electricity costs made green hydrogen (produced by electrolysing water) prohibitively expensive compared to blue hydrogen (derived from natural gas via steam reforming). Today, solar PV electricity during peak hours is >10x cheaper. How does our business model and system optimization shift if electricity becomes more expensive, or cheaper, over the lifetime of our machine?
Is our process energy intensive? Is it comparable to refrigeration or electro-refining of magnesium? Could we be investigated for running an illicit growing operation or a data haven?
How sensible is our supply chain?
Does our machine depend on any unusual materials? What can’t I get from McMaster-Carr, or Ali Baba? Or Silk Road? Is our supply chain fungible or do we depend on the business and good graces of a single supplier in outer Mongolia? Do we absorb CO2 with amines, zeolites, or MOFs? How expensive are these specialty materials? Are we related by blood or marriage with a lab that can actually make them? Can they scale production as quickly as we can scale business, and at what marginal cost? MOFs cost WHAT exactly?
Does our Bill of Materials contain anything (ANYTHING) considered more than usually toxic or requiring special handling? Any plutonium? Prohibited substances? FOOF? Piranha solution? Do we need certified technicians to do the work? Can we afford their fancy insurance? Are we going to get a visit from the DEA or DHS?
Does our process depend on the availability and good graces of one or more highly trained PhDs? Do we have a talent retention plan? How exotic is our process?
Do we need miracle materials to work?
Does our system only work with 99.999999% pure anything? Contamination: no problem, reduced efficiency, or spontaneous combustion? Will our catalyst get destroyed by exposure to common air pollutants, such as water vapor, oxygen, or the smell of pad thai?
Does our system expend its catalysts? Are they actually secretly consumables? Do we have a plan to supply, service, and replace stuff that we weren’t planning on breaking? How much cobalt do we actually need per tonne of CO2?
Do we need a miracle of scale?
Everyone knows that cars are only relatively cheap because of enormous complex, expensive tooling that enables a few hundred thousand to be made, exactly the same, every year.
Does our CC machine have the same issue, where we can’t get CAPEX down to a reasonable level until we’ve designed and built a million square foot alien dreadnought fully automated lights out factory for it? Why can’t it be assembled like LEGO? Have we personally ever built a huge automated factory before? Is this expertise actually our value-add? Have we considered an “alien dreadnought factory as a service” start up instead?
More generally, is there a critical scale below which our system makes no sense? Can we justify the economies of scale or are we waving our hands because our system costs more to build than 20 years of operation at $1000/T can justify?
Do we have a revenue stream?
Or do we need, long term, to rely on coordinated legislative action by a few dozen national governments to emplace a reliable carbon tax/dividend so we actually have an infinitely deep, zero elasticity market to sell our CO2 to?
Where does our concentrated CO2 go? Turning into fuel? Plastic? Carbon black? Graphite? Cement? Underground? Carbonated drinks? What is the annual capacity of these markets? How much of that can we capture? How much of that can we expand?
If we’re selling our CO2 only to PepsiCo, it goes back into the atmosphere very quickly. Do we have a plan to generate a more durable store of CO2?
Who is willing to buy our CO2, in what form, how much, and for what price? What does our business look like with this market saturated? For example, if we’re selling 1000 T/year for deep well injection at $100/T, our business has a revenue of $100k/year. Is that enough to support the team?
Where is the value generated in our business?
If we’re building a CC machine that must be amortized over 20 years, we’re selling very expensive widgets to debt-happy customers, and hopefully lots of them. What is expensive in that machine? Where are we adding value?
Let’s say we’re building CC machines that use a swing cell with zeolites, similar to the life support system on the International Space Station. A major cost of these systems is new zeolites. To reduce cost and improve quality control, we have decided to vertically integrate manufacturing of zeolites, and by doing so have improved the cost by 20%. As the zeolites were about 90% of the initial CAPEX of the machine, more than 95% of our company’s value-add is now in making zeolites. So are we really a zeolite factory in disguise?
More generally, if long term industrial scale CO2 capture does turn out to depend strongly on mass production of an otherwise exotic material, just as the computer industry has depended strongly on photolithographic etching of insanely pure silicon crystals, does verticalization of the industry make sense? Where are we starting on this value chain, and where do we intend to end up? Chemical supply as a service?
What should we be thinking about?
Have I missed any obvious questions? Any un-obvious ones? Does this help us understand what needs to be done?
Casey Handmer 22 July 2022 (original post)
The team at Terraform Industries is now 11 people working towards a near term future where atmospheric CO2, much of it centuries of unpriced industrial waste, becomes the preferred default source of industrial carbon. Our family of technologies will displace drilling and mining as sources of carbon and, in the process, stop the net flux of carbon from the crust into the atmosphere and oceans that is causing anthropogenic climate change.
Our process works by using solar power to split water into hydrogen and oxygen, concentrating CO2 from the atmosphere, then combining CO2 and hydrogen to form natural gas. Very similar processes can produce other hydrocarbon fractions, including liquid fuels. Synthetic hydrocarbons are drop in replacements for existing oil and gas wells and are distributed through existing pipeline infrastructure. As far as any of the market participants are concerned, fuel synthesis plants are less polluting, cheaper gas wells that convert capital investment into steady flows of fuel in a boringly predictable way.
Most recently, Terraform Industries succeeded in producing methane from hydrogen and CO2.
There is nothing particularly special about the technological approach we’re taking. Each of the various parts is built on at least 100 years of industrial development, but up until this point no-one has considered scaling these up as a fundamental source of hydrocarbons, because doing so would be cost prohibitive. Why? The machinery is not particularly complex, but the energy demands are astronomical. Yet as our atmospheric CO2 concentration creeps steadily ever upwards year over year, our ability to extract silicon from rocks and transform it in frankly magical ways continues to progress.
One of these ways has produced the cheapest electricity ever. Electricity so cheap that in an ever growing number of markets it now makes more sense to turn solar electricity into hydrocarbons, than to burn hydrocarbons to make electricity.
To a good approximation, the Earth is a pile of iron atoms (the core) surmounted by a pile of oxygen atoms (the mantle and crust), with other, smaller atoms filling in the gaps. One of the most common of these is silicon, and the silicate minerals are the major component of 95% of rocks. To say that extracting sufficiently pure crystalline silicon is difficult is an understatement, but we’ve been able to do it for longer than a human lifetime and we are continuing to make steady progress. The silicon industry turns over nearly a trillion dollars a year, so the profit motive is doing its job!
Silicon is one of several materials that can be used to make solar photovoltaic (PV) panels, in addition to its starring role in integrated semiconductors inside computers. The solar panel industry has been growing by about 25-35% per year for the last decade, making steady progress on cost and becoming a mainstream energy source to the point where its continued displacement of other grid power sources is partly limited only by the battery manufacturing ramp rate, itself redlining at about 250%/year!
Wright’s Law describes the tendency of some products to get cheaper with a growing manufacturing rate. It is not guaranteed by the laws of physics, but rather describes the outcome of a positive feedback loop, where a lower cost increases demand, increases revenue, increases investment, increases cognitive effort, and further lowers cost. For solar technology, the same effect is known as Swanson’s Law, and works out at 20% cost reduction per doubling of cumulative installations since 1976.
This is not the full story, though. Solar has only been cost competitive with other forms of grid electricity generation since about 2011, at which point investment and engineering effort greatly increased. Since 2011 there has been an acceleration of production growth rate and an increase in the learning rate, such that the cost decline is now 30-40% per doubling. For more details, check out Ramez Naam’s excellent blog on the topic.
For more than a decade, some industry experts have predicted that cost improvements, and installed capacity, will imminently flat line. The chart below shows the “hairy back” of these failed predictions.
It has been clear to me that absent a fundamental physical limit being reached, there is no reason to suspect that the still accelerating positive feedback loop would slow down or stop. Here’s a post I wrote about the topic back in 2018. If anything, we should expect production growth rate to increase from around three years per doubling to perhaps two years. It is still not fast enough.
Global solar production last year (2021) was about 190 GW. With 30% cost reduction per doubling, solar continues its steady march into adjacent competitive energy markets and its displacement and augmentation of energy generation.
What people have missed is that reaching cost parity on fuel synthesis will unlock huge new demand centers and flatten the gradient on the demand curve enough. Even if we copied each new factory 5 times, reducing learning rate by 5x in exchange for increasing production 5x, price declines will still stimulate far more demand than this expanded production can meet.
Regular readers of this and similar blogs will be familiar with this chart of global photovoltaic power potential. Some places will win the solar power lottery, much as other places have historically “won” the oil lottery. Unlike oil, solar resources are much more evenly spread over the world. On the chart above, the US south west receives around 5.2 kWh/kWp, while notoriously dreary England receives only 3.2 kWh/kWp. Does this mean that Britain should import solar power from north Africa? Not quite.
At 30% cost reduction and three years per doubling of production rate, Britain’s cost will match Los Angeles’ in less than six years. There are a few parts of the world, particularly at extreme northern latitudes, where solar power is truly painful, but they are few and their population is low, compared to the billions who live in generally sunny-enough locations. When their local cost of solar falls to the point where synthetic atmospheric CO2-derived hydrocarbons are cheaper than importing it from (probably) the Middle East, demand will increase substantially. How much?
The chart below is a basic Sankey diagram showing energy flows in the US in 2021. A much more thorough (though less screenshotable) version can be found at Energy Literacy. The Quad is a unit of energy:
A quad is a unit of energy equal to 1015 (a short-scale quadrillion) BTU,or 1.055×1018 joule (1.055 exajoules or EJ) in SI units.
The unit is used by the U.S. Department of Energy in discussing world and national energy budgets. The global primary energy production in 2004 was 446 quad, equivalent to 471 EJ.
Some common types of an energy carrier approximately equal to 1 quad are:
8,007,000,000 gallons (US) of gasoline
293.07 terawatt-hours (TWh)
33.434 gigawatt-years (GWy)
36,000,000 tonnes of coal
970,434,000,000 cubic feet of natural gas
5,996,000,000 UK gallons of diesel oil
25,200,000 tonnes of oil
252,000,000 tonnes of TNT or five times the energy of the Tsar Bomba nuclear test
12.69 tonnes of uranium-235 (with 83.14 TJ/kg)
6 s sunlight reaching Earth [10 hours a year for 8 billion people to enjoy US standards of living]https://en.wikipedia.org/wiki/Quad_(unit)
In particular, the US consumes about 37 Quads of energy for electricity generation, of which about a third goes into wires and the rest is lost in thermodynamic heat loss in generating stations and transmission. Ceteris paribus while solar PV and batteries are much less inefficient, PV capacity factors are limited by daytime sunlight, seasonal daylight variations, poor weather, and mismatches between times of peak generation and consumption. The end state of the solar electricity build out will likely see 3-6x overbuild in nameplate capacity, and large variations in electricity price by time of year, day, and location. These price differences, incidentally, already drive the engine of arbitrage which has turbocharged the battery industry.
Analysts recognize that coal and natural gas used for electricity production will eventually be displaced by renewable generation. Just as converting chemical energy in the form of fuel into electricity endures 45-75% thermodynamic losses, converting electricity back into chemical fuels loses 60-70% of the energy in the process. Converting solar power into natural gas only to burn it in a gas turbine power plant could help with long term seasonal energy storage but is so much less cost competitive than other ways to stabilize electricity supply that we should expect this usage modality in, at most, niche cases.
But what of other uses of carbon-based fuels? In the US, roughly twice as much energy is consumed by transportation, industry, and other uses, as in direct electrical generation. Electrification of cars and trucks proceeds apace but other, more fuel hungry forms of transport including aviation are harder to convert. Fuel uses for high temperature industry will continue to demand non-electrical processes. In particular, it’s easy for industry to transition to purely electrical energy if it’s cheaper for them to use it, but not if it’s not.
If we want to use organic market demand for cheap hydrocarbons to fund the build out of a global network of solar powered atmospheric CO2 scrubbers that can remove a meaningful fraction of our planet-warming legacy industrial CO2 waste, then we have to compete on price and convenience, not just on warm-and-fuzzies.
Unlike the electrical grid where, by default, power is generated and consumed simultaneously, capacity factor and intermittency are less of a concern for synthetic hydrocarbons, since existing infrastructure and use cases already enable days, if not weeks, of storage. The power intensive parts of fuel synthesis plants, most prominently electrolyzers, should only operate during the day. The impact of diurnal power supply variations on plant design demands only lower capital costs so that amortization is less painful. Since rapid scaling requires low capital costs anyway, and capital costs usually buy energy efficiency that we neither need, nor want, this trade is not particularly painful.
Synthetic fuels’ displacement of existing sources of coal, oil, and gas will require only enough overbuild to compensate for daytime operation, thermodynamic losses, and any additional induced demand. Terraform’s megawatt scale plant design targets 30% efficiency, but will probably gradually trade that for lower cost over time as power costs continue to fall.
13 Quads of electrical consumption in the US will require perhaps 50 Quads of solar generation, profitable deployment of batteries, and no further miracles as displacement occurs organically over the next 10-20 years. 70 Quads of fossil fuel consumption will be displaced by about 240 Quads of solar generation, and there will be a steep price incentive to enable this displacement.
In the US, we are anticipating a 6-10x demand increase once solar costs cross the critical threshold. In the current market, production capacity increases lag market expansion caused by cost reductions, but only slightly. In fact, in an era of steady displacement, learning rate is pegged to these market characteristics since it reflects a roughly optimal R&D investment strategy. Once we cross the synthetic fuels market expansion threshold, the legacy learning rate glide slope will be wildly inadequate to serve expansions in demand.
What is the solar cost threshold of interest? One barrel of oil contains about 1.7 MWh of chemical energy. Synthesizing a barrel of oil requires about 5.7 MWh of electricity at 30% conversion efficiency. Crude oil prices are between $60 and $100/barrel, indicating cost parity at between $10 and $17/MWh. There are already solar farms installed in some places that sell power at these prices, and between now and 2030 solar costs should come down at least another 60%.
Let’s look at how small price reductions will affect demand in more detail. I sampled these two datasets for world solar PV potential and population density at millions of locations, then marginalized over population and binned by price decreases of 1% per month. 1% per month corresponds to 25% price reduction and 3 years per doubling of production, which is slightly conservative.
The curve above shows how much synthetic fuel demand will occur as a function of time, assuming only 1% solar price reduction per month, 30% fuel synthesis efficiency, and cost parity at $10/kcf of natural gas or $60/barrel of crude. The shape is a function only of the distribution of sun that humans enjoy wherever they live. Tweaking efficiency, price drop rate, or cost parity price only changes the timeline scale, and not by more than a few years each way. Within 8 years of first hitting price parity anywhere, more than half of the world’s population will be within the addressable market, requiring >100 TW of solar PV generation.
This is what I mean when I say we’re looking at a very near term demand unlock, and that we’re going to need a lot of solar panels. On one hand, contemplating scaling the PV industry to meet this demand is a daunting prospect. On the other, here is a market and technology based mechanism that can organically displace fossil carbon use in a single generation and leave behind enough CO2 capture machinery that we can choose to draw down 100 ppm of CO2 with a tiny tax, rather than the hypothetical reorganization of the entire world economy and re-instantiation of feudal levels of poverty and hunger for most of the world’s populace.
Earlier this year we were anticipating hitting cost parity in our beachhead markets some time this decade. Then Russia invaded Ukraine, and European energy security evaporated. Things would look a bit different, perhaps, if the existing European nuclear power industry hadn’t been shot in the foot. If European solar manufacturing had maintained its momentum. If the wind turbine industry was treated as seriously as Airbus’ aircraft manufacturing. These are hypotheticals, and we cannot change the past. What we can change is how we adapt in future.
No matter what happens, Europe is looking at a cold winter. We absolutely should do everything we can to reduce conflict, improve building insulation and resiliency, and safeguard existing energy supply chains. This is necessary but it is not enough. We also need to choose a future of abundance, and that means an immediate emergency crash program to mass produce solar panels wherever and however we can at the highest possible rate. We no longer have the luxury of a decade to quibble about site placement or minor environmental impacts. The alternative is catastrophic climate change and mass starvation. The impact of solar farms on unimproved land is low, and trivial to reverse if, in future, we decide to remediate land. Certainly, it is far less impactful than agriculture, which already consumes a much higher fraction of the Earth’s land surface than solar panels ever will.
Terraform Industries’ synthetic natural gas process is not particularly complicated or difficult to achieve. We intended to make it easy to scale and deploy. If Europe had enough solar power deployed, even at current European solar prices, we could synthesize desperately needed natural gas at lower cost than transoceanic liquefied natural gas (LNG) importation, which is the next best option.
At current prices, Europe spends nearly a billion dollars per day on natural gas imports. Solar panel factory construction is cheap by comparison, even at the required scale. Europe would need about 1.5 TW of solar power generation to displace all imports, though even 10% of this would be very helpful. That’s about 0.3% of Europe’s land area. At current prices, completing this build out would cost about the same as a year of natural gas imports, and the end result would be persistent European energy independence for the first time in its history.
If you are a European policy maker, entrepreneur, investor, or manufacturer interested in learning more, please reach out. Terraform has no immediate plans to enter the European market but we will help anyone we can get this process underway.
The Russia-Ukraine conflict has accelerated the cost threshold transition. What previously might have occurred in 2026 occurred on February 24, 2022. Beyond that point, provided that the learning rate doesn’t fall below 5% (it is currently 30% and increasing), additional production will lower prices and expand market demand faster than it can sate it, more or less indefinitely. Already, new solar installations in Europe (cloudy, rainy Europe) will pay for themselves in less than three years. This is faster than nearly any energy infrastructure in history.
At current rates of production growth, the supply/demand mismatch will see a 10 year backlog between the time when local solar powered synthetic fuel production reaches cost parity with fossil sources, and when solar supply will be available to meet that demand. Ten years! Ten years of energy insecurity. Ten years of a Russian dictator unilaterally setting foreign policy anywhere its pipelines reach. 500 GT of additional, avoidable CO2 emissions. Perhaps 0.9°C of avoidable temperature rise. Hundreds of millions of lives harmed or prematurely ended by climate change.
We’re going to need a lot of solar panels. If 300 Quads are adequate to meet current US needs, then roughly 3000 Quads are needed to saturate global demand at US standards of living. Yes, solar synthetic fuels can overcome oil scarcity even in traditionally underdeveloped places. I expect that usage patterns, efficiency targets, and consumption will shift quite a bit by the time we complete this task, but we have to baseline somewhere. 3000 Quads is roughly 300 TW of solar generation capacity, occupying about 5% of Earth’s land surface area, and split between roof top installations in cities and dedicated plants on nearby less developed land. For comparison, agriculture uses 18% of Earth’s land surface area, and largely uninhabited deserts are 33%. Ultra low cost solar power will be ground mounted, and ideally rolled off a spool onto the ground similar to chemical-free plasticulture today. Synthetic fuel byproducts include oxygen and water, so limited direct irrigation in arid fuel production areas will also be possible.
300 TW is a lot of power. Roughly 20x our current global electrical production capacity. At that scale, hydrocarbon fuels will be cheaper than they are today nearly everywhere, while electrical power will be up to 20x cheaper, strongly favoring direct electrification where possible. Cheaper fuel means less scarcity, less poverty, and less damage to the environment.
Current global PV production is about 200 GW/year, with production doubling every three years. At this rate we’ll get to 300 TW cumulative production in 2048 or so. Not soon enough. If production maintains a 1% price drop per month and manufacturing scales up to meet demand, we can get most of the way there by 2033.
The sooner we get there, the sooner we can begin to roll back damage to the environment caused by breakneck industrialization and exploitation of fossil carbon. Any and all steps to increase the manufacturing growth rate are needed. If we can contract the production doubling time from three years to 18 months, we can reduce the backlog from 10 years to just 4. 300 GT of CO2 emission avoided, 0.6°C temperature rise averted, tens of millions of lives saved.
Substituting solar power into our electrical grid and atmospheric CO2-derived hydrocarbons into our fuel supply chain is just the beginning. We want to support a future of abundance and wealth, while avoiding starvation even as legacy climate damage shifts rainfall patterns and causes extreme weather.
Let’s take the Colorado River as an example. Historical average flows of 22,000 cubic feet per second (cfs) were mediated through several large dams, diverted for agriculture and city water supplies, and support about $1.4t of US GDP annually. A series of more recent droughts have seen the annual flow collapse to less than half the historical average. The river is drying up, and with it the communities that depend on it.
There are higher value uses for water but modern reverse osmosis (RO) desalination plants can generate a cubic meter of fresh water from the ocean for just 2.5 kWh. This works out to 250 kW per cfs, or 5.5 GW for the entire Colorado River. That is, the entire flow could be replaced by RO for just one 5.5 GW power plant adjacent to enough RO to exceed total Saudi desal capacity by a factor of 10. If it were solar powered, we’d need more like 15 GW of capacity to operate just during the day, and about 3x this again to pump the water up over the intervening mountain ranges towards the Colorado headwaters.
This sounds like a continent-traversing water transport megaproject, but we’ve done it before. Back before RO and solar power, water scarcity in California was solved on a generational time scale by the visionary construction of an enormous network of canals and pumps that effectively terraformed large swaths of the state, and which we take for granted now. But for climate change, this system would be adequate indefinitely but the times have found us, yet again.
Artificially supporting the Colorado river’s flows in their entirety would cost only a few billion dollars a year – not even cents on the dollar compared to its economic productivity. It is true that the Colorado is not a large river by global standards, but if we’re facing global water shortages we should be happy to have effectively infinite extremely cheap solar power available to re-irrigate what limited arable land we must depend on. 300 TW of solar PV build out for synthetic fuels and electrification will drive costs low enough that, should we need it, we can augment the natural water cycle and reverse desertification at arbitrary scale.
We need better, faster, cheaper ways to make PV panels. Investors and developers can count on extremely robust market demand going forward. Any economy that can support manufacture of PV or parts of the supply chain should work towards that rather than rely on imports from other countries desperate to sate their own energy demands.
The power is in our hands. No part of this transition requires alien technology, 50 years of fundamental R&D, or miracles of human coordination. We need only take existing functioning processes and mechanisms and turn them up to 11.
Casey Handmer Feb 2 2022 (original post)
Cheaper hydrocarbons from CO2 direct air capture and sunlight.
Terraform Industries is a bet on cheap solar, synthetic hydrocarbon supremacy, and hyperscale.
The overarching goal is to zero out the net transport of carbon from the crust to the atmosphere and oceans as quickly as possible by displacing drilled natural gas production with direct atmospheric processing.
As solar power gets cheaper and oil becomes more scarce, at some point this decade it will be cheaper to extract carbon from the air than to drill mile-deep holes in the crust on the other side of the world.
Synthetic fuels are fully backwards compatible with existing infrastructure and usage modalities.
In 2022 oil is scarce, atmospheric CO2 levels are rising, and solar energy continues to decline in cost. Indeed, the efficiency of converting natural gas to electricity is about 40%, the efficiency of converting electricity back to natural gas (experimentally) is perhaps 30%. There will come a time, sometime this decade in most places, when it is cheaper to get hydrocarbons by capturing atmospheric CO2 than by drilling a hole in the ground.
The 2020s are poised to see the explosive growth of electrofuels rapidly displacing conventional fossil hydrocarbon production. Electrofuels are burnable fossil fuel substitutes synthesized from chemical precursors using electricity, ideally from renewable sources. Production could exceed 1 GT/year by 2030, with corresponding revenues exceeding $600b.
Solar electrofuel cost will undercut local hydrocarbon production/importation costs across a steadily increasing fraction of global markets. Terraform Industries is positioned to provide the machinery and logistics to build local capacity to serve this need.
We seek to maximize growth, which means our technical solution needs to be fast, scalable and cheap. While conventional atmospheric processing machinery designs reflect historical energy scarcity and favor energy efficiency over low capex, we take the opposite approach. Our machinery is designed to be cheap enough to internally generate the cash flow needed to finance further growth without excessive reliance on government subsidies or trillion-dollar financing.
Our analysis indicates that capex target costs of $100/T-year and opex target costs of $100/T for CO2 conversion are highly competitive with oil/gas production for any market not directly adjacent to fossil fuel production areas. That is, a plant that captures one thousand tonnes of CO2 per year would cost $100,000 to build, and an additional $100,000 per year to operate. This compares favorably with both solar photovoltaic plant and fracking well economics, meaning that it doesn’t add marginal financing complexity to the former and meaningfully competes with the latter.
We seek to catalyze major growth in this industry. As the market matures, dozens of future market entrants will be our future competitors, suppliers, and customers.
Prior to 1913, ammonia was derived from guano and Chilean saltpeter. Subsequently, the Haber process has been used to directly fix nitrogen from the air. The Haber process revolutionized access to ammonia and nitrates, changing the course of industry, agriculture, and war.
Ancient forests and swamps that avoided biological decay were buried and, over millions of years, a small fraction of them were chemically converted to coal, oil, and gas, and then trapped underground in places convenient to 20th century extraction technology.
When people in Britain c. 1800 needed a source of fuel that was less scarce than lumber for metallurgy and primitive steam engines, they turned to coal – a plentiful source of reduced carbon not yet in chemical equilibrium with Earth’s oxidising atmosphere due to its isolation underground. The industrial revolution accelerated human exploitation of fossil carbon, bringing about enormous social and economic changes, tripling the average life span, and also gradually warming the planet via increased atmospheric CO2. Since the beginning of the industrial revolution, humans have extracted and burned about 400 billion tonnes of carbon from the crust, resulting in about 1.5 teratons of additional CO2 in the atmosphere and oceans. In solid form, this could make a mountain significantly taller than Mt Everest. Longer growing seasons and more CO2 have contributed to greater plant growth in regions that aren’t yet too hot, but further warming risks destabilizing ice sheets and flooding our coastal cities.
Combustion is a rapid form of the chemical oxidation reaction, in which “reduced” chemicals or fuels donate electrons to oxygen or some other oxidizer. The Earth’s atmosphere is conveniently 20% oxygen, while chemically reduced carbon is a fundamental building block of life, as shown in the Venn diagram below. This diagram shows fundamental chemical units that combine some subset of carbon, hydrogen, and oxygen.
This transfer of electrons liberates chemical energy as heat, which can boil water or expand gases and be transformed into mechanical work, though never with perfect efficiency.
Photosynthesis is the biochemical reaction in which the energy in sunlight is used to reduce carbon and make it available for plants to grow. This carbon is typically combined with water to form (CH2O)n and other polymers based on “sugars”.
The combustion chemical reaction is reversible. Oxygen is electrically stripped off water molecules, releasing a stream of pure hydrogen. CO2 is concentrated from ambient 410 parts per million to nearly 100% pure. Hydrogen and CO2 are catalytically converted to methane and steam, regenerating water and producing a useful fuel that is backwards compatible with existing infrastructure. While the grid and vehicles will continue their transition to solar and batteries, hydrocarbons will continue to be needed for aircraft, rockets, heating, industry, and chemical manufacturing.
Reversing combustion to generate newly reduced carbon fuel is an energy intensive process, and not even a particularly energy efficient one. But modern solar PV technology is perhaps 1000x better at converting sunlight into useful mechanical work than growing trees and burning them in steam engines, so allowances can be made, and electric fuel synthesis can close both technically and economically.
Terraform Industries’ design philosophy is to minimize complexity in order to maximize cash flow.
Existing carbon capture approaches fall into two categories. Either they assume someone will print a trillion dollars a year to finance their ongoing operations capturing CO2 and somehow disposing of it, and/or they assume that electricity is expensive and not getting cheaper. Expensive electricity requires highly complex, highly energy efficient processes, which must be financed on infrastructure terms, with 30 year loans to pay off the capital expense of construction.
While these loans serve an important purpose for serving predictable, well defined market needs, they are ill-suited to catalyze the explosive growth of the synthetic fuel industry. If revenue can cover capex in under 12 months, the financial side of the hardware build out has more in common with a Bitcoin mining rig than a petrochemicals plant, and the industry as a whole can scale more rapidly without relying on expensive, scarce long term infrastructure development loans.
Terraform Industries (TI) seeks to enter the market towards the left of the capex/opex chart above, embodying a process with both competitive production prices and fast scaling potential. When solar PV electricity reaches costs of $5/MWh mid decade, TI’s process will be the first in that market segment.
Falling solar costs demand a low capex approach
Solar costs have fallen with inexorable consistency as manufacturing continues to ramp up. For two decades, cost stabilization has been wrongly predicted to be just around the corner. There is no technically sound reason to suspect that gains will slow, or indeed even cease to accelerate.
At present rates of 10%/year cost reduction, some markets will see $5/MWh at utility scale by 2026, which is not far away. Supply chain difficulties in 2021 slowed this rate slightly, but also greatly increased the cost of natural gas worldwide. If gains continue, by 2036, this price will have been passed worldwide.
Such continuing reductions in solar PV costs could only be driven by explosive growth in demand, over and above that required to saturate demand from traditional electric grids and even electric vehicle charging. TI’s synthetic fuels are poised to generate this demand for electricity.
Indeed, the quantity of electricity required to synthesize 100% of California’s natural gas demand exceeds grid consumption by more than 10:1. This means that synthetic fuel price parity will drive enormous increases in demand for solar power deployment, providing the demand necessary to keep the learning curve bending downwards.
As an aside, scaling production to this demand will result in further price drops for solar power, catalysing other power intensive industries such as atomic recycling and ultimately even mass desalination for agriculture in river basins parched by glacial melt and shifting rainfall patterns.
Synthetic fuel production is enormously energy intensive. One kilogram of synthetic natural gas embodies 55.5 MJ of energy, but more like 150 MJ will have been expended to synthesize it, mostly on hydrogen electrolysis. This may seem wasteful but remember that renewable electricity is cheap and getting cheaper. In terms of opex, electricity is the single greatest factor of production, and yet its cost is reducing by around 10% per year. How can the other factors of production, including parts and labor, possibly match this improvement in cost, year after year? Only by seeking maximal simplicity of design and construction.
Consider the marginal cost elasticity with electricity price for simple and complex processes, shown at right. For higher energy prices, a high complexity system has the lowest overall cost, and costs are relatively insensitive to reductions in energy cost as most of the costs are embodied in the machinery. A simple system is less efficient but better positioned to capture the gains of a reduction in energy cost.
Terraform Industries believes solar prices will continue to plummet and that we will drive and consume much of the next decade of solar supply growth.
Meeting the success condition depends on start date, entry scale, but mostly growth rate
The success condition is met when the net flow of carbon from the crust to the atmosphere is less than biological fixation rates. At present, this requires displacing or compensating for around 50 GT/year of fossil fuel production.
The continued burning of coal, oil, and gas could be matched by carbon capture with durable storage, but any workable solution has to be able to scale to 50 GT/year, which in addition to acceptably low cost also demands the provisioning of >50 cubic km of volume to store CO2, CaCO3, or some partially reduced bio-oil. As a conical pile of HDPE this would be the tallest mountain in the continental US. Every year.
In contrast, a tonne of synthetic fuel produced is a tonne of crustal carbon extraction displaced, with unmined coal, oil, and gas remaining safely in the crust.
A higher efficiency synthetic fuel approach could reach positive net present value (NPV) as early as 2022, but high implementation costs can slow the growth rate in the absence of sufficient project capital. If implementation costs are around $1000/T-year, reaching 50 GT/year production will require a capital investment of $50t ($5e13), a not insubstantial sum, to be paid off over some decades.
In contrast, Terraform Industries’ lower efficiency synthetic fuel plant may not reach positive NPV until 2026, but once there can scale more quickly as its $100/T-year capex cost can be self-funded through revenue in, at most, a few years of operations. Terraform Industries’ approach leverages cement processing technology so it can hit the ground running with a scale of millions of tonnes per year so it only (only…) needs to achieve four orders of magnitude of growth to reach the success condition. Not easy, but not as hard as, eg, churning out 100 million containerized fuel factories over a similar time scale, and certainly not forbidden by the laws of physics.
The higher the growth rate, the less the scale of the initial condition or the start date matters. At 1000% annual growth, starting at 10,000 T/year instead of 1,000,000 T/year costs two years at the success condition. At a still impressive 300% annual rate, starting small costs twice as long.
Provided that revenue from fuel sales, which is set initially by marginal supply from traditional gas wells, exceeds costs of production, the operation is in the black and, potentially, further complexity can be stripped from the process as the plant design is iterated.
Efficiency gains are incremental and linear. Cost reduction gains drive growth and compound exponentially. Maximal growth rate demands minimal complexity.
Terraform Industries’ fuel production method has three parts: CO2 concentration, green hydrogen production, and fuel synthesis.
CO2 concentration is performed using a closed lime/calcite calcination cycle, operating at ambient temperature and pressure. CaCO3’s higher calcination temperature means this is roughly 10x as energy intensive as amines (submarines) or zeolites (space stations), but the capture material (lime) is <$10/T, not $2000/T (and up!), in accordance with our low capex/complexity design philosophy. No esoteric materials or catalysts are required. There are essentially infinite, flexible fungible supply chains for all component parts which serve the global cement industry, except for the electric calcination system. Electric calcination is in active development within the cement industry and, being similar to an electrical ceramic kiln, is not mechanically complex.
Cement plants, like the Holcim plant in Ste Genevieve, produce around 5 MT of cement a year. Worldwide cement production is around 5 GT, with half in China, and much from plants which are somewhat smaller. 5 MT of CO2 converted to methane per year implies a plant on a similar scale, albeit surrounded by solar panels, and a production rate well matched to existing natural gas transportation pipeline capacity. A few thousand such plants worldwide, each serving a major city, represents the instantiation of the success condition.
The CO2 concentration cycle begins with electric calcination of limestone/calcite.
CaCO3 -> CaO + CO2 (calcination proceeds quickly at 800-900 C)
The resulting lime (CaO) is fed humid air through a fluidized bed, resulting in the reformation of calcite via the intermediate step of calcium hydroxide (slaked lime).
CaO (s) + H2O (g) -> Ca(OH)2 (S)
Ca(OH)2 (s) + CO2 (g) -> CaCO3 (s) + H2O (g)
The result is a mixture of CaO, Ca(OH)2, and CaCO3, with absorption of CO2 slowing as more CaCO3 forms and the bed saturates.
The resulting powder is fed into an electric kiln first to dehydrate it at up to 600 C, then back into the 850 C kiln to complete calcination.
CaO + Ca(OH)2 + CaCO3 -> CaO + CaCO3 + H2O (g) (400 C < T < 600 C)
This cycle can be performed with continuous or batch material processing machinery, increasing development options and reducing cost. CO2 fixation and separation are separate processes, so the concentrated CO2 stream can be modulated in real time to match demand.
Commercial lab-grade electrolysis machines cost >$10,000/kW, and perform at up to 84% efficiency. They are expensive because they’re stainless steel pressure vessels that perform electrolysis on a superheated, super pressurized, super alkaline fluid that is a lawsuit waiting to happen. Supercritical lye is not a friendly chemical.
Hydrogen generated using water and renewable electricity (green hydrogen) has traditionally been more expensive than hydrogen generated by steam reformation of natural gas (gray hydrogen). This gap is closing as billions are invested in hydrogen electrolysis technology, derisking this part of TI’s process.
Terraform Industries prototype low cost electrolysis cells are $20/kW and achieve 40% efficiency. They are an atmospheric pressure, low efficiency system utilizing 26% w/w KOH alkaline solution and graphite electrodes, most of which are passive and in series. Full scale production calls for 1 MW cells at pallet scale, distributed between solar panel units in place of the usual solar farm inverters, venting waste oxygen directly, and transporting hydrogen in ambient pressure, large diameter plastic tubes.
Chemically, the electrolysis reaction is
2H2O (l) -> 2H2 (g) + O2 (g)
This reaction would consume 142 MJ of electricity per kilogram of H2 produced at 100% efficiency. TI targets around 600 MJ/kg to exploit the relatively low cost of electricity compared with electrolysis cell capital expenditure.
Hydrogen, as a fuel, is marginal even for rockets. It’s not backwards compatible with our existing industrial stack. It’s quite difficult to work with and to transport. It leaks through metals, embrittles materials, and has amazingly low density. Zeppelins, maybe. As fuel? TI does not expect to see it gaining traction.
Similarly, capturing CO2 is fine but what then? It’s unreactive, as dense as hydrogen is sparse, and not particularly valuable. It’s also hard to store or transport.
After CO2 concentration and hydrogen production, TI has a whole bunch of both streaming from pipes. The approach is to avoid transport and storage by immediately reacting the hydrogen with captured CO2 to produce methane (CH4). This is a similar in principle to avoiding the hazards of sodium and chlorine gas by storing them together as common table salt (NaCl).
By analogy with the traditional combustion reaction:
CH4 + 2O2 -> CO2 + 2H2O ΔH = -890.8 kJ/mol
The Sabatier reaction reduces CO2 by burning it in pure hydrogen:
4H2 + CO2 <-> 2H2O + CH4 (nickel/alumina catalyst) ΔH = -165 kJ/mol.
While the reaction does not run to completion, the unwanted reaction products are easy enough to remove from the exit stream. Combined with the electrolysis step, the complete reaction is:
4H2O + CO2 -> 2O2 + 2H2O + CH4
The only waste products are oxygen and water vapor.
The Sabatier reaction was discovered in 1897. It is not particularly exotic or difficult to execute. The resulting methane can be upgraded to long chain hydrocarbons, such as gasoline, using the Fischer-Tropsch reaction. This process has been implemented at industrial scale numerous times, including at the Oryx plant pictured below.
The Terraform Industries synthetic fuel plant takes as inputs copious solar power (DC, high current) and air, and produces natural gas, with waste products of oxygen and distilled water. The per-Watt cost is lower than the solar PV arrays it ultimately depends on, ensuring that solar PV cost remains on the critical path for however long the price continues to fall. We expect to hit cost parity without subsidies, tariffs, or curtailment in limited markets by 2025. If historical solar production increases continue, we should be able to serve half the world’s population by the early 2030s and the rest by 2040.
What does the world energy mix look like in 2040? Mostly solar, some wind, nuclear, hydro, and very limited legacy fossil fuels. Many cars, buses, trucks, buildings are run with electricity. Local battery storage continues to grow as market needs require. Grids are run mostly at the local level. Hydrocarbon use in general reduces even as prices drop (electricity is cheaper still), while usage tends towards shorter chains and lighter fractions. Synthetic production of hydrocarbons is cheaper than fossil extraction and refining nearly everywhere. Cheaper energy means cheaper, faster aviation, bigger and cleaner industry, better recycling, and renewed local manufacturing worldwide. By 2040, solar costs are so low that mass desalination can begin to compensate for unpredictable rainfall patterns – but that’s another story.
- De-risk CO2 concentration by building development plants at up to 500 kg/day scale, with an initial cost target of $100/T-year.
- Build a low cost development green hydrogen plant.
- Synthesize methane, qualify end-to-end production and assay process.
- Execute large scale plant including the solar farm with colocated machinery, proximal to existing natural gas distribution pipeline, and with customer agreements.
- Scale plant production by all available means. Target commissioning of one MT-scale plant per day within five years of market entry.
Tree. You’ve invented a tree.
As far as rapidly self-scaling solar-powered carbon reduction machines go, plants have been at it for a long long time. Indeed, coal, oil, and gas is the result of a very lossy and time consuming process whereby humans burn, in a single day, solar energy that was stored over thousands of years.
Alternatively, biofuel production from, eg, corn, can be considered carbon neutral if one ignores the carbon intensity of farming and fuel transport. However, there is a limit to how much corn can be grown, determined by water, climate, and land area. Even corn, with incredible C4 photosynthesis, fixes less carbon on an area-annual basis, than a quarter-inch layer of dry lime. The end-to-end efficiency per solar photon for biofuels is <0.1%, while PV+batteries+motors can be as high as 20%. Synthetic fuels are around 5% efficient, which is still a 50x better use of land than growing corn, and can be done in arid regions.
Is that like Prometheus Fuels?
Prometheus Fuels’ business plan is premised on the same observation: cheap solar will result in cheaper synthetic fuel than stuff extracted from the crust. Their website is also impossibly cool.
Prometheus uses aqueous chemistry and a very clever nano-filtration system to separate alcohols without fractional distillation.
Terraform Industries’ approach is deliberately simpler, cheaper, and less capital intensive. Wherever solar is cheap enough, TI can potentially scale more quickly. But TI believes that the world is big enough for two, or two hundred, solar synthetic fuel companies.
TI’s strategy is to stake out the cheap, fast corner of the market. We openly encourage competitors but if a more complex technology faces scaling limitations, TI is the backstop.
Could China steal IP?
When it comes to ensuring strategic access to hydrocarbons, China will not be the odd country out for ignoring international IP agreements and infringing as much as possible. So how can Terraform Industries prevent Chinese, or any international, competition?
For Terraform Industries, achieving the success condition through total verticalization and monopolization of the synthetic fuels industry is sub-optimal. We believe that a better, faster solution will be found through the massively parallel development of competing and complementary synthetic fuel technologies. We believe that the first mover advantage lies with companies that invest their resources in growth and market making, not patent squatting.
The odds of the early generations of technology being defensible from an IP standpoint, or even worth defending, is extremely low. Terraform believes that following six month design cycles common in solar PV, we would consider ourselves lucky to get to the success condition by version 10, or even version 20, of the complete tech stack.
Indeed, given the rarity of synthetic fuel plays that capitalize on cheap solar, we would be gratified to see competitors follow us into this market. And if Chinese manufacturers can make CO2 concentrators, electrolysis units, or Sabatier reactors cheaply and in enough abundance to saturate domestic Chinese demand with product left over, we would be fortunate to partner with them as suppliers!
Casey Handmer PhD. Casey earned his PhD in gravitational wave simulation from Caltech in 2015. He designed maglev systems at Hyperloop and built GPS science instruments and mapping tools at NASA JPL before founding Terraform Industries.
David Smyth worked on software for the Space Shuttle and JPL Mars rovers, before stints at Millennium Space Systems and Honeybee Robotics. He’s also the President of Westlawn Institute of Marine Technology.
Stephanie Coronel PhD. Stephanie completed her PhD studying mechanics of composite fuel tank ignition prevention at Caltech, followed by work on combustion safety at Boeing and Sandia National Laboratory.
Jenna Amundson brings deep experience with marketing and people ops from Hyperloop and Jenlis.
We’re also proud to work with Second Group Design engineers Brian Towle (GE, Hyperloop) and Jett Ferm (Pilot Group, Hyperloop) to fine tune our carbon filter.
Terraform Industries is hiring! Join us on our mission to yank billions of tonnes of CO2 out of the atmosphere and make money in the process. We’re particularly keen on MechEs, ChemEs, EEs, and anyone else with strong mechanical intuition and fabrication experience. Send us your most compelling one-pager to firstname.lastname@example.org.
Casey Handmer Nov 1 2021 (original post)
This blog is a follow up to So You Want To Start A Carbon Capture Company. In the last five months, the cadence of new entrants in this space, as well as new climate-focused funds, has only increased. This is a marked, though welcome, contrast to the now familiar dithering and lack of unified action at the international political level.
Our entire civilization rests on our ability to harness ancient solar energy stored underground as reduced (i.e. not oxidized) carbon and capture the heat unleashed when we bring it into chemical equilibrium with the surface by combusting it in our oxygen rich atmosphere. The benefits of coal, gas, and hydrocarbons cannot be overstated. Compared to our pre-industrial ancestors, we enjoy longer healthier lives because we have the ability to dispatch roughly 100 times as much power as we can absorb and produce through our own metabolism. Food is also a form of reduced carbon derived from photosynthetic plants that we can digest and eventually breathe out, after swapping a couple of electrons with the oxygen we breathe. Food, compared to fossil carbon, is far harder to produce and transport.
Ceasing use of fossil fuels overnight would lead to immediate collapse of our civilization, mass starvation, and a return to pre-industrial norms of hunger and poverty. And yet, continuing to burn fossil fuels artificially enriches our atmosphere with excess CO2 which increases the greenhouse effect of Earth’s atmosphere, eventually leading to a climate catastrophe that will also destroy our civilization and lead to mass starvation, war, and coastal flooding as described in Kim Stanley Robinson’s latest novel “Ministry for the Future”.
Political deadlock centers around an intermediate vision, one in which our civilization attempts to reprice fossil fuels to internalize the currently free unpriced externality of dumping unlimited quantities of gaseous combustion products into the atmosphere. Thus making fossil fuels more expensive, their alternatives could attract more investment and hasten deployment, weaning us from our terrible addiction. At the same time, this means ever higher fuel prices which constitute a regressive tax on the world’s poor and, historically, political instability. Dozens of governments have fallen due to their inability to assure continued supply of sufficiently cheap fossil fuels. Meanwhile the sort of mass wealth redistribution required to ensure that fuel price increases did not adversely affect the world’s poor, meaning the 99%, are both politically unsustainable in at least a plurality of countries, as well as being counterproductive in proportion to their effectiveness. That is, it’s very difficult to imagine any set of policies that keep fuel cheap enough for the 99% while also driving sufficiently large reductions in use over a meaningful timescale.
It is certainly true that massive growth in the electric car industry is helping to turn the tide of fuel consumption for personal transportation. Meanwhile, solar, wind, and nuclear power provide carbon-free electricity and are growing at a fabulous rate. On a global basis, however, overall fossil extraction and use continues to grow, producing around 50 gigatons (GT) of additional CO2 every year. To give a sense of the volumes involved, if liquefied, that’s enough to fill San Francisco Bay eight times over. Even given the most optimistic projections for the growth of fossil fuel-displacing industries, the legacy vehicle fleet, air transport, chemicals, heating, electricity generation, and so on will continue to produce enough CO2 to catapult us over the 2C heating limit.
Carbon removal will be required. That is, we will have to build enormous machines capable of scrubbing CO2 from our atmosphere, just as is done in a submarine or spacecraft. Contemplating the enormous cost of this technology, most simulations assume that it will only be applied en masse towards the end of the century when, hopefully, the cost is lower and the need unignorably urgent. To many of my contemporaries, this deus ex machina is a hopeless “get out of jail free” card invented by political cronies unable to make tough unpopular decisions. Indeed, many pilot “clean coal” carbon scrubbing pilot projects are already abject failures. It doesn’t require more PhDs than Bruce Banner to recognize that if scrubbing a tonne of CO2 out of a coal plant smoke stack takes more energy or revenue than what is generated producing that tonne of CO2, the system just cannot work.
And yet there is reason for optimism. Carbon neutral hydrocarbons are within our grasp. As solar power gets cheaper and oil becomes more scarce, at some point this decade it will be cheaper to electrically extract carbon from the air than to drill mile-deep holes in the crust on the other side of the world.
Let us take a brief historical detour. Ammonia is an essential industrial chemical used in fertilizers and explosives, with an annual production of about 176 million tonnes. Prior to 1913, ammonia and nitrates were mined from guano and Chilean saltpeter. Motivated by blockades in the run up to the First World War, German scientist Fritz Haber pioneered the process that bears his name, permitting direct catalytic fixation of nitrogen from our atmosphere. At 78% nitrogen, the atmosphere has essentially unlimited quantities but fixation previously relied on rather unusual biochemical pathways.
In essence, carbon neutral hydrocarbons seek to extend this principle to deriving industrial quantities of reduced carbon from the atmosphere rather than the crust. Plants do this every day when they use water, CO2, and sunlight to produce cellulose, and fossil fuels are derived from their ancient photosynthesis. Despite advances in agriculture, however, plants cannot absorb enough CO2 to compensate for fossil fuel production, and they are trying hard! If they could, biomass-based industrialization would have been possible without coal and oil. Producing enough biomass today to substitute for current fossil fuel consumption would require vastly more water and arable land than Earth has available. Plants are tasty but they are picky about where they grow and ultimately rather inefficient at converting sunlight into reduced forms of carbon. If we are to transition global hydrocarbon consumption to carbon neutral synthetic sources, it will require a mostly physical/chemical process. It is, however, substantially more challenging than ammonia production.
First, concentration of CO2. Unlike nitrogen, which is four fifths of the air we breathe, CO2 is present in the atmosphere at about 420 ppm. There is substantially more nitrogen, oxygen, argon, and water vapor. Hydrocarbon synthesis concepts usually require a concentration step where CO2 is scrubbed from a stream of air and later released as a concentrated flow. To put the challenge in perspective, the US currently consumes 18 million barrels of oil, 13 billion cubic feet of natural gas, and 1.2 mT of coal per day. This generates 14 million tonnes of CO2, or 7 billion cubic meters at STP. Once diluted by atmosphere to 420 ppm, the volume is 17000 cubic kilometers, equivalent to a layer over the entire US land surface 1.8 m thick. To concentrate enough CO2 to synthesize enough hydrocarbons to meet current demand, this volume must be processed every day. Given constant operation and 10 m/s gas flow rate, total aperture area sums to 20 square km. In contrast, the equivalent calculation for global ammonia production works out to a collective aperture of a mere 450 square meters. Displacing global fossil carbon usage is going to require a lot of really big fans.
Second, chemical reduction of CO2. Even with a pure stream of 7 billion cubic meters of gaseous CO2 every day, the gas itself is not very useful. It is a waste product, no more fuel than water or any other fully oxidized chemically stable chemical. The energy released when it was produced has to be put back in, and then some, to tear off the oxygen atoms and produce either reduced carbon as graphite or hydrocarbons. One old fashioned way to do this is to catalytically react CO2 with hydrogen, producing methane (CH4) and water vapor. CH4 is the smallest hydrocarbon and the principle component of natural gas. Doing this requires a very large supply of pure hydrogen, ideally generated electrolytically, which requires an enormous supply of electricity. Direct electrocatalytic reduction of CO2 also requires a lot of electricity, as there is no free lunch. If one had a plentiful source of green hydrogen, though, there are worse things to do with it than reducing CO2. As a pure fuel hydrogen is difficult to deal with and not cross-compatible with existing infrastructure. Some quantity can be used to fill airships, but the volumes required for fuel synthesis would overwhelm airship demand within seconds. The bottom line is that hydrocarbon production from captured CO2 is enormously energy intensive, in addition to having intrinsic inefficiencies. Overall, perhaps 15-35% of input electricity could be converted to chemical energy.
Third, cost of energy. Let’s say I wave a magic wand and a fully operational, fully scaled CO2 capture and hydrocarbon synthesis plant appears. Can I afford to run it? Remember that the energy efficiency of the plant is 35% at best. Given that one of the primary uses of natural gas is burning it to produce electricity, surely using electricity to produce natural gas seems a bit perverse? Natural gas power plants are about 40% efficient at converting natural gas to electricity. Combining the two efficiencies gives a combined efficiency of <14%. Provided my source of electricity is at least seven times cheaper than natural gas-derived electricity, it makes more sense to convert electricity to natural gas than the other way around.
There are certain caveats here. For example, if my source of electricity is solar power and my primary use of electricity is heating, it makes more sense to burn natural gas for heat and save solar power for running appliances and charging electric cars. Each interconversion between thermal and electric energy takes a substantial efficiency hit. This has implications for future energy distribution systems that I will not explore here.
Nevertheless, in markets where solar electricity prices are >7x lower than natural gas, there might be a business case. Does this seem possible? Natural gas prices in Europe this winter have already climbed higher than $22/kcf, almost 10x more than that found in producer regions, such as the US south. In the meantime, the cheapest utility scale solar plants in 2020 are producing electricity at 1.04 c/kWh, compared to typical European prices of around 30 c/kWh, though there are of course differences between electricity price and cost at different points in the system, particularly given that solar power doesn’t work at night.
Let’s look more generally at this problem. Consider the following map showing global solar resource potential. Essentially the entire populated part of the world, except for north west Europe, has a solar resource within a factor of two of the absolute best.
In contrast, oil is not uniformly distributed across the world’s surface. Most places do not have enough, and a tiny minority have way too much! Much of the remaining proven reserves are increasingly uneconomical to extract, requiring more technical drilling, fracking, and refinement than ever before.
While fossil fuels become scarce, their price volatile and generally increasing, the price of solar photovoltaic (PV) electricity continues to drop. The graph below shows that solar prices decline steadily as deployment increases, creating a virtuous cycle and positive feedback loop. On average, costs decline about 10%/year. Solar cost declines slowed due to supply chain issues in 2021 but natural gas prices increased by a much larger factor.
Consider again my magic wand-derived synthetic hydrocarbon plant. Let’s say that deployment is currently unprofitable in Los Angeles because the gas-to-solar price ratio is unfavorable by 30%. In just three years, PV cost improvements eat that gap and I hit break even. There’s not much that natural gas producers can do about it, in the face of continuing solar cost decreases.
We will see this business model break even first in sunny places that lack adequate hydrocarbon supplies, then steadily expand away from these areas towards the poles at about 200 km per year. Indeed, at 10%/year cost improvement, only 8 years separates cost competitiveness in the sunniest places from nearly anywhere else on Earth. A capable carbon capture hydrocarbon synthesis strategy should be capable of keeping up with this explosive market expansion. As a result, the prime constraint will be deployment rather than cost competitiveness, which is essentially the same problem faced by the electric car industry.
These three formidable challenges, CO2 concentration, CO2 reduction, and electricity cost, cannot be underestimated. Overcoming them is a worthy challenge, and enables a rather neat solution.
First, economic displacement of fossil carbon production reduces net production of greenhouse gases while also reducing poverty through more democratized production of more affordable fuel. There is no need to square the political circle of legislating otherwise voluntary hydrocarbon scarcity, potentially at the point of a sword. There is reduced need to worry about supply chain interruptions or price volatility. Seasonal price variations due to weather and climate are readily predictable, and thus priceable, months or years in advance.
Second, a profitable carbon capture industry can self fund and attract project finance using conventional channels. There is no need to print a trillion dollars a year to fund CO2 sequestration, since the CO2 is immediately converted into a valuable product that is immediately bought and used. A mature carbon capture hydrocarbon synthesis industry represents a real way to scrub legacy CO2 emissions from the atmosphere with a modest excise, rather than desperate and long delayed deployment of ruinously uneconomic carbon capture machinery.
Third, direct synthesis of light hydrocarbons from gaseous CO2 sidesteps the technical, financial, geopolitical, and environmental challenges of oil extraction, transport, and refining. No need to deal with sulfates, cracking long hydrocarbons, oil tankers, the Straits of Hormuz and Malacca, directional drilling, underground mining, groundwater contamination. Large scale carbon capture represents a new and interesting set of technical and environmental challenges but it’s not intrinsically cursed in the same way as coal, oil, and gas.
There are hundreds of potential technology combinations to choose from. Some are already under active development. Like prominent European tech demonstration Store&Go, scaling economically and technically viable processes is the main challenge. For example, Store&Go predates widespread recognition of continuing cost improvements from solar power, and so it presupposes that the electricity input is scarce and expensive, and places a large emphasis on the energy efficiency of the underlying process. Unsurprisingly, their tech stack is complex and extremely expensive, such that even with a 30 year financing period it would be unable to produce hydrocarbons more cheaply than enduring price gouging from Russia. It is, of course, necessary for Europe to be able to internally produce some volume of hydrocarbons at any cost, but this tech stack cannot compete in the open market. Indeed, no tech stack that optimizes energy efficiency at the cost of capital expenditure (capex) can hope to generate free cash flow over a time frame relevant to climate change mitigation efforts, so large scale deployment depends either on enormous government investment or finding some way to greatly reduce capex.
This is the essential challenge to scaling. An energy inefficient process will be cheaper to produce but more expensive to operate. However, as solar electricity prices decline, an inefficient process will capture more of the gain than an efficient one whose balance of costs is relatively insensitive to electricity prices. Taking this observation to its logical conclusion, the best synthetic hydrocarbon process is one that barely breaks even at any given time, so long as deployment costs are held to an absolute minimum and deployment scale is maximized. Such a process maximizes the carbon captured per dollar of project development capital invested, while banking on ongoing electricity price decreases to generate free cash flow sooner rather than later.
Consider the goal of reducing net transport of carbon from the crust to the atmosphere. If the carbon capture industry grows at a steady rate, it makes essentially no impact until it is nearly completely deployed. As of today, our global CO2 capture capacity is between 1000 T/year and 10,000 T/year. While plants capture much more than this, there is no way for them to capture more than a few percent of net emissions, any more than we could fuel our entire civilization on biomass alone. If we want to scale to capturing 50 billion tonnes per year by 2040, we need an order of magnitude of growth every 3 years, with essentially no impact until 2037. Growing an industry by ~250 %/year for 19 consecutive years is a big ask, especially given that the success condition does not award partial credit, though it does reward a team effort.
On the other hand, any industry poised to generate this much growth is probably the biggest business opportunity this century. There are a handful of companies currently developing cash flow positive carbon capture technologies and business models. There needs to be hundreds. In particular, a graph of approaches by capex and opex needs much filling out, particularly in the low capex, higher opex end of the parameter space. I am convinced that dozens of tech stacks can work economically, but they all need work to build at scale and compete. We need more shots on goal.
With that in mind, I have resigned after four years at the Jet Propulsion Laboratory to found Terraform Industries. At JPL I was lucky enough to work on Mars rovers, Moon rovers, GPS instruments, and artificial intelligence, but the urgency of decarbonization demands my attention! At TI, we are pursuing a particularly promising approach to gigascale atmospheric hydrocarbon synthesis. Yes, we are currently raising a seed round (Edit: Not anymore). Yes, we are hiring ambitious, exceptional engineers.