Don’t bury money: how to create value from CO2
It has become clear that reaching net zero in 2050 will be impossible without carbon capture. But once the carbon has been captured, what should we do with it?
Carbon capture, storage, and utilisation (CCSU) technologies offer an opportunity to achieve deep decarbonisation in key industrial processes and in fossil fuel usage in the power sector. On the storage side, according to the International Energy Agency (IEA), a cumulative of up to 107 Gt CO2 could be stored permanently by 2060. However, there are some concerns around CO2 storage like leakage from underground reservoirs as well as induced seismicity. Moreover, it is still unclear whether CO2 storage facilities will develop at the scale and pace required to store 107 Gt CO2 by 2060 is yet to be seen.
Although not a replacement for carbon storage technologies, carbon utilisation offers a complementary abatement solution with a cumulative capacity between 8 and 14 Gt CO2 in 2060. Carbon utilisation or CO2 valorisation is the process of creating something more valuable out of the greenhouse gas CO2. Captured CO2 can be used as a renewable resource to produce e-fuels, sustainable natural gas, high-value chemicals, sustainable plastics, carbon nanomaterials, and more.
The carbon-to-value market has the potential to be huge with CO2 availability on the rise and an increasing interest in this space.
The topic of carbon utilisation is however complex and extensive. Therefore, we decided to offer this deep dive in a new format. You can read the main article (this one), which in three chapters provides the big picture and a summary of the topic. If you want to get technical (and nerdy) then each of the chapters has its own sub-article where we go into the depth of the topic.
In the first chapter, we outline the market opportunity that carbon utilisation presents. To fully leverage this market opportunity, a basic understanding of chemistry is required, which is provided in the second chapter. Then we explain the four different CO2 conversion methods: thermochemical, electrochemical, photochemical, and biological in the third chapter. It also includes a competitive landscape map, outlining the current state-of-the-art technologies and the most promising carbon utilisation startups in the space. Here’s a first look at the map:
After the long introduction, let’s begin our journey.
The market opportunity: CO2 as a widely available commodity
For more information on the market opportunity, go to our first sub-article of this series.
As of 2022, 35 commercial facilities are capturing 45 Mt CO2 globally. Project developers have announced the ambition to have 200 additional carbon capture facilities operating by 2030. This would result in an annual carbon capture volume of 220 Mt CO2 in total. Meaning, we would have 220 Mt CO2 available for carbon storage or as a feedstock for carbon utilisation processes. Apart from carbon capture, (industrial) waste streams and biomass will be additional CO2 sources.
With CO2 becoming widely available (like a new commodity), new processes to valorise CO2 are attracting increasing interest from governments, industry, and investors. Global private funding for CO2 utilisation startups reached nearly $1B over the last decade. In North America, the NRG COSIA Carbon XPrize is supporting CO2 valorisation with a $20M competition. Besides, research, development, and demonstration are being supported globally by amongst others the European Commission and governments in the UK, US, Canada, and Japan.
With feedstock availability and increasing funding from different sectors, the market is expected to boom. In 2030, the global market for CO2-derived products and services is predicted to be between less than 1 and 7 Gt CO2. Fuels have the largest potential due to their vast market size, followed by chemical building blocks, and then polymers, also known as plastics.
Contrary to many generalist venture capital investments, understanding popular buzzwords like blockchain and B2B SaaS won’t be enough for climate technology. To fully leverage the carbon utilisation market opportunity, we need to focus more on hardware rather than software. Moreover, we need to know what the potential pathways and outcomes are for carbon utilisation. The clue to understanding the options starts with chemistry.
Chemistry 101: understanding the basics of carbon utilisation
For more information on chemistry for climate tech investors, go to our second sub-article of this series.
Chemistry is a central pillar to understanding climate tech solutions, and it’s no different with CO2 conversion methods. We’ll go over the basics here.
To create something more valuable out of CO2, we need to transform it. However, CO2 molecules are relatively stable and therefore require high energy input to be transformed. Each oxygen atom shares two electron pairs with the carbon atom and therefore the strong carbon-oxygen bonds need a lot of energy to be broken. This energy is typically delivered in the form of heat, electricity, and/or light. To lower the energy barrier, a catalyst can be used.
Due to the thermodynamic stability of CO2 molecules, currently, the use of this greenhouse gas as a chemical feedstock is limited to a small number of industrial processes. Several approaches like the thermochemical, electrochemical, photochemical, and biological conversion of CO2 into more valuable products are being investigated in academic and industrial settings. With that said, let’s look at the four CO2 conversion methods.
Conversion Methods
For a more detailed explanation of all four conversion methods and a market overview, go to our third sub-article of this series.
🔥 Thermochemical conversion
Thermochemical CO2 conversion utilises heat as an energy source. Typically, a catalyst is added to the mix, lowering the CO2 conversion energy barrier as well as speeding up the conversion reaction.
Up to now, long-chain hydrocarbons (5 or more carbon atoms) have only been produced at high yields via thermochemical CO2 conversion. Creating long-chain hydrocarbons from CO2 is beneficial because they store more energy and are easier to transport off-grid compared to gaseous methane (which is the lightest hydrocarbon with only one carbon and 4 hydrogen atoms). Therefore, this is a promising pathway toward a circular economy. These are the potential products made from CO2 via thermal catalysis:
CO2 to methane (natural gas)
Creating synthetic natural gas from CO2 is a relatively simple one-step process. A clear advantage of this approach is that the infrastructure for natural gas transportation already exists and the produced methane can be fed directly into the existing natural gas grid. A general disadvantage is that reaching cost parity strongly depends on the availability of cheap renewable energy, as we need four molecules of green hydrogen for every molecule of CO2 converted.
CO2 to long-chain hydrocarbons (e-fuels)
CO2 can be converted to long-chain hydrocarbons, also referred to as synthetic fuel or e-fuel. This can either be a one-step process or a two-step process, where CO2 is first converted to carbon monoxide (CO) to increase the overall process efficiency. E-crude created through this process is a direct drop-in for fossil-based oil and such liquid hydrocarbons are easier to transport off-grid compared to gaseous methane.
CO2 to methanol
Another well-established process is methanol production from CO2, CO, and H2 mixtures. Methanol is an important chemical building block and is used as a precursor for many commodity chemicals, such as formaldehyde, acetic acid, and long-chain hydrocarbons. Currently, over 90 methanol plants have a combined production capacity of 110 million tonnes and generate $55B in economic activity every year. In the light of renewable energy, methanol is a promising energy carrier: it is a liquid at room temperature and therefore easier to store than hydrogen or natural gas. Although methanol’s energy density is lower than gasoline, a methanol-based economy would only require small adaptations to engines and the general infrastructure. Methanol can, for example, be used efficiently in marine diesel engines after minor modifications.
CO2 to ethanol
Ethanol and other long-chain alcohols are widely used in commercial fuel blends for internal combustion engines to increase combustion efficiency and the octane number of gasoline. Long-chain alcohols are typically produced through fermentation of e.g. corn or sugar cane and increasing production puts strain on agricultural resources and land use. If an efficient catalytic process is developed, long-chain alcohols could be produced from CO, CO2, and H2 mixtures instead.
CO2 to polymers
CO2 can be incorporated in polymers, more commonly known as plastic, using a variety of technologies. The advantages of this approach are that infrastructure for plastic production already exists and that we wouldn’t have to break the CO2 molecules apart, which means saving energy. Challenges include reaching cost parity, as plastic is a commodity produced at low cost, and separation/reuse of the catalyst.
CO2 to formic acid
One way to avoid the energy-intensive carbon-oxygen bond cleavage step is to produce formic acid from CO2. The total process would require 4 kWh/kg of formic acid electricity, which includes H2 production via water electrolysis. This multi-step process is not yet widely commercialised due to challenges around formic acid extraction from the reaction mixture as well as the relatively high price of ruthenium-based catalysts.
CO2 to other specialty chemicals
CO2 can additionally be converted into a variety of specialty chemicals or used in industrial processes to replace other chemicals. Every process to create specialty chemicals has its own pros and cons. The most common con is generally high energy input requirements.
Plasma-assisted CO2 conversion
There is increasing interest in plasma technology for CO2 conversion because it can operate at mild conditions. Plasma is created by applying electricity to a gas. The gas becomes ionised and then consists of electrons, ions, radicals, atoms, and molecules beyond their neutral state. This is a very reactive environment and in the case of CO2 conversion, it could activate the CO2 molecules at low temperatures. Although this approach could be used to create a wide variety of reaction products, challenges include the relatively low energy efficiency of max. 50% thus far.
⚡ Electrochemical conversion
Instead of using heat as an energy source to break the carbon-oxygen bonds of CO2, electricity can be used. This form of catalysis is referred to as electrocatalysis or electrochemical CO2 conversion. Although its popularity has certainly grown over the past years, electrocatalysis is generally less developed in terms of technology readiness level (TRL) compared to thermal catalysis. Below we will list some potential reaction products that can be formed via the electrocatalytic pathway.
CO2 to CO
Turning CO2 into CO is the most mature pathway for electrochemical CO2 conversion at this point. Partial current densities for CO production have surpassed 1 A/cm2, which is similar to commercial water electrolysis producing hydrogen. The main challenges that have to be overcome for successful commercialisation are low energy efficiencies, reactor instabilities, low CO2 conversion rates, and low product selectivities.
CO2 to formic acid
Similar to thermochemical conversion, the energy-intensive carbon-oxygen bond cleavage step can be omitted by producing formic acid (CHOOH) from CO2. A challenge that has to be overcome for commercialisation purposes is the limited solubility of CO2 in water, leading to low conversion rates and low current densities. For industrial applications, a current density of 200 mA/cm2 should be demonstrated. In terms of commercialisation, there are a handful of projects, startups, and larger companies working on this.
CO2 to C1
Methane and methanol can be produced electrolytically from CO2. Although technically feasible on copper-based catalysts, the thermochemical route is far more established at this point. It is therefore unlikely that electrochemical methane and methanol production will be able to compete with thermochemical routes on an industrial scale in the near future.
CO2 to C2
Direct conversion of CO2 to ethylene or ethanol has been reported in the academic literature. Creating C2 instead of C1 products would be beneficial, as longer (hydro)carbon chains store more energy. Besides, C2 products have broader market applications. Ethylene is a common chemical building block for example to create plastics, while ethanol is widely used as fuel. However, commercialisation is still in its infancy due to low efficiencies.
CO2 to carbon nanomaterials
Carbon nanomaterials have numerous applications; they are, for example, used in the battery industry and the fuel cell industry in the form of graphite. Carbon nanotubes (CNTs), another structure of carbon nanomaterials (Figure 1), are for example used for energy storage applications, in the automotive industry, and for water purification. These materials are typically produced from fossil fuels or mined (in the case of natural graphite). Its mining and processing occur mostly in China.
Around 2015, reports started appearing in the academic literature regarding molten salt CO2 capture and electro-transformation (MSCC-ET) to produce various carbon nanomaterials from CO2 instead. The approach is very interesting, as it can be CO2-negative and has a lower energy input compared to the current fossil-based processes. The main challenges around MSCC-ET are currently engineering challenges, such as efficiently removing the carbon nanomaterials from the electrodes after deposition. The commercialisation of this process thus seems promising and is currently being pursued by a handful of startups and/or larger companies.
💡 Photochemical conversion
Photochemical CO2 conversion utilises (solar) light as an energy input source. The concept is similar to photosynthesis in green plants, where CO2 and water are converted into sugars and oxygen under the influence of light. Photocatalysis, discovered in the 1970s, is a light-induced chemical reaction catalysed by a semiconducting material. At the moment, photocatalysis has only a limited number of commercial applications, which are not necessarily related to CO2 conversion. For example, air and water purification with titanium oxide-based catalysts as well as hydrogen production. There are some CO2-related opportunities, which are currently mostly ongoing research at universities.
Thus far, the most commonly investigated reaction products from photocatalytic CO2 conversion are CO, formic acid, methane, methanol, and ethanol. For commercialisation purposes, however, cell-level efficiencies and product selectivities should improve. The most promising pathways towards commercialisation would likely be to leverage photocatalytic material properties with other modes of energy input for CO2 conversions, such as photothermal catalysis (combining heat and light), photoelectrochemical catalysis (combining electricity and light), or biophotocatalysis (combining microorganisms and light).
☣️ Biological conversion
Biological CO2 conversion utilises microorganisms to convert CO2. Although scientists and engineers have mainly focused on the three methods discussed above, photosynthetic microorganisms have been converting CO2 and water into organic matter (e.g. sugars or other biomass) for more than two billion years. On a global scale, such microorganisms convert more than 100 Gt CO2 into biomass per year. Optimising their capabilities, for example through genetic or metabolic engineering, could become a disruptive technology for CO2 valorisation. Combining microbes with electricity could be a particularly interesting approach to boost the product yield from biological CO2 conversion. Promising reaction products from biological CO2 conversion are listed in the sections below.
CO2 to methane
A promising biological carbon utilisation pathway is to use methanogens, the microorganisms that produce methane as a byproduct in anaerobic (without oxygen) conditions. Such microorganisms are common in wetlands and the digestive tracts of animals. They use CO2 as an electron acceptor and H2 as an electron donor.
CO2 to e-fuels
Although photosynthetic microorganisms have the natural capability to convert sunlight and CO2 into fuels already, they typically have a low sunlight conversion efficiency of 3–6%. To overcome this issue, artificial devices such as photovoltaic cells can be used to convert solar energy into electricity with 10–40% efficiency. Most efforts so far focused on algae growth in large open ponds that use atmospheric CO2 as an input source directly. A downside of this approach is that it has large land requirements. Besides, CO2 concentration in the air is relatively low, which makes the process very slow.
Microorganisms in bioreactors could make the CO2 conversion process more efficient through optimised operating conditions, higher CO2 concentrations, and optimised light conditions. However, multiple challenges to be overcome for widespread commercialisation. For example, photobioreactors with microalgae or cyanobacteria have high capital investment and operating costs, which drives the eventual price of the produced e-fuels up.
CO2 to fatty acids
Combining a cathode with microorganisms can be used to create short-chain fatty acids (C1-C6) directly from CO2. This concept, which is also applied in biological e-fuel production, is called microbial electrosynthesis. Microalgae can also produce C16-C18 fatty acids from CO2. Additionally, two-stage fermentation could yield longer-chain fatty acids (C16-C18). General challenges to overcome to commercialise this approach are low product yields and the separation of fatty acids from the reaction mixtures.
CO2 to amino acids and proteins
Apart from fatty acids, amino acids could also be extracted from microalgae. Typically, the fatty acids are extracted first and from the remaining defatted microbial biomass, amino acids can be extracted. Amino acids are the building blocks of proteins and thus several value-added products can be imagined. Alternatively, amino acids and proteins could be created from CO2, a nitrogen source, and water directly with the right microorganisms and bioreactors. The resulting reaction products could be used, for example, as fish feed or meat alternatives. Regulatory considerations are important here: for edible protein production, methane-oxidising bacteria are the only bacteria that have been approved so far by the European Union.
CO2 valorisation: a competitive landscape
We’ve identified companies working on the specific CO2 valorisation methods mentioned above and classified them based on the (estimated) stage/scale that they are currently operating at. Selected startups are graphically visualised below:
