Carbon Commentary newsletter
1, Climeworks technology enhancements. Climeworks says that its direct air capture (DAC) technology costs around $1,000 a tonne today including transport and storage. But a recent announcement from the company told us that its next scaling up will reduce energy use by a half. Because energy will represent a large portion of the eventual cost of DAC, this progress is vital, although the projected figures of ‘250-350 USD per ton captured and total costs of 400-600 USD per ton net removal by 2030’ still seem strikingly high compared to the projected price of CO2 in the main international carbon trading systems. The next generation of Climeworks plants are intended to offer million tonne a year removal capacity.
2, Chinese solar. The world’s biggest solar farm opened a few days ago. Sited in a desert region of western China and far from the major cities, it will provide about 6 terawatt hours a year (less than a tenth of one per cent of the country’s electricity demand) from 5 gigawatts of capacity spread over about 20,000 hectares. For comparison, global solar PV capacity, across all sites in the world, did not break through 5 gigawatts until 2006, just eighteen years ago. Big solar farms such as this tend to be located far from centres of electricity demand because of poor land availability in Chinese industrial areas. This means a growing need for expensive long distance transmission links. So China is also pushing the development of ocean PV. One state-owned company is developing a 400 megawatt site attached to the sea floor by 10 metre posts. 400 megawatts is about as big as the largest working European solar farm.
3, Clean energy spending. Even as the world becomes more pessimistic about the pace of the energy transition, the numbers show little deceleration in the speed of change. The IEA wrote that total clean energy expenditure, which includes EVs and heat pumps, rose to about 2 trillion in 2023, or about 2% of world GDP. This compares to $1 trillion going to coal, gas and oil. For comparison, this year about $500 billion will be spent on solar, more than will be spent on all other clean energy technologies combined. That’s the good news. The less appealing headlines are that fossil fuel upstream spending rose by 7% in 2023 and is forecast to see a similar growth this year. And, second, that the rise in clean energy spending is heavily concentrated in China, the US and Europe. Elsewhere, high costs of capital are now holding down growth rates for clean technologies
4, Requirements for ships. One third of all ocean going ships are used for transporting fossil fuels, concludes a report from the Kühne Foundation. Declines in the need for oil, gas and coal by 2050 will reduce the number of ships required, creating a risk to the value of existing assets. Kühne estimates that the 1.5 degree scenario, which of course is now a highly implausible outcome, will result in a loss of one third of expected profits, even if the ordering of new ships stops immediately. It seems to me that a more nuanced view is appropriate. Oil tankers have relatively short lives, and the fleet today has an average remaining lifespan of 10 years, according to the study. They are also relatively inexpensive compared to liquid gas carriers, which are typically newer and with longer expected time in service. And coal carriers can be repurposed and used, for example, for iron ore. I suspect therefore the focus should be whether liquid gas carriers (LNG and LPG), but not oil tankers and other ships, have a large and expensive risk of being stranded.
5, Soil carbon. The ability of global soils to hold carbon will have a substantial impact on the development of climate change. There is more carbon stored there than in the air and in vegetation combined. Although there are a rapidly widening number of techniques for increasing the carbon content of soils, including biochar and no-till agriculture for example, there is growing evidence that what are called climate ‘stressors’ are likely to accelerate the underlying loss of carbon. A new global study suggested that imposing multiple and higher levels of stress on soils, such as increased temperature but also changes such as fertiliser use, will cut the amount of carbon stored and transfer it to the atmosphere.
6, Green steel. Oman-based Vulcan Green Steel signed an agreement with Volkswagen with the intention of providing 300,000 tonnes a year of green(er) steel from 2027 onwards. (My guess is that VW worldwide uses about 10-12 million tonnes of steel a year). The metal will be made initially using natural gas but will switch to hydrogen made using Oman’s abundant sun and very high typical wind speeds. Through its subsidiary Scania, VW will also buy from H2 Green Steel in Sweden. To an extent perhaps not realised, the primary steel industry may rapidly move to locations with low electricity prices and away from its historic bases in countries such as Germany.
7, Power-to-gas-to-power. Electricity systems based on renewables will typically deliver the lowest cost power by converting surpluses to hydrogen and then using that hydrogen at times of deficit. This is the result of a detailed and highly quantitative analysis from Korean reseachers. They acknowledge that electricity networks based on solar power only - and thus probably near the Equator – may work most cheaply by using batteries but wind power, which is generally more variable, requires the use of hydrogen as the best storage medium to guarantee reliable electricity supply.
8, Green ammonia. India put out a call for proposals for over half a million tonnes of green ammonia as a raw material for fertiliser, or over one per cent of national requirements. This is a part of the government’s campaign to decarbonise this important national industry. Nevertheless, as with steel (Note 6), the Gulf may become an important source of energy-consuming products. Yara, the world’s largest fertiliser producer and trader, recently signed a supply deal with Indian company ACME to take 100,000 tonnes of ammonia from its in-construction plant in Oman. This Oman plant alone will produce nearly a million tonnes a year after its completion in 2026.
9, Truck charging. If heavy trucks are going to transfer to batteries, they’ll need powerful sites for very rapid charging. Tesla’s current position in private car sales is partly dependent on its early decision to build out large charging stations around its major markets that were initially only available to Tesla owners. Scania and Daimler trucks have both decided to copy this approach and to offer to build chargers for their main potential customers. Chargers will largely be installed in the sites owned or used by the truck operators rather than public locations.
10, Geoengineering. Governments have turned their face against the use of geoengineering to combat the effects of climate change. That doesn’t necessarily mean that private institutions feel unable to experiment with tools such as solar radiation management (SRM), restricting the amount of the sun’s energy that reaches the Earth’s surface. One foundation based in London is reported to have committed to putting $40m into solar geoengineering, an amount equal to the promises of the US government. Other bodies, such as the Environmental Defense Fund, are also investing in SRM. Nobody should see SRM as an easy route to mitigating climate change because it will almost certainly change meteorological patterns such as the Indian monsoon, but it’s looking increasingly inevitable that substantial geoengineering will be urgently necessary. However governments and world institutions really need to actively regulate this developing technology.