CO2-Based Synthetic Fuel: Assessment of Potential European Capacity and Environmental Performance
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CO2-Based Synthetic Fuel: Assessment of Potential European Capacity and Environmental Performance Authors: Adam Christensen, Ph.D. Chelsea Petrenko, Ph.D. Copyright c 2017 This research was funded by European Climate Foundation and the International Council on Clean Trans- portation Final release, November 14, 2017 ii Contents 1 Executive Summary1 2 CO2-based synthetic fuels: Introduction6 2.1 Study Objectives........................................7 2.2 Scenarios............................................8 3 Economic Evaluation9 3.1 Basic Operation.........................................9 3.2 Methodology.......................................... 10 3.3 Literature Review........................................ 10 3.4 Financial Model......................................... 12 3.4.1 Fundamental Economic Parameters.......................... 12 3.4.2 Capital Costs...................................... 12 3.4.3 Feedstock Prices.................................... 14 Electricity........................................ 14 CO2 ........................................... 15 3.4.4 Exogenous Market Prices............................... 15 Diesel Fuel....................................... 15 3.4.5 Deployment....................................... 16 3.5 Results.............................................. 16 3.5.1 Policy Scenario 1.................................... 17 3.5.2 Policy Scenario 2.................................... 17 3.5.3 Policy Scenario 3.................................... 19 3.5.4 Policy Scenario 4.................................... 21 3.5.5 CO2 Sources...................................... 21 3.6 Summary of Results....................................... 22 4 Environmental Impacts 23 4.1 Methodology.......................................... 24 4.1.1 Direct Emissions.................................... 24 4.1.2 Indirect Emissions................................... 24 4.2 Estimated GHG Intensities................................... 26 4.3 Potential contribution of CO2-based synthetic fuels to climate mitigation goals in the EU.. 30 5 Final Conclusions 31 iii A Policy Scenario 2: Country specific production 33 B Policy Scenario 3: Country specific production 38 C Country specific capacity factors (renewable energy generators) used in Policy Scenario 2 & 3 52 iv List of Figures 3.1 Model plant for the production of CO2-based synthetic fuels.................. 10 3.2 Production of CO2-based synthetic fuels in Scenario 2 from solar-only generation in Europe. 18 3.3 Production of CO2-based synthetic fuels in Scenario 2 from wind-only generation in Europe. 18 3.4 Production of CO2-based synthetic fuels in Scenario 2 from hybrid generation in Europe. 19 3.5 Production of CO2-based synthetic fuels in Scenario 3 from solar-only generation in Europe. 20 3.6 Production of CO2-based synthetic fuels in Scenario 3 from wind-only generation in Europe. 20 A.1 Production of CO2-based synthetic fuels from solar-only generation in Portugal....... 34 A.2 Production of CO2-based synthetic fuels from wind-only generation in Sweden....... 34 A.3 Production of CO2-based synthetic fuels from hybrid generation in Greece......... 35 A.4 Production of CO2-based synthetic fuels from hybrid generation in Italy........... 35 A.5 Production of CO2-based synthetic fuels from hybrid generation in Portugal........ 36 A.6 Production of CO2-based synthetic fuels from hybrid generation in Spain.......... 36 A.7 Production of CO2-based synthetic fuels from hybrid generation in Sweden......... 37 B.1 Production of CO2-based synthetic fuels from solar generation in Austria.......... 39 B.2 Production of CO2-based synthetic fuels from solar generation in Belgium.......... 39 B.3 Production of CO2-based synthetic fuels from solar generation in Bulgaria......... 40 B.4 Production of CO2-based synthetic fuels from solar generation in Cyprus.......... 40 B.5 Production of CO2-based synthetic fuels from solar generation in Czech Republic..... 41 B.6 Production of CO2-based synthetic fuels from solar generation in France.......... 41 B.7 Production of CO2-based synthetic fuels from solar generation in Greece.......... 42 B.8 Production of CO2-based synthetic fuels from solar generation in Hungary......... 42 B.9 Production of CO2-based synthetic fuels from solar generation in Italy............ 43 B.10 Production of CO2-based synthetic fuels from solar generation in Luxembourg....... 43 B.11 Production of CO2-based synthetic fuels from solar generation in Malta........... 44 B.12 Production of CO2-based synthetic fuels from solar generation in Poland.......... 44 B.13 Production of CO2-based synthetic fuels from solar generation in Portugal......... 45 B.14 Production of CO2-based synthetic fuels from solar generation in Romania......... 45 B.15 Production of CO2-based synthetic fuels from solar generation in Slovakia......... 46 B.16 Production of CO2-based synthetic fuels from solar generation in Slovenia.......... 46 B.17 Production of CO2-based synthetic fuels from solar generation in Spain........... 47 B.18 Production of CO2-based synthetic fuels from solar generation in Sweden.......... 47 B.19 Production of CO2-based synthetic fuels from solar generation in United Kingdom..... 48 B.20 Production of CO2-based synthetic fuels from wind generation in Finland.......... 48 B.21 Production of CO2-based synthetic fuels from wind generation in Italy............ 49 v B.22 Production of CO2-based synthetic fuels from wind generation in Netherlands....... 49 B.23 Production of CO2-based synthetic fuels from wind generation in Poland.......... 50 B.24 Production of CO2-based synthetic fuels from wind generation in Finland.......... 50 B.25 Production of CO2-based synthetic fuels from wind generation in Sweden.......... 51 vi List of Tables ∗∗ 1.1 2030 volume projections and environmental parameters for CO2-based synthetic fuels. Note that the EU GHG emissions for the 1990 baseline do not include international aviation, land use, land use change and forestry. Green indicates the greatest potential contribution of each scenario to climate mitigation for the parameter indicated, followed by yellow and red....4 3.1 Electrolyzer efficiencies (ηE2H ) used in this study....................... 11 3.2 Fuel synthesis efficiencies (ηH2F ) used in this study...................... 12 3.3 Fundmental economic parameters for NPV and IRR calculations................ 12 3.4 Reference capital costs for electrolyzers and fuel synthesis subsystems. All costs are re- ported in constant 2018 e.................................... 13 3.5 Electrolyzer lifetime (years) before replacement is necessary.................. 14 3.6 Projected availability of CO2 from large point sources in EU Member States and theoretical maximum production of CO2-based synthetic fuel from these sources in 2030 and 2040... 22 4.1 Levelized Emission Factors for Electricity Generation [56, 58]................. 25 4.2 Life-Cycle Emissions for CO2-based synthetic fuel if GHG reductions are counted in one sector only, by Country (gCO2e/MJ) in 2030 (percent GHG reduction compared to petroleum fuels)............................................... 27 4.3 Life-Cycle Emissions for CO2-based synthetic fuel if GHG reductions are counted in one sector only, by Country (gCO2e/MJ) in 2040 (percent GHG reduction compared to petroleum fuels.).............................................. 27 4.4 Total potential GHG reduction of CO2-based synthetic fuels, counted in one sector only (million tonnes CO2e) (% of total EU GHG emissions in 1990, excluding international avi- ation and land use, land use change and forestry)........................ 30 4.5 Potential fraction of total EU road fuel consumption that could be displaced by CO2-based synthetic fuels.......................................... 30 C.1 Capacity factors for different off-grid renewable generators used in this study [48, 49].... 53 vii List of Abbreviations BNEF Bloomberg New Energy Finance DME Dimethyl Ether ETS Emissions Trading Scheme EU European Union IRR Internal Rate of Return GHG Greenhouse Gas LCA Life Cycle Assessment MW Megawatt MWe Megawatt (electricity) MWf Megawatt (fuel) NPV Net Present Value NREL National Renewable Energy Laboratory PEM Proton Exchange Membrane PtL Power to Liquids RED Renewable Energy Directive SOEC Solid Oxide Electrolyzer Cell US United States viii Acknowledgements This project was generously funded by the European Climate Foundation and the International Council on Clean Transportation. Thanks to Stephanie Searle, Nikita Pavlenko, Kristine Bitnere, and Fedor Petrenko for key contributions to the analysis and report, and to Rannveig van Iterson, Julia Reinaud, Keith Whiriskey, Jonas Helseth, Ana Serdoner, Andreas Graff, Urs Maier, Carlos Calvo Ambel, Laura Buffet, and Chris Malins for helpful input and reviews. 1 Chapter 1 Executive Summary CO2-based synthetic fuels are of increasing interest as a potential strategy to reduce petroleum consumption as well as greenhouse gas (GHG) emissions from the transportation sector. The most well-known example of CO2-based synthetic fuels is power-to-liquids, or “electrofuels,” which use captured CO2 and electricity to produce drop-in diesel or gasoline, methanol, dimethyl ether (DME), or other fuels that can be used in vehicles, airplanes, or ships. Production of CO2-based synthetic fuels has been very limited to date, but production could increase if policy support were available. In particular, the European Commission’s proposal for a recast Renewable Energy Directive (RED II) includes CO2-based