by Matt Lucas
As the director of a startup accelerator for carbontech, I often hear the same question from investors, nonprofits, and impact-oriented entrepreneurs: “What’s the best product to make?” For these climate-conscious groups, best is usually measured in carbon-storing potential, production volume, and of course, dollar signs. In their ideal world, somewhere out there is a carbontech product that can lock away gigatons of carbon while making tons and tons of money.
I wish there were a whole portfolio of such products. In truth, the only conceivable options are concrete and aggregates, and even those may not be a carbon sink on the gigaton scale. Globally speaking, concrete is estimated to be a 33-billion-ton market worth $800 billion. Hypothetically speaking, if concrete were entirely limestone (it’s not), 44% of its weight could be CO₂ — roughly 14 gigatons of CO₂ locked away per year. The trouble is, no existing technology puts anywhere near that amount of CO₂ into concrete. And even if such a technology existed, it would find a difficult market: concrete and aggregates are comparatively low-value products in cutthroat commodity industries, so building a startup business there is especially challenging.
If we relax our standards and consider products that only store carbon temporarily, then we can add hydrocarbon fuels to the list. The transportation sector in the U.S. emits more CO₂ than the electricity generation sector. With so much demand for transportation fuels, you could hypothetically convert all the CO₂ from the electricity sector into the transportation sector — with room to spare. This is more commercially promising, given existing policy support in the form of the Renewable Fuels Standard and, in Silicon Valley, the Low Carbon Fuels Standard, but it’s still a volatile commodity market.
The truth is, there isn’t any one product that meets all three of the criteria my colleagues want of a “best” product. I’d argue that this mindset, what I call the gigaton mindset, actually misses the realities of today’s business and policy landscape. Carbontech is important only in part because it’s something we can do now: it also lays the groundwork for larger climate action in the future. Rather than searching for a single product — a gigaton-scale silver bullet — we should aim for the cumulative impact of a basket of carbontech products. For that, we need to think smaller.
Carbontech is about building a new industrial sector as much as it is about individual products.
At the same time, we can’t be blind to the realities of commercialization, which often benefit from a high-value first market. Carbontech products span at least five orders of magnitude in value, with aggregates and concrete valued on the order of $10 per ton and nutraceuticals like astaxanthin valued at $1,000,000 per ton. If a carbontech process can yield a series of products of descending value but increasing scale and market size, then that process has a stepwise path to market. The largest-volume carbontech products are simply not the highest value, so they’re probably not the best ones to start with from a commercialization perspective.
Then there’s the enormous potential impact of the long tail of products that aren’t on their own gigaton-scale. Take the case of the top 18 global chemicals. While ammonia is largest, the largest of these chemicals containing carbon is ethylene. It has a global production of around 120 million tons per year. At recent prices — about $400 per ton — that’s an annual market opportunity of $48 billion. (I didn’t say “small” meant small numbers.) How would ethylene measure up to the criteria for a gigaton-scale silver bullet? Not well. Though it has a ten-figure market value, the maximum CO₂ utilization is 378 million tons per year. That’s an enormous carbon utilization potential, but it’s nowhere near a gigaton.
The problem is, leaving ethylene and other carbontech products off the table simply because they don’t reach a gigaton individually is missing the bigger picture. Taken together, the top 18 global chemicals easily exceed a gigaton of CO₂ utilization. Many of them are also long-lived products, so they could store their carbon for meaningful periods of time. From a commercialization perspective, they’re about ten times more valuable than concrete and aggregates, and a higher market price like this generally allows for easier commercialization. These smaller products add up to a big impact we can’t afford to ignore.
The big perks of thinking small
Carbontech is about building a new industrial sector as much as it is about individual products. By looking beyond illusive gigaton silver bullets and starting to think small, we make possible a host of social and economic co-benefits that will be essential for developing the commercial ecosystem that carbontech startups will need to thrive.
These co-benefits extend above and beyond the world of carbon products. As an industry feasible in today’s policy and economic context, carbontech gives us a path to building the workforce of tomorrow and attracting the human and financial capital that will ultimately be required to drive gigaton-scale removal of carbon from the atmosphere.
The industry also creates more markets for captured CO₂, which will pull in more projects and drive down costs. A feasibility study recently completed on the sister power plant to SaskPower’s Boundary Dam project anticipates a 67% reduction in capital costs and an overall cost of capture of just $45 per ton. That’s a better learning curve than other energy technologies. The challenge with carbon capture hasn’t been the capture technology, but a lack of paying customers for the CO₂. Unlike the existing markets — saline sequestration and enhanced oil recovery — carbontech products have the potential to thrive without additional policy support while decoupling from fossil resource extraction.
Carbontech can also build a geographically distributed political constituency. Consider that support for wind and solar incentives became bipartisan when there was a project in every district. Carbontech can be the same unifier for carbon management policy. In 2018, “Carbontech on the Hill” Day brought a generous handful of carbontech startups to Washington, DC to meet their representatives. I foresee a time in the near-future when “Carbontech on the Hill” will be able to target the majority of members of Congress.
Finally, carbontech can help to decarbonize difficult-to-mitigate industrial sectors and materials. In a low- and no-carbon world, we’ll need to find ways to decarbonize our material supply chains. As a complement to mitigating emissions from existing infrastructure and industry, I suggest we think about recycling carbon through these industrial processes.
There is no one product that does it all. But to my colleagues who wish there were, I say: we shouldn’t write off the value of many products working in parallel. An industry based on this mindset has the potential to ease the transition to a world that removes more carbon from the atmosphere than it emits. As technologies improve and the pathways for carbontech develop and multiply, these advances will benefit all aspects of how we manage carbon in the new carbon economy.