LCOE and the Cost of Synthetic Jet Fuel

Mankind has set itself the challenge to decarbonise its energy system. While progress is being made in the quest for CO2 neutral electricity it is proving more challenging to develop CO2 neutral liquid fuel. The liquid fuel challenge may be addressed in two ways. The first is to simply do away with it all together and to opt for electrification of transport. But that option is not available to air travel leading to the challenge of manufacturing a CO2 neutral jet fuel at a reasonable cost.

[Image from US Navy research test flying a model P-51 Mustang powered by fuel made from seawater derivatives. Image from Smithsonian.]

The US Navy has developed a way of extracting CO2 and H2 from seawater and recombining these raw materials to manufacture alkane polymers in the range C9 – C16 that are useful for conversion to jet fuel. This approach is in general similar to Audi’s e-diesel that I looked into some 18 months ago. So where is the catch? Smithsonian says:

made into fuel at the cost of approximately $3 to $6 per gallon. The low end is equivalent to today’s jet fuel costs, while the high end would be double the price.

Note that at 42 gallons per barrel, $3 works out at $126 per barrel of jet fuel. I suspect this sum was done pre oil price crash (see below).

In my post on Audi’s e diesel I concluded that it would cost 2 to 4 times as much as conventional diesel which is clearly a show stopper. High cost, in general terms, is the cancer running through most Green Tech solutions from solar panels to electric cars and batteries. Given enough money, Man can just about achieve anything. But historically our economies and societies have thrived upon choosing the cheaper and better options – it’s called capitalism. Now we are being mandated to select more expensive and poorer options. This is bound to end in tears.

Given that the motivation for producing syn-fuel is normally to eliminate CO2 emissions the source of electricity used must be CO2 neutral. During WWII the Nazis made synfuel from coal as did the South Africans during the apartheid era proving that the processes are scalable where cost is not the prerogative.

In this post I want to re-examine the cost of manufacturing syn-fuel from a range of carbon neutral sources of electricity including wind, solar and nuclear power. This employs the same methodology as used in my Audi e diesel post. In that post I used Robert Rapier’s energy consumption figures and I have checked with him that these are transferable from diesel to kerosene (jet fuel).

Figure 1 The cost of jet fuel on 14 October 2016 from IATA.

A good starting point is to find out what jet fuel costs today. According to the International Air Transport Association (IATA) the cost was $61.8 / bbl on 14 October. According to the EIA, Brent was trading at $48.87 and WTI $50.35 on that day, the average = $49.61. We can deduce that $12.19 (19.7%) is the refining and transport cost of the jet fuel. Luckily there is no tax on jet fuel and working with tax free barrels makes this analysis cleaner than working with taxed litres as was the case with diesel.

Before going further let us remind ourselves about the processes involved and then to look at the energy balances. The starting point is always to get pure CO2 and H2.

Figure 2 The Audi process uses well established chemical engineering processes.

Audi’s process employs CO2 capture from air and H2 production by high temperature electrolysis of water. The US Navy describes their process as follows:

NRL has made significant advances developing carbon capture technologies in the laboratory. In the summer of 2009 a standard commercially available chlorine dioxide cell and an electro-deionization cell were modified to function as electrochemical acidification cells. Using the novel cells both dissolved and bound CO2 were recovered from seawater by re-equilibrating carbonate and bicarbonate to CO2 gas at a seawater pH below 6. In addition to CO2, the cells produced H2 at the cathode as a by-product.

I don’t have the energy parameters for the Navy process and so will proceed using those used previously for Audi e diesel. It is clearly important to discover which is energetically more efficient. That is a good topic for the comments.

Figure 3 The US Navy apparatus that produces both CO2 and H2 from seawater and combines them to make CnH2n+2 is mounted on a small skid.

Most methods for production of synfuel employ variants of the Fischer – Tropsch reaction:

(2n + 1) H2 + n CO → CnH2n+2 + n H2O

Where n is typically between 10 and 20. For jet fuel the reaction may be summarised thus:

25H2 +12CO→C12H26 +12H2O

Note that the reaction uses CO (carbon monoxide) and not CO2.  I speculate that CO is produced from CO2 using the water-gas shift reaction:

CO2 + H2→CO + H2O

Energy Costs

Following Robert Rapier’s methodology there are three main components to consider.

1) The energy required to separate CO2 from air. 3.2 tonnes of CO2 are required to make a tonne of e diesel and an energy cost of 250kWh per tonne is identified giving a total of 800 kWh.

2) The energy required to make H2 from water. 294 kgs of hydrogen are required to make 1 tonne of fuel. At this point RR does not give the energy used but simply quotes the cost $4 / kg. Converting that to electricity at 6.9c per kWh (US price) works out as 4 / .069 *294 = 17,044 kWh to make 294 kgs of H2.

3) The thermal energy used in the conversion process is 1750kWh per tonne of CO2 (3.2 tonnes) = 5600 kWh.

In Summary:

CO2 separation = 800 kWh
Hydrogen production = 17,044 kWh
Thermal energy for conversion = 5,600 kWh

Total = 23.444 MWh per tonne

Total = 3.279 MWh / barrel

Note that by far the largest energy cost is the electrolysis of water consuming 73% of the total energy budget. Anyone who can substantially reduce that energetic cost will surely win a Nobel Prize.

The final stage of this analysis is to work out the cost. Here we need the cost of various low carbon sources of electricity where I use the levelised cost of electricity (LCOE) as published by the EIA. Calculating LCOE is a bit of a black art since it involves assumptions about the future cost of fuel for fossil based systems and assumptions about future manufacturing cost, life span and capacity factors for renewable based systems. But the arithmetic is simple. We simply multiply the $/MWh by 3.3 to get $ / bbl of jet fuel.

Figure 4 Summary of LCOE for common forms of carbon neutral electricity from the EIA. HAWP estimates from KiteGen (internal documentation) and Makani (video interview with Corwin Hardman).  Beyond what is discussed in the text, just look at these numbers for offshore wind and solar thermal. The public are more accustomed to knowing the price of oil. But not the production cost of electricity. Try selling Joe Public a cheap holiday where the cost of jet fuel is $500 / bbl. But this is UK, Scottish and EU government policy. Stick that on your manifesto and get elected!

Cynical readers will no doubt be critical of my using unaudited KiteGen numbers for high altitude wind power (HAWP) (see disclaimer at end). These numbers are based on IEA and NREL methodologies and will of course be subject to verification following actual deployment. The figures 20 to 7 are based on mid maturity of the technology with between 50 ($20) and 5000 ($7) machines deployed. The numbers may seem unbelievable but bear in mind the enormous mass advantage that HAWP has over ground turbines (20 versus 1300 tonnes) and the higher capacity factor of HAWP both of which feed directly into a lower LCOE. Other HAWP players make similar claims:

Kite Power Solutions:

Much lower Levelised Cost of Energy (LCoE) than conventional wind and other renewables.

While the late Corwin Hardman of Google Makani claims $30 / MWh for their system that may be less efficient than KiteGen’s.

Ampyx Power:

Abundant energy at low cost for everyone, everywhere. Without CO2 emissions, at low cost and without subsidies. This is how we see the future.

Concluding comments

The technology to make liquid fuel from CO2 and H2 has existed for nigh on 100 years. The main barrier to wide-spread deployment is the uncompetitive cost of fuel that is produced. The main cost centre is the electricity consumed where, for example using onshore wind as the source would lead to Jet A1 costing over $200 / bbl compared with $62 / bbl today. This is a show stopper.

The cost of synfuel can be attacked from two directions. The first is to make the process more efficient to reduce the amount of energy consumed. But this will inevitably at some point meet a thermodynamic barrier that cannot be crossed. The other approach is to tackle the cost of the electricity  consumed. < $20 / MWh is the magic number that would make Audi’s e diesel and Extra Virgin Jet Fuel competitive with fossil fuels. High altitude wind power is the only show in town that holds any promise.

Disclaimer

I am currently engaged by KiteGen as a consultant on a commission basis during their third round capital raising exercise. I am delighted to announce that KiteGen have been selected to present at the Techtour CleanTech investor summit in Rotterdam next month.

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92 Responses to LCOE and the Cost of Synthetic Jet Fuel

  1. The cost of synfuel can be attacked from another direction: tax fossil fuel at a rate that factors in its external cost in terms of climate change.

    In any case there seems no reason we pay tax on fuels used for land transport but not aviation: rectifying that anomaly, but doing it by only taxing aviation fossil fuels (or taxing them more than carbon-neutral fuels) would seem reasonable (except no doubt to politicians!).

    On another point I’m surprised “advanced nuclear” is so costly. Do you know what advanced nuclear technology the IEA were considering in their figures?

    And on yet another, it would be interesting to see how the CO2->ethanol process, recently announced by Oak Ridge, compares (if it can be scaled up)
    http://onlinelibrary.wiley.com/doi/10.1002/slct.201601169/full

    Thanks for another interesting, numerate article.

    • Peter Lang says:

      What is the external cost of climate change?

      Social cost of carbon should be set at zero

      Assessing the Social Costs and Benefits of Regulating Carbon Emissionshttp://reason.org/files/social_costs_of_regulating_carbon.pdf

      The Case Against a U.S. Carbon Tax” explains many, but not all, the problems with the estimates of SCC and of the hypothesized costs of climate change. https://object.cato.org/sites/cato.org/files/pubs/pdf/pa801.pdf

      Richard Tol, one of the foremost authorities on estimating the economic cost of climate change, shows that warming would be net- beneficial to 4C (IMO, he overestimates the cost of energy because he assumes high cost energy in future as we move to renewables.) (Figure 3 here: http://www.copenhagenconsensus.com/sites/default/files/climate_change.pdf )

      • Peter Lang says:

        Bias on impacts of GHG emissions

        SCC Calculations

        In addition to such procedural problems with the use of the SCC in federal policy, there are deeper conceptual concerns. The average layperson may have the belief that the SCC is an empirical fact of nature that scientists in white lab coats measure with their equipment. However, in reality the SCC is a malleable concept that is entirely driven by analysts’ (largely arbitrary) initial assumptions. The estimated SCC can be quite large, small, or even negative— the latter meaning that greenhouse gas emissions should arguably be subsidized because they benefit humanity—depending on defensible adjustments of the inputs to the analysis.

        But the possibility of such negative SCC values is rarely, if ever, reported. A recent study assessed the scientific literature on the SCC and determined that there exists a large and significant publication bias toward reporting only those results that indicated a positive SCC.4 The authors calculated that the selection bias resulted in a three- to four-times overestimate of the mean SCC value in the current mainstream economics literature. Such selective reporting of results can build upon itself to further enhance the biases in the literature, for example when future studies are developed from extant findings.

        http://object.cato.org/sites/cato.org/files/pubs/pdf/pa801.pdf

      • Wookey says:

        “What is the external cost of climate change?”

        A very good question, but do you really think that it is zero or negative? That’s an extreme view IMHO.

        Cato and Copenhagenconsensus are institutions known for their denial and minimisation of the effects of climate change. (I am not familiar with the other one). As you admit their opinions are very much in the minority. It seems vanishingly unlikely to me that ongoing sea level-rise, mass extinctions, and enormous agricultural upheaval will be balanced out by other effects. But I will check out your links.

        I agree that the SCC number has very wide error bars, but to claim it’s not positive is ignoring reality.

    • Willem Post says:

      John,

      The IEA numbers are BS.

      To recover the capital cost without any other costs, the energy cost would be:

      Capital cost, $5 billion/1000 MW / (Production, 1000 MW x 8766 x 0.90 x 60 y) = 5.0 x 10^11 cent / 4.73 x 10^11 kWh = 1.057 c/kWh.

      If 5% bond financing amortized over 40 years, there would be an additional c/kWh.

      Keep on adding components, such as fuel, staffing, O&M, and eventually you get to about 5 c/kWh.

      To keep it simple, ignore inflation.

      • Willem Post says:

        Addition:

        If 5% bond financing amortized over 40 years, annual payments to pay off the mortgage would be $289,115,000.

        Production would be 7,889,400,000 kWh/y.

        For the first 40 years, the financing component would be 3.664 c/kWh*

        Funds borrowed during construction is an additional c/kWh

    • Euan Mearns says:

      Whilst agreeing that it is anomalous that there is no tax on jet fuel, taxing it would now wreck the aviation industry, tourism and the global economy. This of course is what Green alarmists want (I’m not implying that you are on). Is it not better to invent a way of making CO2 neutral jet fuel low price?

      The LCOE of nuclear does look high to me. This is close to the strike price for Hinkley C that seems to be based on the totally botched Areva EPR. I’m betting that the Hitachi ABWR and KEPCO APR 1400 come in at half the price. This would make nuclear competitive with expensive oil.

      • Alex says:

        Ultimately the main driver is the cost of capital and DECC agreed to allow EDF a 10% return. Hence the high strike price.

        Hinkley C is budgeted at about £18 billion (a record breaking $8000/KW). I understand the budget for Moreside is about £10 billion, for a similar output.

        Operational costs will be more than half that of the EPR. I’d expect Moreside and Wyfla to get a strike price of ~£70+recent inflation, compared to £92.50 for HPC.

        If the Government wants a lower strike price, then they need to move to auctions. i.e. Here’s a nuclear site with outline planning permission, now I need 4 or 5 (GDA approved) operators to put in their lowest bids to build and operate a reactor. Then you might see reactors offering £50-60/MWh. Perhaps less with the Hualong One.

        If you want to go lower still, you need Molten Salt reactors.

        “Whilst agreeing that it is anomalous that there is no tax on jet fuel, taxing it would now wreck the aviation industry, tourism and the global economy”

        I would assume it replaces the various Passenger Departure taxes currently used. “wreck” may be too strong a word – those industries weren’t totally wrecked when oil was above $100/barrel.

      • Euan,

        I am certainly alarmed about climate change (and other boundaries to civilised human existence on this planet – ocean acidification, biodiversity loss etc – which we have already crossed or are in danger of crossing).

        But “Green”? How dare you sir! 😉

        Actually I think “Green alarmist” is pretty much an oxymoron: most Greens simultaneously assert that climate change is so serious that we should abandon our current civilisation for an energy-austere “Good Life” (which would probably work out more like Cambodia’s Year Zero), yet imply that AGW and its mitigation is really quite trivial, by insisting that we can deal with it with one arm tied behind our back eschewing our single biggest source of low-carbon energy. (Or depending on your degree of Green-ness, also rejecting all realistic large-scale sources of low-carbon energy: hydro and big wind as well as nuclear. Somehow Jim Jones’ cult doesn’t seem so strange :-(.)

        If you want to label me I would accept “Ecomodernist”. If we’ve paddled ourselves up shit creek the appropriate response is not to jettison the paddle but to use it to paddle ourselves out again. And if necessary build a better paddle to do so.

        • Euan Mearns says:

          great response 🙂 I’ll drink another bottle or red to better paddles 🙂

        • Peter Lang says:

          I am certainly alarmed about climate change

          There is nothing you can do about climate change. The climate has always changed.

          perhaps you mean you are concerned about net negative effects of GHG emissions. right?

          if so what are they. Please quantify the net damages of GHG emissions (i.e. the economic damages minus the benefits cumulative to 2100). And show the empirical evidence used to calibrate the damage functions used for the analyses.

          The estimates of impacts are outputs of IAMs. The IAMs require a damage function as an input. However, there is a lack of empirical evidence from which to derive of calibrate the damage functions. As IPCC AR5 WG3 Chapter 3 says: http://www.ipcc.ch/pdf/assessment-report/ar5/wg3/ipcc_wg3_ar5_chapter3.pdf says:

          – “Damage functions in existing Integrated Assessment Models (IAMs) are of low reliability (high confidence).” [3.9, 3.12]”

          – “Our general conclusion is that the reliability of damage functions in current IAMs is low.” [p247]

          – “As discussed in Section 3.9, the aggregate damage functions used in many IAMs are generated from a remarkable paucity of data and are thus of low reliability.”

          The belief that GHG emissions will be damaging is based on dogma, innuendo and assumptions.

          It’s becoming ever more clear that the belief that GHG emissions will be damaging is based on dogma, innuendo and assumptions.

      • As to the issue of taxing aviation fuel versus reducing the cost of synfuels: why not both? Cheap sustainable energy – which we have, or are in reach of having the technology to produce – is necessary for the sort of civilisation which most of us Earth dwellers either enjoy or aspire to, and extending the sustainability of cheap energy to the aviation sector is a worthy and probably do-able goal. But as John O’Neill points out further down here (http://euanmearns.com/lcoe-and-the-cost-of-synthetic-jet-fuel/#comment-24168) even if aviation fuel were totally carbon-free there are other AGW-producing aspects of air travel which can’t easily be averted, so we probably do need to curb it somewhat.

        Whilst the sudden imposition of an aviation fossil-fuel fuel tax (even with accompanying reductions in other taxes) could cause a great shock to the aviation industry and tourism (I’m sceptical that it would “wreck … the global economy”) it doesn’t need to be imposed overnight. When it’s cheaper to fly from the North of England to the South via Berlin than to travel by train there’s something wrong with relative transport prices (and not all of it is the UK’s ludicrously expensive rail system). A gradual year-by-year move back to making air transport relatively expensive compared to less environmentally-expensive modes would allow businesses to adapt. The only downside I can see is that it might put out of joint the noses of Green activists currently accustomed to jetting around the globe to environmental conferences 😉

      • jim brough says:

        I can not see it possible to make CO2 neutral jet or any other transport fuel.
        Unless we use nuclear which is by far the best of reliable low CO2 emission technologies available to provide the electricity and energy needed to make synthetic fuels.

        • Wookey says:

          Why not? Surely this article just covered how it can be done. Both onshore wind and nuclear have approx the same low gCO2/KWh numbers. If the process can work on intermittent supply, then it’s very well suited to wind and the use of variable supply at the times when it is cheap. This certainly works for the electrolysis part (see ITM power). Probably less so for the other processes (I am no chemical engineer so have little idea of the feasibility of this).

    • robertok06 says:

      “The cost of synfuel can be attacked from another direction: tax fossil fuel at a rate that factors in its external cost in terms of climate change.”

      There is no such thing as cost in terms of climate change.
      One can surely associate some type of social cost, mainly health-related but also environmentally-related, to fossil fuels, nuclear, etc… but climate change’s external cost is nowhere to be a measurable quantity.
      Climate change as intended by mainstream media is only an experiment in social engineering, disguised as science.

  2. Peter Lang says:

    Unlimited jet fuel from nuclear power and sea water at about US$3-$6 per gallon estimated by US Navy Research when produced on board aircraft carriers: https://bravenewclimate.com/2013/01/16/zero-emission-synfuel-from-seawater/
    Cheaper on land.

    Audi estimate a similar price to produce diesel: http://www.energytrendsinsider.com/2015/04/30/is-audis-carbon-neutral-diesel-a-game-changer/

    However, the cost could be around half if the hydrogen was produced from high temperature nuclear reactors instead of by electrolysis.

    Cost could be very much lower if nuclear power costs had continued decreasing at the rate they had been until about 1970 (see Figure 2 here: https://judithcurry.com/2016/03/13/nuclear-power-learning-rates-policy-implications/).

    The world has effectively unlimited electricity from nuclear power and unlimited petrol, diesel, jet fuel from electricity and sea water. Energy is effectively unlimited. Progress is blocked by the anti-nukes.

    • Euan Mearns says:

      However, the cost could be around half if the hydrogen was produced from high temperature nuclear reactors instead of by electrolysis.

      Award yourself a Nobel Prize Peter. $3 / US gallon is still $126 / bbl. About double todays price. The US Navy process produced both H2 and CO2 via an electrochemical treatment of acidified seawater.

      • Peter Lang says:

        I suspect your comment is snide. However, I made no such point.

        My point is that nuclear fuel is effectively unlimited, and seawater is effectively unlimited, so, with cheap nuclear (which is possible in future) we can have effectively unlimited electricity and transport fuels – and without having to change the existing supply side infrastructure for these fuels. Got a better alternative? Tell us about it.

        Furthermore, it seems rather hypocritical to make jibes about costs when you post the ridiculous cost estimates for wind power claimed by their proponents before there is any commercial production. This nonsense is similar to what the solar thermal researchers were telling us in the 1980’s and 1990s – i.e. “solar thermal is baseload capable now and cheaper than nuclear now, if the stupid government would just give us the funds to prove it”.

        • Euan Mearns says:

          Not intended to be snide at all Peter, a simple effort to introduce some levity to the discussion.

        • Euan Mearns says:

          Furthermore, it seems rather hypocritical to make jibes about costs when you post the ridiculous cost estimates for wind power claimed by their proponents before there is any commercial production.

          No jibes for my part on cost, a simple expression of fact (3*42=126). And the HAWP numbers are presented as unaudited and I fully accept that the proof will be in the pudding. But with mass of materials in a HAWP machine 1 / 65th of a turbine and with capacity factors perhaps double (if reliable operation is proven) then I am willing to entertain the thought that the LCOE may be significantly lower than ground based wind generation.

          • Peter Lang says:

            I don’t know why you are converting $126 / bbl. The quote was in $/gallon. It’s just adding unnecessary confusion to convert it to bbl.

            Furthermore, that price is for existing technologies, using electrolysis to produce hydrogen (I understand) and electricity at current prices. I understand it is expected hydrogen will be produced at less than half the price from high temperature nuclear reactors and electricity cost will continue to decline in real terms as it has been for the past 130 years or so (once we get over the current disruption to progress, which began in around 1970). Therefore, a high learning rat should be possible of perhaps 30% reduction per doubling of output (equivalent to the learning rate of nuclear for the first 15 years (before the disruption and the transition to nuclear stalled).

          • @Peter Lang

            Please!, HTE isn’t an exclusive for nuclear reactors, electricity could provide high temperature as well. And such heat quantity could be easily exchanged in counter flows in process optimisation. No gain at all exploiting nuclear heat waste vs. electrical. Electricity is the noblest form of energy the most versatile. HTE never reached the status of commercial production, so what about ridiculous estimate?

          • Peter Lang says:

            The major difference:1

            1. there is effectively unlimited nuclear fuel and potential to cost nuclear costs by perhaps two orders of magnitude. Progress has been blocked for nearly 50 years largely as a result of the dogma of the anti nuke fanatics. Nuclear has over 60 years of and 16,500 reactors years of demonstration showing it is commercially viable, and the safest way to generate electricity.

            2. Conversely, HTE has no record of commercial operation and, IMO, almost certainly cannot provide much of the world’s electricity, let alone much of the world’s energy. It almost certainly will not be allowed in large scale commercial electricity generation in developed countries because of the risks to to aviation from the tether cables. When I asked on a previous thread what had been done to address that issue, there was no satisfactory answer – just silence and avoidance of the issue. It is a show stopper, just as it was for the StratoSolar scheme. http://www.stratosolar.com/airspace.html
            Notice in this article there is not a mention of any permission being granted by the FAA.

          • Euan Mearns says:

            @ Massimo – HTE = what? High Temperature Electrolysis?

          • Peter Lang says:

            Woops, my mistake, I meant KiteGen, no HTE.

          • Greg Kaan says:

            Peter, I fully understand (and share to a large extent) your concerns and hence your scepticism on the KiteGen concept as a means for providing utility scale power. However, unlike other forms of “renewable” energy generation, the KiteGen is not yet proven to be a dead end with no hope of ever providing reliable, cost effective power.

            Given this, I am happy to see the figures presented for KiteGen with the caveats presented by Euan on the figures being based on modelled outputs. Once the upcoming KiteGen trial is underway in 6 months time, then we can revisit the projections to see if they bear any resemblance to reality.

            Meanwhile, we can only wait for some more grid failures before the governing bodies in Western countries come to their senses and face up to the limits and damage inflicted by the wind turbines, solar PV and solar CST plants that are littering our landscapes and undermining our grids.

            As a sceptic of CAGW from CO2 emissions (I reject the term denier as fundamentally unscientific), low carbon emissions are of no consequence, IMO but resource depletion demands we investigate forms of non fossil fuel energy production. I agree that nuclear fission in its various forms is far and away the best candidate for this but HAWP like KiteGen is worth investigating and in the scientific manner, we should reserve judgement until there are observations for this basis.

          • Peter Lang says:

            Greg Kaan,

            HAWP like KiteGen is worth investigating and in the scientific manner, we should reserve judgement until there are observations for this basis.

            I agree with this statement. However, I would not support, and in fact be opposed to, public funding for it unless it can be demonstrated that it will be allowed to be deployed widely and sufficiently to supply a substantial proportion of electricity generation. To do that, the proponents need to have addressed the issue of cables dangling from the sky. I believe that is the show stopper that is being dodged. The argument that airspaces are controlled is irrelevant. Many non commercial planes fly all over the place, including across deserts, (e.g. doing airborne geophysical investigations), and they as well as commercial airliners occasionally get into difficulties so the pilots have other priorities than staying in their allowable airspace. It seems not credible that cables dangling from the sky will be approved by aviation industry regulators, let alone at the scale needed to supply needed to supply a significant proportion of electricity or jet fuel.

            I could be wrong, but public funding should not be provided until this key issue is resolved.

            The advocacy for this is just like we were hearing from the solar thermal proponents back in the 1980s. I’ve heard it all before.

      • Peter Lang says:

        By the way, I understood the US Navy estimate of $3-$6/gallon was using electrolysis to produce the hydrogen. http://www.dtic.mil/cgi-bin/GetTRDoc?AD=ADA539765 Have I got this wrong?
        Simple summary by chemical engineer, Dr John Morgan, here: https://bravenewclimate.com/2013/01/16/zero-emission-synfuel-from-seawater/

  3. Peter Lang says:

    The main cost centre is the electricity consumed

    True. The cost of the fuel could be roughly halved if H2 was produce from high temperature nuclear reactors instead of from electrolysis.

    The cost of nuclear generated electricity could be around 10% of what it is now if the early learning rates had continued: https://judithcurry.com/2016/03/13/nuclear-power-learning-rates-policy-implications/. If we remove the impediments that are blocking progress, the rapid learning rates could resume.

    • Leo Smith says:

      Spot on. Nuclear has the potential to be around $20/Mwh and if the political will was there could be.

      after humanity has tried all the other alternatives, that’s where it will end up.

      nuclear power stations producing gridscale electricity and off peak diesel are very possible

  4. oldfossil says:

    I thought that serpentization was the most efficient route from CO2 to CH4, a bit slow but after you’re over the energy hump it’s self-sustaining. In fact the nett energy yield might almost be enough to support cryogenic extraction of CO2 from atmosphere, some solar added.

    Sasol, Suid Afrikaanse Steenkool in Olie or South African Coal to Oil, is still alive and functioning. Hurting because of the oil price collapse but they have a guaranteed floor price and are free to trade on the natural petroleum market as well.

    Sasol diesel and petrol has, I believe, the same energy density as the real thing. The USAF switch to low-density biofuel means that a warplane can never be more than thirty minutes from a tanker. How does the Audi product compare?

  5. Alex says:

    If I understand the US Navy approach correctly, they assumed the electricity is free. The idea is that they have 200MWe reactor in an aircraft carrier. A large part of the time, the ship is idling and probably has 100MWe or so spare – effectively free, or marginal cost.

    The argument for renewables is pretty much the same: Surplus wind power is free. That fact can be debated all day – let’s just say Battery Electric Vehicles are trumping Hydrogen Vehicles at the moment.

    “The cost of synfuel can be attacked from two directions.”

    There is a third way, and that is to miss out the production of electricity, using a high temperature reactor to make hydrogen directly. The Chinese are building a 200MW pebble bed reactor, and in theory, such a reactor could produce hydrogen or electricity at about 60% efficiency. The process has been lab tested but probably needs a lot of work for production: https://en.wikipedia.org/wiki/Sulfur%E2%80%93iodine_cycle (sulphuric acid at 1000C anyone?).

    From an energy perspective, that makes hydrogen as cheap as electricity. Add a bit more to turn it into something useful like jet fuel, and it’s still competitive.

    The ultimate solution will be a high temperature reactor that can switch between producing jet fuel and producing electricity, according to demand.

    • OpenSourceElectricity says:

      It’s another way, which most people forget.
      To have a stable electrig grid, independend of the way electricity is produced, there must be a spare capacity in case of unexpected high loads or a load growth due to changing population/economy/habits etc.
      In case of a power generation system operating at low to zero marginal costs like it would be with renewable generation (or with unlikely high amounts of nuclear, unlikely due to capital costs) there would be no use to let this generation capacity sit idle. when there is a possibility to use the electricity at higher than this very low marginal costs.
      Which means there is for sure some electricity availabe to procuce chemicals and/or fuel in such systems, if the capital costs to generate the fuel is low enough.
      The considerations also tell that there will never be stable oil prices above 200$/barrel, no matter how extraction costs develop.
      In case prices at the area of 30$/MWh for solar (Abu dhabi etc) or Wind (Morocco, possibely KiteGen, I wish them good luck) are working in the longer run, there is also no stable price for Oil above 100$/barrel. If Euans calculation is right.
      Which means that if they work, the main task is to produce enough panels, turbines KiteGen Platforms, etc. and to lay enough HVDC Cables.

  6. matthew_ says:

    Solar PV in sun rich areas at $24/ MWh (*) is pretty close to your threshold of $20.
    * – http://www.thenational.ae/business/energy/marubeni-jinko-submit-world-record-low-bid-for-350mw-sweihan-solar-project-in-abu-dhabi

    There will be lots of low cost power available in a grid with a lot of solar / wind power. The challenge will be that the low cost power will only be available every now and then (maybe 10% of the year), when the wind and sun produce more than the normal load. The process which can utilize this almost free power needs to be profitable with a very low load factor.

    Challenge: Design an autonomous factory that does something useful with free power during the 10% of the year that the power is free. I say autonomous because I don’t suppose you can have people on site every day if the plant only runs 36 days out of the year

    • Euan Mearns says:

      If you look at the chart I just posted you see there is a vast range in LCOE for all technologies depending upon the prevailing conditions where they have been deployed. Solar will obviously make a lot more sense in Abu Dhabi than it does in Scotland.

      I can’t recall who said it. But there are concerns about the quality of new cheap panels that allow such low bids to be lodged.

      • meliorismnow says:

        So maybe $24/MWh is not achievable anywhere in the world in any volume in the next couple years. Maybe all the companies who won unsubsidized bids <$40 over the last year will lose money on the deals. But do you really think all of them are wrong and it can't be achieved (if everything goes correctly) with current tech? Sunny with cheap land and easy access to sea water is pretty low bar currently.

      • Willem Post says:

        Euan,
        Solar energy is near zero about 65% of the hours of the year.
        It is highly variable during the day.
        Some snowy and foggy days it is not there at all.
        How could such energy have an LCOE, if it needs all sorts of crutches to be functional?
        It is not dispatchable.
        It cannot be used to black start a grid.

        • OpenSourceElectricity says:

          Willem, what do you want to tell us? Naturally solar is perfect to black start grids. No external poewr needed to make a panel produce electricity. The only point is that it can start a grid just during day, not at night.
          Which is a completely different topic. A coal power plant without external power can not start anything be it night or day.
          The oly thing you need for this is the right version of inverter.
          ususlly you have other inverters because they are not wanted to do black starts.

          • Stuart Brown says:

            Google is a wonderful thing. I know nothing about this, but this morning have learnt that the National Grid in the UK had a couple of independent studies done in 2015. One says “We consider renewable technologies, such as wind or solar, to be not suitable for the provision of BS services.” The other says “Solar photovoltaic is a renewable energy technology that may be able to offer some black start benefits, if
            certain conditions apply.”

            http://www.smarternetworks.org/Project.aspx?ProjectID=1653#project-details

            Take your pick!

            To try and drag this back on topic, how does using spare power from turbines or solar that would otherwise be curtailed compare? In a previous post Euan had wind being paid constraint payments of £90m in 2015 to do nothing. Is that enough to justify trying to do something useful with it instead?

          • Euan Mearns says:

            To black start a grid segments are normally energised sequentially from a central controlled source. To use solar PV would require that the installed PV within a segment could bring that segment to the correct voltage and frequency.

            I don’t think so!

          • OpenSourceElectricity says:

            @ Stuart, Euan, it is no problem to bring a segment to the right frequency and voltage with solar pwoer, it is the standard thing you do when running a solar pwoered island grid. The part of the grid and the available generating capacity must be in the right proportion, the same as with Diesel, Coal power Hydro and so on.
            As a minimum the inverter must have a poerful capacitor bank, along with the algorithems to keep the grid stable. A battery which provides sufficient high currents would do too (for blackstart capacity is not the problem, it’s a topic when supplying constant output. )
            There ae also several studies about blackstart in german, usually several years older (thus harder to find online), and often ignored in the english speaking world as it seems.
            In short words the result is: doing black starts with wind or solar WHICH IS EQUIPPED FOR _THIS TASK when there is wind and sun. Since you can’t guaranty this for all small segments of a grid, it is still a good idea to have other black start capabilities available, such as hydro, or a modern HVDC line coming from a grid segment without blackout.
            And also Wind and solar generation not equipped for blackstart can accelerate the blackstart processes, beacause they take over load once they are reconnected to the grid within extremely short time. (And stabilising the grid when having the right grid code) thus allowing to add new sebments of the grid faster in the black start process.
            Point is usually wind and solar are not equiped for this task, although costs would be low to do so, the costs are above zero, and so are skipped by the operator when it is not required. (By the way, most wind farms have central control, and for example SMA has online connection to most of their inverters, of the owner wants it. Central control is no technical barrier today anymore. (Telecomunication network nodes here usually have UPS and Diesel backup)

          • Euan Mearns says:

            OpenSource – I’m interested in your professional credentials. Your words will carry more weight if you are an engineer. I don’t know of any part of the UK that would have sufficient solar capacity to blackstart a grid segment.

          • OpenSourceElectricity says:

            Euan, I have a masters degree in electrical engineering .
            The important point is the relation of generation and theload in the grid. To switch it on, generation must be several times bigger than the load which is switched on first.
            Traditionally here e.g. a hydropowerstation would be started, and then connected to a coal/gas plant to get them running, and then other plants would be added to the grid, and then the first consuming loads.
            If you’d do this with wind, the first turbine would be started, which would brovide frequency and energy for the rest of the windpark, this would then be connected to othwer windparks to get them running, or to coal/gas/ other generation, and then first loads would be switched on.
            The same cound be done at a sunny neen with solar power.
            As well as you could start a tiny island with rooftop solar, if there is enough power from the roof and your inverter is able to run in island operation, you can blackstart the grid of this house. IF you would have control and switches in the right place, you could then (in theory) ad hous by house and rooftop solar by rooftp solar and later road by road, city by city to the grid, as long as there is enough sun. IT would just be unneccesary complex to control all the small units and have all those remote controlled switches. Its more easy to start with a sufficient large unit, which is available all time.
            That’s the differce between ” being able to do a black start” and “being the best generation to start a black start process”.

          • Euan Mearns says:

            Thanks OpenSource, we will accept your words are truth 😉 I am giving a talk next week to Scottish Oil Club in Edinburgh with the title “Blackout”. Blackstarts is one topic I’ll touch upon. This is what the Scottish grid looks like now:

            The January 2017 model

            Is it perhaps significant that the new 2.2 GW western HVDC line lands at Hunterstone, where one of our nukes is located. Are you saying that nuke could be black started using the inter connector and then used to progressively energise the whole grid?

          • Stuart Brown says:

            Euan, if you’re giving that talk you may want to look at the two reports I linked to. They have something to say about using HVDC, nuclear and other things to black start the grid. Figure 4.11 in the Mott Macdonald report might amuse you too.

          • Euan Mearns says:

            @ Stuart – I’ve looked and looked and can’t see two reports you linked to.

          • Stuart Brown says:

            Euan, hmm, try this?

            From the original link was a link to here:
            http://www.smarternetworks.org/Project.aspx?ProjectID=1653#downloads

            There are a couple of PDFs:
            DNV GL: Future Black Start Report and
            Mott MacDonald: Black Start Alternative Approaches Report

            They seem to be the results of a couple of consultancy exercises to advise NG on the effects of increasing renewables and decreasing coal fired generation on black start capabilities. I’ve not the expertise to critique them one way or the other, but at least they seemed to be expert opinion on the subject. Or at least good enough to have been paid for!

            Drop me an email if you want to and I’ll forward them if that doesn’t work.

          • Willem Post says:

            Open,

            My experience with hydro plants is one starts a diesel generator to operate auxiliaries.

            As water is flowing through a turbine one waits until it is at synchronous conditions, while talking to the grid operator. He gives the go ahead to connect.

            The energy flows to another generation plant to help it get to synchronous conditions, etc.

            As that happens, more and more load is connected to the partially operating grid.

            This procedure continuous until the entire grid is functioning.

            With solar at near zero 65% of the hours of the year, it would be a cold day in hell before any grid operator would call on a solar system to start the grid.

            Of course, with enough imagination and money one could start a pilot program to figure out the details, but for now that black start up system does not exist.

            The topic was LCOE.
            Solar would need a crutch or crutches for black start.
            The LCOE of these crutches should be added to the solar LCOE

            In a similar manner part of the LCOE of the balancing generators should be added to the solar LCOE.

            Solar energy is a cripple that cannot function on its own 24/7/365, so to talk about solar having an LCOE in a grid setting is totally irrational.

        • matthew_ says:

          Willem,
          LCOE = levelized cost of energy
          Based on your comments about solar crutches it seems you might be confusing this with LCOLE (new term?) = levelized cost of levelized energy. I mean this to be energy supply that is levelized to something resembling traditional base load supply.

          LCOE doesn’t say anything about the dispatch ability or other properties of an energy source. It just spreads the total cost over all produced energy. Grid support services like black start, frequency regulation, and the various types of reserves are separate issues.

          • Willem Post says:

            matthew,

            LCOE is used to compare the COST of energy sources.

            With enough subsidies the LCOE is made to look attractive, as with solar and wind.

            LCOE says exactly nothing about the quality of these energy sources.

            Some sources need a lot of support, as wind and solar, some hardly any, as I showed with hydro plants.

            Some sources are not even there, as with wind and solar, even though all sorts of support is available.

            As I wrote, it will be a cold day in hell before grid operator calls a PV solar plant owner to black start the grid.

    • Alex says:

      We are looking at energy costs and not capital costs.

      This is a line from UK Electricity in 2050, Part 3:
      “In 2014 electrolysis uninstalled capital costs were estimated at US$400/KW, with replacement every 10 years.”
      http://energy.gov/sites/prod/files/2014/08/f18/fcto_2014_electrolytic_h2_wkshp_colella1.pdf

      You could put PV in the desert (Chile perhaps – they have no oil industry to protect, or Australia) just to produce fuel.

  7. Euan Mearns says:

    One thing I found interesting converting the cost of electricity to cost of liquid fuel is that there seems to be a cognitive chasm among politicians when it comes to promoting technologies and the cost of energy. Just look at the LCOE estimates for wave and tidal (I’m guessing the scale is $/MWh). The Scottish government is gung-ho about promoting these technologies evidently oblivious to or care not about the cost. But if they said Scotland was going to run on liquid fuel that cost $1350 / bbl they would surely be lynched. It seems OK to pay the Earth for electricity.

  8. Euan

    Do we know the justification for releasing the generated O2 to atmosphere in the Audi process?

    Seems a waste when there are industries that will happily accept O2 (even with a little hydrogen) or conceptually could be put to use generating the CO2….

  9. jim brough says:

    Euan,
    Your latest remarks are so true.
    They are dreamin !
    I’d ask those who want to lower global CO2 emissions to consider what might happen if they followed the South Australian Government’s push to wind and solar. 40% of the State’s electricity , WIND, stopped producing electricity to protect their turbines from high wind speeds.
    Conveniently forgetting that the government closed its coal-fired generator and relies on back-up electricity from brown coal in the neighbouring State of Victoria to back up its dreams of CO2 neutral, CO2-free renewables.
    No electricity generation technology is free of CO2 emissions because of simple chemistry.

    Solar is a prime example.
    Mine the resource…. whether you do that by human or fossil fuel means it results in CO2 emissions. Refining the silicon dioxide to the silicon needed for solar panels needs lots of heat energy and carbon to convert the dioxide to Silicon, and CO2 emissions. Before we come to the cost of making them and putting them on rooftops.

    Why should we build a windmill or wind turbine without considering the CO2 emissions during its construction and operation ?
    I live in the area near Sydney Australia and I would not install solar to supply my needs because without taxpayer subsidy it was not financially attractive.

    There is no CO2 free or neutral way of making electricity because you have to mine and refine the materials which make it possible. Faraday, Maxwell and Kelvin would agree.

    • meliorismnow says:

      Mining doesn’t require fossil fuels. Every piece of equipment that I know of uses electric motors and has an all electric variant available (and that’s been true going back 50+ years). If financing costs could be reduced, mining operations in many cases could be operated entirely on local solar or wind installations and could vary operations based on (relatively/buffered) instantaneous and seasonal energy supply. But miners are not going to double the cost of infrastructure and have idle equipment, buy new equipment, and adopt new processes and take on energy expertise/risk to potentially save a bit on operational/energy costs. They would need a financial incentive to do so, like pollution/carbon/depletion taxes and need it’s equivalent applied to competitive locations globally.

      • Willem Post says:

        m,

        “Mining doesn’t require fossil fuels”

        You are joking?

        There are trucks as tall as a three-story building that take 100-ton loads from a huge bucket of an open mine digger that is about 100 ft tall.

        They operate on diesel fuel.

        • Wookey says:

          Right, but the huge coal diggers with rotating buckets are actually electric. Currently diesel-electric, because that’s easiest, and much of the mobile equipment is likely to continue to use liquid fuels for some time because that’s convenient, but it’s clearly possible for that fuel to be generated from very low-carbon sources, and I can certainly envision mining systems that use electricity directly because it’s much more efficient, and this is a high-capital activity anyway.

          It’s clearly not beyond the wit of man to decarbonise mining, same as everything else. Right now the finances aren’t very attractive, although there are pilot schemes for low-carbon supplies in remote places (Western Australia). Silly to assert that it’s not possible. As ever the question is all about engineering and costs.

    • robertok06 says:

      “There is no CO2 free or neutral way of making electricity because you have to mine and refine the materials which make it possible. Faraday, Maxwell and Kelvin would agree.”

      I read recently a paper on the GHG emissions related to mining uranium… 1.2 gCO2 equivalent/kWh electric… it is not zero but I’m pretty sure that even the three gentlemen you’ve cited above would agree that it is as close to zero as possible, i.e. the best solution.

  10. Nigel Wakefield says:

    It would be would be beneficial to the discussion if we had a much clearer idea of the actual energy required to produce Hydrogen from water.

    Reading RR’s article and following the links in it shows that his putative $4/kg cost is based on figures produced by NREL for estimated costs in 2015, based on the “average price of electricity for industrial users in the U.S. [at] 6.9 cents per kWh” (April 30th 2015). Euan demonstrates how this works out to 17,044 kWh per metric tonne of fuel – or 58 kWh per kg of Hydrogen. It’s useful to note at this point that the costs include the capital cost of the plant required. I believe that the actual electricity requirement for H2 production through electrolysis is about 50 kWh per kg, so I assume that 14% of the cost (a theoretical 8 kWh/kg, or $0.56 per kg) is (fixed) plant capital cost.

    I noted with great interest recently that solar prices are continuing to drop, a recent tender for a large PV park in Abu Dhabi yielded a new record low price of 2.42 US cents/kWh (http://reneweconomy.com.au/solar-price-hits-record-low-of-2-42ckwh-and-may-fall-further-32358/)
    This is substantially lower than the EIA LCOE estimate for solar PV in the table above, and also substantially lower than the price of electricity for industrial users of electricity in the US. I imagine that the EIA estimate is based on PV in the US rather than Abu Dhabi which would make up for some of the difference, but 8.5 c/kWh is still massively high compared to current real world numbers…. installed PV in the US seems to cost substantially more than in the rest of the world, but that’s an entirely different subject.

    Anyhow, back to the point… if we use Euan’s calculation methodology and the latest price for solar PV in Abu Dhabi ($24.2/MWh) we get Jet Fuel for $80/barrel, which is not a million miles away from the current $62/barrel crude-oil derived cost.

    On the subject of electrolysis, there are a number of different technologies, of which PEM (Proton Exchange Membranes) seems most adaptable to using intermittent electricity as produced by solar, wind, etc. I found this presentation (http://energy.gov/sites/prod/files/2014/03/f12/webinarslides052311_pemelectrolysis_hamdan.pdf) which claims conversion efficiencies of 43.5 kWh/kg Hydrogen. It also shows capital costs at around $0.70 per kg of hydrogen (2012), with a conversion efficiency of 69% (also 2012). Using Abu Dhabi solar, this gives us a hydrogen cost of $4.2/kg using 2012 PEM technology and efficiencies, with no accounting for technological development since that time, and no deployment of potential economies of scale (either in manufacture or system size).

    While I’ve barely touched the edges of the subject, it seems to me that current technology and (renewable) energy prices puts us a lot closer to cost parity with crude-oil based Jet Fuel than the article suggests – which, to me at least, is a very pleasant surprise.

    As an oil producer, I’d imagine there’s very little incentive for Abu Dhabi (or Saudi Arabia, Kuwait, etc) to defecate on their own economic doorstep by pursuing the production of Jet Fuel (and other distillates) by leveraging their abundant sources of solar energy.

    However, if the calculations are right, it does suggest we are close to a world where oil prices would be capped in the $70 to $80 region in the long term – subject, of course, to the availability of the necessary resources to build the electrolysis infrastructure and the accompanying PV/wind/kitegen/etc capacity to provide the necessary energy, and, of course, the political will to pursue that course. It is the latter which I fear will be the stumbling block….. with hydrogen representing ~9% of water by weight, it’s not as if we have a shortage of that, assuming, of course, that we can use seawater??

    Food for thought…

    • Your post and the article are not incompatible. After all you are assuming a low electricity cost based on an LCOE, a policy tool. It is not a “real world number”.

      The main problem with just using solar is that you have to payback your capital with an intermittent production rate. This of course can occur but it would be carefully costed.

      • Nigel Wakefield says:

        Did you mean my post was not compatible?

        My reply was based on the real world tender for a 350 MW solar PV plant in Abu Dhabi (not LCOE) – I posted the link to it. In the article, there was a comment that an even lower cost bid was submitted by Masdar but contingent on a 1 GW deployment. Hence it is a “real world number”…. or have I misunderstood you?

        I agree that intermittency of production would affect capital payback (less so for a dedicated PV site).

        One of the problems we face with increasing use of intermittent renewables (or, conversely, relatively inflexible nuclear plant) is integration with demand profiles. Factories, production plant, etc are generally designed (and costed) to run 24/7/365 or close thereto. It’s therefore economically (and thermally) inefficient to run them only when there’s a surplus of available energy input. Having intermittent supply on the grid therefore requires substantial conventional fossil-fueled back-up and commensurate inefficiency.

        That’s why I liked the PEM hydrolysis technology – it can deal with energy input intermittency without a major impact on efficiency, more so, seemingly, than other hydrolysis technologies. Of course, this would have an impact on capital efficiency (i.e. payback) but we face exactly that problem with most conventional fossil-fueled power stations on earth save the few that run at baseload.

        We face ridiculous scenarios where, for example, wind energy is constrained off grid (i.e. dumped) because there’s insufficient demand (or, more correctly, grid transmission capacity) to support it. Using that energy at close to zero cost would go some way in alleviating the problems with capital payback associated with intermittency of supply.

        A perfectly profiled, close to 100% efficient, supply/demand energy system is unfortunately largely a utopian dream. A centralised system would accept a degree of capital inefficiency as part of the cost of the system. With de-centralised systems (i.e. privately owned and operated systems) every individual participant wants their part of the system to operate at optimal efficiency as that maximises profitability, ignoring the fact that it generally that requires another part of the system to operate sub-optimally…… it’s one of the major reasons why a lot of technology development occurs in the military where profitability is not a factor.

        • No, Nigel, compatible.

          You are using a much lower price than Euan. Your posts more or less agree if he drops his cost or you raise yours.

          First. You quoted the prices as comparable to LCOE. LCOE is not real world, it is a policy tool.

          The problem I have with the those prices you quote is that the project 6 months prior (just down the road) had the Masdar price for a similar system at 3c which was already 50% lower than the nearest competition (and much lower than the Jinko bid at the time, the winner in your post).

          So somehow Jinko achieved over 100% in cost reduction? Considering they have not released anything extraordinary different (unlike say Yingli a few years ago), cost reductions of that scale are astonishing.

    • robertok06 says:

      “I noted with great interest recently that solar prices are continuing to drop, a recent tender for a large PV park in Abu Dhabi yielded a new record low price of 2.42 US cents/kWh”

      I’ll believe this fantasy story the day these imaginary PV panels will generate real kWh, not “futures” for attracting investors.
      All these wonderful news of contracts signed for delivering PV power at ever decreasing costs are all based on fantasy… and it is easy to prove so… just go to the NREL LCOE calculator page, input the values for the required fields, and you’ll see that in order to get to 2.42 US$ kWh one would need… let me check… HIGHER than 50%!… (54%, with 5% discount rate and 1$/Wp)… how realistic is that TODAY… or even in 10 years?

      Try it yourself: http://www.nrel.gov/analysis/tech_lcoe.html

      • Willem Post says:

        robert,

        That is like PPAs for wind at 5 c/kWh, but owners, like Buffett, getting 2.3 c/kWh AS A CASH GIFT from the federal government.

        WARREN BUFFETT:

        It’s not the demand for more electricity that’s driving construction, but rather the government’s preferential tax treatment and counterintuitive energy mandates. Warren Buffett has admitted as much. In 2014 he explained: “I will do anything that is basically covered by the law to reduce Berkshire’s tax rate [. . .] We get a tax credit if we build a lot of wind farms. That’s the only reason to build them. They don’t make sense without the tax credit.”

  11. Jonathan Madden says:

    It’s a pity that CO2 captured from the atmosphere cannot be stored at low enough cost. A single plant, located where solar PV is cheap, could in principle concentrate 100m tonnes daily and thereby offset all man made emissions and do away with any requirement for the synthesis of eco fuel. Unfortunately CO2 is difficult to transform into solid form or even to find sufficient underground volume to accept massive amounts of compressed gas.

  12. John ONeill says:

    According to the IPCC, the climate effects of air travel resulting from carbon dioxide production have to be multiplied by three or four to account for the other greenhouse effects – nitrogen oxides, ( which are hard to avoid with high temperature combustion in air ), water vapour, ( which is a powerful GHG in the stratosphere ), and seeding of cirrus clouds. Flying lower, in the troposphere, would reduce or eliminate the non-CO2 components, but increase drag, meaning both slower flights and more fuel use, hence more CO2.
    So switching to synthetic fuel would only cut aviations’ climate toll by about a third, and moving to hydrogen fueled airliners, if they were feasible, would make it worse. ( The water vapour produced would weigh eight times as much as the fuel, and on long flights most would go into the lower stratosphere, which used to be dry.) Aircraft currently make about two percent of CO2 emissions from fuel, but if you count the other factors, they have a global warming potential about the same as India’s CO2 output, and more than any other one country apart from China and the US.
    Most other energy use has alternatives, but in this case, the choices are : fly less, or look forward to the benefits Richard Tol assures us will accrue as we progress on towards + 4 C .

  13. A C Osborn says:

    Question.
    If they do away with Fossil Fuel energy for Transport the world is still going to need all the other things that come from cracking Oil. Plastics, lube oil, fertiliser products etc
    So if we still have to crack the oil to get those essentials to modern life, what the hell are they going to with all the Deisel, Petrol, Jet Fuel and other Oil products that are no longer required for transport?

    Or are you suggesting we also find ways of making those other essentials artificially and therefore more expensive as well?

    Not that there is any need to lower CO2 output in the first place and it is all a complete and utter waste of money and resources that could be better used raising the 3rd world to our level of comfort.

    • Nigel Wakefield says:

      Leaving aside the question of whether there is a need to lower CO2 output….

      The per capita average consumption of energy globally is about 300 barrels of oil equivalent (boe)

      Per capita UK usage is about 475 boe/year.

      Let’s say we can convince higher level users (e.g. USA ~1,100 boe/capita/year) to reduce to UK levels, and raise others to UK standards (currently: China 360 boe/capita/yr, India 96, Indonesia 135, Bangladesh 34, Pakistan 75, Nigeria 123, Argentina 301, Brazil 222 to name but a (significant) few….)

      We’d have to raise global energy output by >50% from current levels to achieve that. 50% more oil, 50% more natural gas, 50% more coal, 50% more nuclear, 50% more hydro, etc, etc without picking any technology winners.

      Even without considering global population growth and per capita energy demand growth, where would we access this incremental 50% without driving energy prices through the roof?

      Just considering oil, we’d have to raise production to close to 150 million barrels/day of crude and condensates. I don’t think that’s possible even if oil prices tripled (or more) from current levels.

      To achieve your aim of raising 3rd world standards to “our” level of comfort (I’ve used UK as the proxy standard), energy prices would have to go so high that the synthetic fuels discussed here would become essential to meet demand.

      That’s not going to happen without absolutely crushing developed market economies and our way of life….

      As to your question of plastics, fertilisers, lube oil, etc… if they’re derived from oil then they are products somewhere in the hydrocarbon chain (i.e. composed of some mixture of hydrogen and carbon). If we can synthesise liquid hydrocarbons from captured CO2 and hydrogen from electrolysis, we can synthesise all those other things too… and we’d have to in order to raise 3rd world levels of comfort to those that we enjoy.

      It’s not the subject of this post, but I hypothesise that the standard of living convergence is already underway but not in the way you envisage. Globalisation, in its current form, will raise living standards in the 3rd world by reducing those in the developed world. IE we will equalise at a lower level than we currently enjoy. Automation (e.g. increasing use of robots instead of human labour) squeezes labour costs and will push those living standards even lower…..

      That’s where we get the likes of Trump, Farage, Le Pen, Wilders, Duterte, etc. They’re not necessarily right or left wing, they are “populist” demagogues speaking to the symptoms and results of globalisation – not the cause.

      All the above is my opinion and commentary only and should not be construed in any way as advocating or otherwise the views of the politicians mentioned.

    • Euan Mearns says:

      AC, I think you are missing some points. The first is that regardless of your views, there are others like Richard Branson who want to develop low C sustainable jet fuel. The second is that the post and discussion offer a number of ways this may be achieved at a cost lower than the current cost of oil, for example using high temperature nuclear to source the H2, or Th molten salt reactors or high altitude wind to generate cheap electricity.

      Should this synfuel route prevail, the price of oil will tank making the lives better for all those in the developing world, also making pesticides and fertiliser cheaper.

      And you shouldn’t expect oil to stay at $50 forever. The slow down in E&D activity now will feed through to scarcity in the years ahead.

      • Nigel Wakefield says:

        Euan,

        The price of oil will only tank if synfuel comes in cheaper than crude… currently it clearly does not, but it does appear to have the potential to get a lot closer, uncomfortably so for higher marginal cost oil producers.

        If synfuel were to reach cost parity with conventional crude, then crude prices would drop forcing synfuels to the margin. At present, it seems more likely that they have the potential to cap oil price upside rather than force them lower. That said, the lead times and capital required to build a significant synfuel manufacturing capacity are sufficiently big that crude could probably stay at, say, $100, for a number of years before synfuel became a credibly competitive threat in capacity terms.

        At that kind of price, there’s an awful lot of light tight oil to chew through, at a lower marginal cost than synfuels can seemingly currently reach, to push crude prices lower again….close but no cigar for synfuels in that regard. We have seen how production hedging for LTO picks up dramatically with crude at $50, particularly in the Permian and Eagle Ford basins. That’s probably hedging for drilled but uncompleted wells, rather than a lot of new drilling. However from $50 to $60 we’d get new drilling in those basins and above $60 the Bakken seems to come back into play.

        The lowest marginal cost synfuels might just about compete on price with new drilling in the Bakken at the moment but the potential ramp-up capacity is a lot smaller, so the Bakken would win that race.

        I submit there’s also a “new technology” handicap for synfuels… who’d want to commit multi-billion dollars in development costs for a technology that, in all likelihood, would evolve quite rapidly in cost and efficiency terms if and when it became mainstream? Cheaper and more efficient technology would force the pioneers to the margin in terms of cost competitiveness, so my guess is most people would like to see others blaze the investment trail first….

        More likely is that synfuels would take off as a result of oversupply in electricity markets – i.e. too much power / not enough demand. A situation might evolve where relatively low cost / low output synfuel plants are strategically sited to take advantage of constrained power available at very low prices (i.e. anywhere where there’s too much wind capacity relative to grid capacity on occasion – Scotland, northern Germany, north-west China, potentially Texas and California, etc…).

        The cost/benefit analysis would have to weigh the relatively high capital cost against the low run hours and derive from that what power price was affordable to justify the capital outlay – pretty complicated, I’d think. But it seems more likely to me that a synfuel production base (whether diesel or jet or some other liquid hydrocarbon product) would evolve from that direction than as a direct competitor initially to conventional crude/products

        • A C Osborn says:

          Euan, I am not going to argue about the need for CO2 reduction, but your answer about Synthetic fuel from Nuclear is a very long way in the future.
          Just think about what you are saying, who is going to build these Nuclear Stations when all the world’s money is being directed in to solar and wind by just about every organisation in the world.
          Add to that even if the will and cash is available, with the lengthy development time, statutory Safety Certification time and then Build time you have to be talking 50-100 before the needs of Electrification are met and enough down time capacity is available to turn over to the sort of Oil production we currently enjoy let alone may ned in the future.
          On top of that the infrastructure for the Oil industry already exists, to get where you and Nigel envison it would require a complete reproduction of everything already in existence.
          I can’t imagine how many $trillions will be required.

          ps please do not swear at me using Richard Branson 🙂

          • A C Osborn says:

            Sorry, should say
            talking 50-100 Years

          • I don’t know what the current state of play is but a few years ago I gathered that Terrestrial Energy had attracted a chunk of funding from the Canadian tar sands oil industry for development of its variant of Molten Salt Reactor. The interest of the oil companies seemed to be that they were subject to a levy on their use of fossil fuel (large amounts of natural gas used to raise steam to extract oil from tar sands) which levy had to be spent on “clean tech” which Terrestrial Energy’s offering counted as. One of the markets TE is/was targeting for their MSR was providing process heat for the oil sands industry.

            I’m probably guilty of wishful thinking but it strikes me that if the Terrestrial MSR became A Thing and the energy it produced was cheap enough the oil companies might find that they could cut out the pesky business of messing around with tar sands in remote, inhospitable regions in the teeth of public opposition to their activities and use the cheap energy to synthesise hydrocarbons – using their expertise in large scale chemical engineering – to sell through their existing supply chains.

            In terms of moving from fossil fuels to carbon-neutral synfuels, having the oil companies as prime movers rather than enemies seems like a sound starting point.

  14. roberthargraves says:

    At 2.4 cents/kWh ThorCon electricity costs are potentially in the synfuel commercial feasibility range; here’s a post from Oct 24.
    https://www.facebook.com/ThoriumEnergyCheaperThanCoal/photos/a.401743253214503.94464.400192543369574/1078495492205939/?type=3&theater

    • Peter Lang says:

      How many commercial ThorCon plants are operating and for how long have they been production electricity at 4.5c/kWh. Where is the authoritative data of the electricity supplied and the prices paid in a commercial electricity market?

  15. philsharris says:

    Euan
    I know this post is about transport fuel, but what about, for just one example, the 200GW of naturalgas we use to heat our homes and businesses at peak morning hours? Limitless electricity?

    • philsharris says:

      … and that is of course just Britain of a morning.

    • robertok06 says:

      “Limitless electricity?”

      Bienvenu en France, pal! 🙂

    • Euan Mearns says:

      Cheap electricity is the secret to future prosperity. Electric heating is far superior to gas. Shutting down a gas boiler / furnace and installing electric panel heaters is simple. Strip out all the old pipework and radiators and add a few cables and panel heaters.

      This all seems easier to me than installing heat pumps.

      • A C Osborn says:

        I totally agree that “Cheap electricity is the secret to future prosperity.”

        Electric Heating may be “superior”, but it is much more expensive than Gas, even with new Ceramic heaters.
        If you watched programmes like “Rip off Britain” you would see what I mean.
        So your 2 statements do not appear compatible.

        Everything apart from Nuclear that is being proposed to fight the dreaded Climate Change is making Electricity and therefore everything produced more expensive not less expensive.

  16. Euan – thanks for this post and your analysis. I think you’d all be interested in Don Larson’s presentation at the 5th Annual Small Modular Reactor Conference: http://www.youtube.com/watch?v=G8zOHZINyG8 , 13 1/2 minutes. He discusses the work and the next steps he wants to take, and is fully aware of the issues with electrolysis for generating hydrogen. At the 11:28 minute mark he emphatically says he wants a higher temperature reactor and is specific: “Give me David’s (David LeBlanc, Terrestrial Energy) reactor” to generate hydrogen via a thermal cycle like the sulfur-iodine cycle. He goes on to discuss business cases for synfuel in different settings around the world. He’s a very dynamic speaker.

    The video is on Gordon McDowell’s channel http://www.youtube.com/channel/UCXIdM7ABQ8b9FI495vbsHkA where you can find a trove of presentations on molten salt reactors and small modular reactors. Gordon has been creating these documentaries for many years now.

  17. Grigoriev Albert says:

    There is a commercial gasification process to produce lubricants, synfuels and petrochemical products from coals and various residuals.

    As a rule the gasification process needs an air separation unit which with some modification would be able to store a lot of energy in the form of liquid air/oxygen to accommodate renewable producers.

  18. Olav says:

    The commercial gasification unit has an air separation unit due to process need for oksygen.
    Here could the oxygen from elektrolyses fit straight in.. saving cost.
    The commercial gasification unit has exess CO and CO2 not beeing used due to the lack of hydrogen from the coal or biomass.feedstock. A doubling or more if product from one unit feedstock used is a possibility giving hydrogen and oxygen produced from electricity without a home a good use.

  19. Ben Jamin' says:

    I did some back of an envelope calculations on this subject a couple of months ago.

    http://markwadsworth.blogspot.co.uk/2016/08/synthetic-fuels-vs-electric-battery-cars.html

  20. Peter Lang says:

    Cost of hydrogen production for synfuels

    Key cost components in the estimate of cost per tonne of diesel from the Audi diesel synfuel estimate http://www.energytrendsinsider.com/2015/04/30/is-audis-carbon-neutral-diesel-a-game-changer/ :
    Hydrogen: $1,176 (but 50% higher for the process they assumed)
    Electricity = $55.20
    Thermal energy: $90.35
    Total: $1,322 (to $2,000)
    1 tonne diesel – 352 gallons
    Cost per gallon: $3.76 (to $5.43)

    These are within the range estimated by the US Navy for producing jet fuel from seawater and nuclear power on board nuclear powered aircraft carriers (i.e. $3-$6 gallon). However this is the cost of the feedstocks only. We need to add “several more dollars per gallon” for the capital cost and O&M costs of the processing plant and then distribution costs.

    Hydrogen production comprises 90% of the total cost of synfuel production (i.e. $1,176 / $1,322). The cost estimates assume hydrogen at $4/kg ($4,000/tonne) based on an NREL report. However, estimates for the cost of hydrogen from high temperature nuclear reactors are around half the cost, e.g.:

    The economics of hydrogen production depend on the efficiency of the method used. The IS cycle coupled to a modular high temperature reactor is expected to produce hydrogen at $1.50 to $2.00 per kg.

    http://www.world-nuclear.org/info/Non-Power-Nuclear-Applications/Industry/Nuclear-Process-Heat-for-Industry/ (also see estimates from other sources below).

    Therefore, using hydrogen from high temperature nuclear reactors could halve the estimated $3-$6 per gallon estimated cost of diesel and jet fuel.

    I am surprised the author didn’t consider the option of using high temperature reactors to produce the hydrogen.

    A point near the end of the article on the Audi diesel cost estimate provides an important reality check (it applies to all synfuel proposals and cost estimates):

    If everything works as hoped, they will then need to scale up again to something in the 100 to 1,000 barrel per day range. These scale-up steps are like gates that must be successfully passed, and historically most seemingly promising processes fail to pass through those gates for various reasons. As a result, one should never take too seriously a cost estimate for fuel production from a commercial plant when the data is derived from experiments at a much smaller scale.

    Other estimates of the cost of hydrogen production:
    $1.43/kg and $1.74/kg.
    http://fsl.ne.uiuc.edu/2010%20NPRE%20470/A24265%20Schultz%20large%20scale%20production.pdf

    the U.S. government has done a highly detailed Hydrogen Production Cost Analysis http://www.nrel.gov/hydrogen/production_cost_analysis.html … They calculated that base hydrogen costs (i.e., no distribution) ranged from $3.74/kg to $5.86/kg.

    http://www.energytrendsinsider.com/2015/04/30/is-audis-carbon-neutral-diesel-a-game-changer/

    Cost of hydrogen from different sources http://www.h2carblog.com/?p=461

    • A C Osborn says:

      One of the problems that I do not see addressed here is Hydrogen Embrittlement, I wonder what impact that would have on the vast quantities of Hydrogen needed for Synfuels compared to the currently small requirements for Industrial use?

    • Wookey says:

      “Cost per gallon: $3.76”

      Which (allowing for that being a US-gallon) is almost exactly what we currently pay in the UK for diesel at the pump. So that probably seems horribly expensive to US people, but it looks fairly plausible from a European perspective. OK, that’s the bottom end and ignores capital/distribution etc costs, but if the hydrogen was cheaper, as mooted it does seem like this is within the bounds of plausibility. People are sensitive to the price of fuel, as they pay it every week or two, but the point is that if you could sell it at this price no-one inthe UK would even notice the chance. And fuel used to be 25% more expensive when the oil price was high. People moaned a lot but the UK did not collapse.

  21. Ben Jamin' says:

    https://en.wikipedia.org/wiki/Carbon-neutral_fuel

    ” The U.S. Navy estimates that 100 megawatts of electricity can produce 41,000 gallons of jet fuel per day “

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