Industry news
Things I noticed and thought were interesting
Week ending 27th September 2020
1, Circular retailing. A shopping centre in Sweden only sells used or recycled goods. In a tentative move towards participation in this market, IKEA opened a store there that sells products that have been damaged and repaired. This is a small step because IKEA already offers these goods in its full-size stores. Nevertheless, the company’s participation in what is probably the world’s first and only shopping mall for used products is some indication of its commitment to building a fully circular business. A related press release said ‘In ten years, all IKEA products will be produced using only renewable or recycled material, designed to be reused, resold or recycled’.
2, Hydrogen aircraft. Airbus showed off some good looking illustrations of possible hydrogen aircraft. The world’s press duly featured the designs in enthusiastic articles. But these are only ideas at present and fully commercial large aircraft are probably at least twenty years away. Although hydrogen carries about three times as much energy per unit weight as conventional aviation fuel, even in a liquid form it has only about a quarter the energy per unit volume. The shape of large planes will need to change significantly to offer comparable performance. In a much less noticed news story, ZeroAvia carried out a trial flight of a 6 seater hydrogen fuel cell aircraft from an airfield in England. This airplane is targeting a flight between Edinburgh in central Scotland to Orkney, 400 km to the north, by the end of this year. (Thank you to the subscribers who wrote to me about Airbus).
3, CCS Norway. The Norwegian government proposed to fund one of the most important of the ‘Northern Lights’ CCS projects. After approval by parliament, it will pay about 2/3rds of the 10 year cost of collecting CO2 from a cement plant, a world first for the CCS industry. The CO2 will be taken by ship to a port from which it will be transported by pipeline to a depleted oil field for permanent storage. The costs really don’t make this seem an attractive project: about €600 a tonne of stored CO2 over ten years, or several times the price of alternative ways of cutting emissions, but this probably includes some infrastructure that can be shared with other projects. Unsurprisingly, the government seems to have backed away from another carbon capture project that would transported carbon dioxide from a waste disposal plant near Oslo.
4, More on cement and CCS. The high cost of the Norwegian solution was illustrated by a competing claim from the UK’s CarbonClean that a deal with Mexico’s CEMEX should result in a pilot CCS plant at a cement factory in 2021 with an expected cost of $30 a tonne of CO2 captured. (However the €600 Norwegian figure that I quote also includes the cost of transport and storage). The CarbonClean technology uses a proprietary solvent and claims capture rates of more than 90%. Because cement plants have ready access to high temperature heat that is needed to drive off CO2 from the solvent, costs may eventually be lower than in some other CCS applications. Even if CarbonClean is correct in its assessment of the cost of the process, it will add at least 50% to the price of cement. However, this is twenty times better than the Norwegian trial.
5, Carbon benefits of cellulosic ethanol. An academic paper argues that converting grazed grasslands to switchgrass - a perennial plant native to North America - for use in making cellulosic ethanol has beneficial effects on carbon emissions. It particularly makes the case that harvested switchgrass can at least equal the carbon benefits of reforestation. Get everything right, the scientists argue, and the mitigation benefits could be 4 to 15 times greater. This is an important counter-argument against those who believe that all use of land for biofuels is wrong from a climate change perspective.
6, Regenerative agriculture. Giant retailer Walmart already planned carbon neutrality in its own operations by 2040. It went further this week by announcing that it will put 50 million acres (20 million hectares) of agricultural land into regenerative agriculture. This means that the area will be managed to absorb carbon, not release it. It will also actively protect a million square miles (2.6m sq. km.) of marine area. This has been an important trend in recent months, with several large businesses (e.g. Cargill, Timberland), announcing the intention to widen their decarbonisation plans to include agricultural improvement, often combined with reforestation.
7, Opinion surveys. Cardboard packaging giant Smurfit Kappa published a survey showing that changing shopping habits may have raised the importance of sustainability in fashion. The idea is that online purchasing has allowed consumers to more easily investigate the sustainability characteristics of brands. 25% of people across four European countries covered in the survey had researched the eco-credentials of a product online. ‘23% of those surveyed have re-purchased from a fashion brand based on its sustainability credentials’ the company wrote. Of course there’s a commercial interest here: Smurfit Kappa wants consumers to buy products packaged in cardboard rather than products made from fossil fuels but this is another indication of growing resistance to single use plastics. ‘35% of fashion consumers stated they would not make an online purchase from a fashion company if they discovered its packaging wasn't eco-friendly’, said the company.
8, Electric cars. Another increase in the market share of electric cars in Europe. August saw battery-only cars attain 5.5% of the market with unit sales rising 110% in the last year. (The market as a whole fell 18% from 2019). Plug-in hybrids sold very slightly less well than pure electric vehicles but were up even more strongly since August 2019. Taken together plug-in cars reached over 10% of total sales. The unexpected strength of electric vehicles is helping governments to edge towards earlier mandatory sales blocks on petrol and diesel cars. My guess is that most European governments will standardise on a final date of 2030 within the next year.
9, Railway electrification. Railway operators want to electrify trains that currently use diesel but building the infrastructure for fully electric networks has typically cost vastly more than expected. Railways are looking for alternatives. Hydrogen is possible and Scotland’s operator has just promised that one train will be ready for COP26 in Glasgow next year. Deutsche Bahn in Germany is moving much faster with experiments and one particular idea caught my eye. The company proposes to use battery power, combined with short sections of overhead cables to deliver top-ups of power to trains on the move. (Thanks to Jennifer Cooke)
10, More pleas for a carbon tax. It always comes as a slight surprise to see companies arguing for something that will cost them money. Trafigura, a huge commodities trader that charters 4,000 ships a year, has suggested that shipping fuels should pay a $250-$300 per tonne tax on CO2 emissions. More specifically, it argues for a levy that penalises high carbon fuels and rewards zero-carbon shipping (and also diverts some cash to R&D and as payments to small island states threatened by climate breakdown). Trafigura says that $300 a tonne represents the approximate cost difference today between marine diesel and low-carbon alternatives. But it would more than double the price of using existing fuels. The company puts forward the argument that the tax should start at this eye-wateringly high level and then gradually decline as the costs of hydrogen, green methanol and ammonia fall. This is an unusual view - most proponents want carbon taxes that start low and gradually increase – but I think the Trafigura proposal is strikingly logical. I also suspect that this proposal might just be able to win support from the International Maritime Organisation (IMO).
Over the next few weeks we’ll be experimenting with a database that will allow readers to search for newsletter articles on specific topics, such as CCS or electric trucks, or specific countries or companies. I am very grateful indeed for the technical help of the European Marine Energy Centre (EMEC) in Orkney, Scotland, for making this possible. Please let me know with a quick email if you would like to beta-test this database.
Eventually the database may move behind a paywall, which will also hide longer articles and quantitative analysis. The weekly newsletter itself will always remain free to view.
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