Carbon capture, utilization and storage (CCUS) is increasingly seen as an important part of bridging the gap towards a renewable energy future. In the International Energy Agency’s (IEA) Clean Technology Scenario, 107 gigatons of CO2 will be permanently stored before 2060, 20 times the current yearly emission of the US.
For this article, carbon utilization in particular has my interest. Actually seeing CO2 as a resource that can be converted into a product with added value has to potential to significantly lower the cost of CO2 emission reduction and atmospheric removal. Next to that, the future is still very open, with a huge range of possible technologies being researched worldwide.
As it turns out, China can play a pivotal role in many of those technologies.
At the moment, this is not per se because of the central government’s focus. Most large scale Chinese CCUS projects focus on capture only, or utilization for enhanced oil recovery (EOR), a mature CCUS technology that has some major disadvantages. For many other utilization applications, regulatory hurdles persist, and responsibilities are spread out across a variety ministries and agencies. After 12 years of effort, the China-European dialogue on CCUS has been ‘lost in limbo’.
However, when zooming out to the wide array of untapped utilization possibilities, China’s market and industry offer a surprising amount of opportunities that policy makers and businesses alike can act on.
The timing is right, as the 2020s look like a decade of lofty climate ambitions for both Europe and China. The new Dutch government coalition has put unprecedented attention on climate policy – the reason that I now work for the Ministry of Economic Affairs and Climate Policy. The European Union has its European Green Deal and a 35% climate focus in the new framework program Horizon Europe.
As described by the European Green Deal “The environmental ambition of the Green Deal will not be achieved by Europe acting alone”. As the world’s largest emitter of CO2, China will have to be one of the main partners. China is still building coal power plants, and increased consumption of energy, steel and cement keep emissions growing at 4% per year. At the same time, it does have very ambitious climate goals itself. This conflict creates a great potential for selling, scaling-up, or co-creation of European carbon utilization technologies.
In the following figure, I’ve made an overview of the most promising carbon utilization technologies, their climate action potential, and what opportunities and challenges China has to offer. They can roughly be divided in five groups with similar characteristics.
New and existing applications in chemicals
Presently, the biggest consumer of CO2 worldwide is for production of the fertilizer urea, at around 130 megatons per year. China is the biggest producer, and takes up around 34% of global capacity. Most of the Chinese production plants still use outdated coal technology, and could be replaced by existing, more advanced technology using flue gas or ammonia production. However, even among stricter regulations, cost is still an issue. Once urea has been applied as a fertilizer, the captured CO2 is returned to the atmosphere within roughly a week. Therefore, it can serve to prevent extra emissions only. Because of its scale, urea production in China can be interesting for scaling up of new carbon capture technologies.
CO2 can also presently be used to produce salicylic acid, a medication from which aspirin is derived. Furthermore, it serves in the manufacturing processes for polycarbonate, a high-performance plastic used to make optical lenses, CDs, DVDs, contact lenses and other products, and for polymethane, which has applications including foams and rubbers.
Future applications with much higher usage volumes are polymers, and chemical building blocks such as methane and methanol. China has the world’s largest chemical processing industry and could be a large test bed for utilization technologies in this domain.
Direct use in the agriculture & food industry
The estimated yearly demand of CO2 food processing and preservation purposes in the food and beverage industry is about 10 megatons per year. Relatively large at the moment, but not nearly enough to meet the 2060 IEA goal. Next to that, related utilization technologies are relatively mature, and there does not seem to be a lot of movement in extra utilization opportunities. The only non-EOR large scale CCUS project in China, at the Shanghai Huaneng Beidongkou power plant, sells directly to the food & beverage industry, without much involvement in innovation in the actual utilization process,.
There seems to be more space for extra utilization in the agricultural domain. Utilization of CO2 in greenhouses has proven to increase plant growth and yield. In fact, the Netherlands is leading in this aspects, with existing utilization projects, and the 2-5 million tons per year CCUS Porthos project also possibly involving horticulture use,. A modern horticulture industry is quickly developing in China. It is estimated the annual use of CO2 could be 22 megatons in Europe alone.
Another promising candidate is micro algae. Micro algae are the world’s most efficient at storing energy in oil, and grow well when supplied with CO2. Since they can be grown using brackish or salty water, they do not compete with most aquaculture or China’s preciously little fertile land. China has the potential to play an important role in this sector. It is estimated two third of the world’s commercial algae biomass was produced in China in 2015. Most of this was done with relatively simple technology, and has the potential to cater to an expected 43 billion USD domestic market for nutraceuticals by 2021. Next to that, the Chinese algae industry is already well united in the micro algae branch of the Chinese Algae Industry Alliance which is active in the topic of CCUS. Ocean University of China in Qingdao is in the top 5 biggest contributors to science regarding these species of algae.
All of the above have short life cycles and mainly use concentrated CO2 from flue gas. Therefore, they are only suitable for reduction of existing emissions.
A big economic opportunity: fuels
Fuels from CO2 have a lot of potential for carbon utilization. They can utilize an enormous volume of CO2, and at the same time replace fossil fuels, leading to further reduction of emissions. Prime candidates are methanol and formic acid, produced using a broad range of processes such as hydrogenation, electrolysis and thermochemical conversion.
China’s strong chemical process industry again makes it into an important player in this respect. Because of a natural resources mix with a lot of coal, but little natural gas, methanol is the ideal transportation fuel for China. It can be produced from coal through gasification, is relatively clean and cheap. China now represents 40% of the world’s methanol market, and it is estimated methanol is used for 5% of the domestic transportation fuel pool. China’s coal provinces such are already investing heavily in infrastructure. Shanxi is for example setting up 2,000 fuel stations within the next 5 years. The methanol which is now created by coal gasification, can in the future easily be replaced by methanol from more sustainable sources. The Netherlands already has the world’s first company that produces and sells industrial quantities of high-quality bio-methanol.
China is also the largest producer, consumer and exporter of formic acid. However, the main use is still in feed additives. The Dutch Technical University of Eindhoven is one of the world’s front runners in adapting formic acid as a transportation fuel, already having a bus driving around in Eindhoven. Europe is clearly leading the pack, with Switzerland also heavily involved.
It is important to realize that both these fuels require hydrogen at some stage in the production process, which can be produced with renewable energy sources, but also with fossil fuels. Hydrogen have received a lot of attention both in China and the Netherlands. In the Netherlands for energy storage, and in China as a transportation fuel (see some of our earlier reports). A cluster of Dutch companies are actively seeking cooperation in the Chinese market. Usages for formic acid and methanol fuels have the potential to deepen collaboration in the long run.
An alternative route is by using biofuel (methane). Biomass from crops such as soybeans or corn is an option, but China does not even have enough fertile land to produce food for its own people. A better option is micro algae, which do not compete with this space. A possible use is aviation fuel after 2030. Dutch airline KLM is setting up a small biofuel plant. In China, the Civil Aviation Authority of China (CAAC) is urging the use of biofuel. Boeing and PetroChina helped promote a Joint Research Laboratory for Sustainable Aviation Biofuels in 2010. It initially planned to focus on algae, but later announced a pilot project using kitchen waste, also in collaboration with COMAC. This is comparable to a worldwide shift in attention away from algae for jet fuel. Algae are still used on pilot scale to produce biodiesel, most notably by Hebei company ENN. The first announcement of this was made in 2009, but it is not clear yet if the pilot scale facility is already in operation.
All in all, there seem to be many long-term opportunities for European companies in China. However, at the moment, most of the feedstock still comes from coal. Only with the right support of the Chinese government will these applications become truly sustainable in the future.
Possibility for negative emissions: bio based materials
Because of their longer life cycle, bio based materials have much more potential. As we all know, plants take up CO2 from the atmosphere to grow, actually meaning negative emissions. The longer the life cycle, the more CO2 is stored, as long as the products keep getting replaced by new bio based products and recycling is done properly. A big if, but at the very least CO2 can be stored for a significant amount of time until other solutions are available.
China has relatively little arable land, and is already a big importer of food and animal feed. Because bio based materials compete with food for resources, China will likely not be a major source of the raw materials, and is not at the forefront of implementation or research. However, with a shift to agriculture waste utilization, or by import of raw materials, China can still play a role. Wageningen University in the Netherlands in particular has a lot to offer.
Despite not being a likely source of raw materials, China’s industry can still play a role. An important category are bio plastics and bio polymers. After all, Chinese manufacturers are responsible for 35% of worldwide polymer production. In China, China XD takes the lead, aiming to build additional production capacity of 300,000 tons of bio plastics. However, bio plastics production still remains nearly insignificant at less than 1% of worldwide plastics production. The SPLASH consortium that Wageningen University is a part of works on polyolefins and polyesters from algae, particularly interesting for China.
Another category is bio composites. When used on a big scale, for example in cars, they can potentially store a large volume of CO2. It is a sector in which the Netherlands is strongly present. A student team at the University of Eindhoven have created the first car made of bio composites. There is also a joint Sino-European consortium on bio-based and recycled composites for aircraft secondary structures and interior (that the Netherlands is not involved in).
The last category is building materials, both conventional (wood, bamboo), and more complex, derived materials. An example of the latter are materials like ‘hempcrete’, aggregates made from plant stems that can potentially be used on a large scale. Bamboo and rattan have received special attention in China, but there is barely any research into other derived materials. This is a pity, since fiber crops that can serve as a basis for these materials are mainly processed in China, and the sector is facing worldwide decline. The Chinese construction sector can still serve as a big potential market with ongoing massive infrastructure projects. We have all seen the pictures of impressive new highways, tall buildings and high speed train tracks.
Long term or near permanent storage utilization
The CCUS technology with the biggest current impact in China is enhanced oil recovery (EOR). In this process, the purified CO2 is stored in a mature oilfield, improving the yields of the oilfield in the process. However, there a few reasons why this process is not very sustainable. First of all, it aids extraction of more fossil fuels. Secondly, there are many poorly understood environmental risks in storing huge amounts of CO2 underground for a long time. Finally, the process requires pure CO2 directly from flue gas, which does not aid in removal of existing atmospheric greenhouse gases.
A more sustainable carbon utilization that is picking up momentum is mineralization, in which CO2 is trapped in materials related to naturally occurring minerals. These minerals are in a stable state and will retain CO2 for thousands of years. Mineralization can be done without much energy requirements in geological formations, but also in factories. In the latter case, the resultant materials can actually be utilized as a strengthened building materials. CO2 cured concrete is already a possibility, and cement or aggregates from building waste could follow in the future. The IEA sees this as one of the most impactful applications, with a potential use of 1-5 gigaton per year.
There are some exciting collaboration opportunities. CO2-value is a European consortium active in this domain. The Netherlands in particular has research at the University, Technical University of Delft and Wageningen University, among others. In China, Sichuan University is one of the frontrunners, having established a joint lab on CO2 mineralization in collaboration with Sinopec, working on a demonstration project at the Puguang gas field for phosphogypsum mineralization. Again, the huge Chinese construction sector can be an interesting partner for European technology.
There are many other long term storage options related to geoengineering or ocean engineering that are not utilization per se. A utilization that is still worth mentioning is biochar. Made from biomass by pyrolysis, it is a sort of permanent fertilizer, that can be put in the soil and act as a carbon sink for thousands of years. It could potentially store 1 gigaton of CO2 per year. There is a China Biochar Network, and several companies are producing biochar in China. With degrading soil qualities in China, biochar is a solution worth further promoting. However, China is the biggest producers of pesticides and fertilizers in the world, and also a big over-user. Competition with existing chemical fertilizer solutions will be fierce. In the Netherlands, Wageningen University is active in the area, and there are several Dutch SMEs active in biomass pyrolysis.
Possible targets for carbon utilization are as diverse as the sources of carbon emissions. Outside of flue gas carbon capture and EOR-like usage, Chinese government support for carbon utilization is limited, especially when compared to renewable energies. However, China can still be a very relevant partner. Despite a shift towards renewables, it is still planning to build a big number of modern coal and gas power plants, ensuring an ample supply of easily accessible flue gas CO2. At the same time, China has a large share of the main industries where carbon capture can be utilized.
Of these industries, the chemical and construction sector are the most important. Major uses are chemical building blocks and materials created using CO2 from flue gas, but also CO2 cured concrete.
Fuels are potentially a big utilization, and some pilot projects are already under way. However, care needs to be taken as cheap coal gasification available means CO2 used is not necessarily CO2 avoided. Increasing use of renewables and development of a hydrogen infrastructure can be enablers for more sustainable solutions.
Except for food waste and algae, China might not be the first choice as a source for biofuels and biobased materials, as they have to compete with food over scarce arable land. However, the Chinese industry can still take an important role in parts of the supply chain.
Regardless of the technology, a sustained dialogue with the Chinese government is important when looking for scaling up maturing European technologies in China. The experience of the EU-China dialogue on carbon capture and storage has taught that this is difficult. However, only when the cost of CO2 is correctly accounted for by subsidies or other favorable policies, carbon utilization can compete best with (cheaper) alternatives.
Links and sources
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