At our November 7 MeetUp, we reviewed the state of the race for alternate net zero carbon fuels for the transportation market, the largest source of harmful carbon dioxide emissions.  Consequently, the market for alternative fuels is huge, measured in the billions of gallons per day.  

We had three speakers:  Dr. Dennis Schuetzle, CTO of Infinium, Deepak Aswani Supervising Principal Engineer, Research & Development from SMUD, and Elaine O’Byrne, Director of Operations from Fuse.  We discussed 4 paths forward.  Three depend on lowering the price of green hydrogen.  The fourth depends on getting better fuel-producing energy crops.  None of the paths are yielding fuels at a price equivalent to those derived from petroleum.   However, there are some bright spots.

Using hydrogen directly is by no means the simplest path, according to Dr. Schuetzle.  It would require a massive investment in new infrastructure and conversion equipment (like engines and fuel cells) to use this elusive fuel.  He advocated hooking the hydrogen to another atom, in his case a carbon atom coming from captured carbon dioxide.  Deepak said SMUD is looking at that plus hooking hydrogen to a nitrogen molecule to create ammonia as the energy carrier.  The question is what happens to the nitrogen at the point of use.  If the ammonia goes directly into an engine or turbine, it could result in production of a lot of nitrogen oxides, one of the key components in the reaction to create smog and a harmful chemical on its own affecting respiration.  And ammonia is itself a toxic chemical that need to be handled with care.  SMUD is also looking at “renewable natural gas”—basically methane from digesters, gasifiers, or landfills.  Liquid fuels from organic sources like plant oils are clearly already in the commercial market as biodiesel, but with doubts about the total amount that can be supplied being able to shrink the use of petroleum-based fuels much.  There is more hope the synthetic fuels could achieve this goal.

In terms of commercial success, ammonia and the “E-fuels” like those from Infinium are making some progress.  Dr. Schuetzle offered these milestones:  With subsidies and incentives, Infinium can sell its clean diesel in California for $6-7 per gallon, barely profitable, but in Europe where subsidies for Sustainable Aviation Fuels (or SAF) are more generous, the sales price is equivalent to $22 per gallon.  Unsurprisingly, Infinium has targeted Europe for some of its biggest commercial projects with plans underway for large plants (on the order of 50,000 barrels per day) in France and Norway.  Infinium has already scaled itself up from a 50 bpd plant to 500 and now shortly to 5,000 bpd.  In addition, Infinium has found that better markets are also available if it orients its facilities to make naphtha or waxes.  Still Dr. Schuetzle does not see SAF in the aggregate from multiple suppliers as satisfying more than about 2% of the market in the next decade.  He does see hope that by adjusting its product stream to favor the high-margin goods, Infinium could be profitable.  It might be one of the first to do so.

Elaine talked about the incentives offered in California through the Low Carbon Fuel Standard.  While the LCFS credits have drifted up to $200 per ton of carbon removed, they have now settled back down to around $70.  This is not a level which encourages much production of these more abundant low and zero carbon fuels.  However, the level of the credit is a function of where the ARB sets the target for the carbon content of fuels.  If, as seems likely from its recent proposed rulemaking, the allowable amount of carbon in fuels is lowered, the credit price will increase.  A higher credit price may entice more low-carbon fuel producers into the market.

So, while the race is underway, it will be a marathon.  It will create business opportunities for those who can master how to maximize the use of the credits and those who find better catalysts to lower production costs.