Decarbonisation Technology August 2022 issue

a low CUI. Carbonation binds CO 2 to the calcium and magnesium oxide in the slag of the steel plant. The CUI is particularly low because, in addition to calcium oxide (CaO), the slag contains other elements such as silica and alumina. Product/feed value delta Natural gas, urea, and methanol are high-volume commodities with a relatively limited product value. The uplift is even smaller for steel slag carbonation. The production of xylenes, polyols, PPC, and butanal offers a slightly to significantly higher product value. The upgrade is tempered in the case of the xylenes technology because nearly half the product mix consists of lower value naphtha or gas. To forecast product prices, conventional methods such as demand growth and cost- plus-margin approaches were used. Price incentives were not considered for using CO 2 instead of fossil feedstocks due to the current lack of clear legislation, with one exception: sustainable aviation fuel (SAF). Different countries, regions, international institutions, and business organisations are developing legislation and frameworks to facilitate and support SAF production. Similar to renewable diesel in the US, mandates and other support mechanisms are expected to create a new market for high-value products. The SAF price applied in this study is five times higher than fossil mid-distillate products. SAF represents 40 wt% of the total product mix of the FT technology investigated in this study. With the high SAF price expectations, the value of the combined product mix more than doubles, which has a major impact on the EBITDA, as seen in Figures 2 to 5 . Indeed, while methane, xylenes, and methanol production all show highly negative cash flows in a high H 2 cost scenario, the FT technology EBITDA is marginally positive, despite the high demand for hydrogen. This difference is wholly due to the SAF price bonus. This SAF price bonus corresponds with a carbon abatement value in the range of USD 500 to 1000/t of CO 2 . Note that all technologies, except for methanation, will be cash flow positive in a high H 2 cost scenario if the CO 2 price reaches USD 350/t. Methanation requires at least USD 700/t. Road fuels and methane fuel may never benefit from the support SAF is expected to

receive because more cost-efficient alternatives are available, i.e. electricity, ammonia, hydrogen, and methanol. Mandates for 'green' chemicals using CU are a potential future low-carbon policy option. Similar to what is currently observed with biodiesel and SAF, this would create a separate market with higher values. These CU-based products are expected to compete with chemicals generated from waste streams. Fixed operating cost The fixed operating costs shown in Figures 3 and 4 include labour, maintenance, insurance, and catalyst/chemicals. The impact of this cost factor is small compared to the other costs. Some technologies use expensive catalysts that contain noble metals. Similar to naphtha reforming catalysts in conventional oil refining, only a regeneration and lease fee of the noble metal is considered, not the full noble metal value. In Part 2 of this article, we will dive deeper into the CU technology economics by investigating the capital expenditure for the different technologies and the impact of the CI of green hydrogen, power, and fuel consumption. Key takeaways The following can be concluded from the operating cost analysis performed in Part 1: • Producing fuels and other oxygen-free products requires large amounts of hydrogen, which in the short and medium term makes the technology uneconomical due to the high cost of green hydrogen. • The potentially very high value of SAF illustrates that production mandates on low-carbon intensity products can change this equation and make CU economically viable at a higher hydrogen cost. • High-value niche chemicals, especially those containing oxygen, are viable candidates for CU. Producing building materials using CO 2 and slag uses relatively limited amounts of CO 2 but should be economically viable with limited support. VIEW REFERENCES Joris Mertens Joris.Mertens@kbc.global Mark Krawec Mark.Krawec@kbc.global Ritik Attwal Ritik.Attwal@kbc.global 37