Tuesday, October 21, 2008

Analysis: Algae for carbon dioxide (CO2) capture

Summary
This post describes a simplified economic analysis of an algal biofuel technology that converts carbon dioxide (CO2) from cement plants into (potentially) useful algal oil. I examined various key factors such as CO2 offset price, price of algal oil, and productivity that affect the profitability of such a process.

Based on my analysis I conclude that the single most important factor that affects the economics of CO2 capture is the algal biomass yield (mass produced/unit area). Doubling the productivity (and the CO2 offset) per hectare decreases the payback time by 50 % (15 years to 7 years).

Disclaimer: This is not a critique of the specific algal biofuels process proposed. CO2 mitigation using algae is one of the answers to our grand energy challenges, and we must continue to address these issues.

Assumptions:
The Holcim plant in Jerez likely produces a fraction of the total 5.1 million tonnes of cement per annum (5.1 MTPA). (A cement plant in India I worked at produced 2.6 MTPA, and it was the largest in Asia at that time. Not having first-hand data for this specific facility, lets assume that this plant is 1 MTPA, for the sake of comparison. The exact production does not alter the results significantly).

Cost of algal oil: 4 $/gal
Price of carbon offsets: 15 Euros/T CO2 (20 USD/T CO2)
(A high-cost scenario for algal oil and carbon offsets would be 6$/gal, 50 $/T CO2. This is also addressed in the analysis.)

Data:
Each lb of cement produces 1.0 lb of CO2 (U.S. average, pg.10).
Total CO2 to be mitigated annually by 2011: 50,000 T in 100 ha (0.05 MTPA
CO2 in 100 ha) .
Algal biofuel production: 1.3 million gallons/year

Calculations:
Total CO2 production: 1 MTPA
By 2011, the 100 ha. facility would mitigate 50,000 T of CO2 (0.05 MTPA CO2). This would be 5% of the CO2 emissions (if the Jarez facility production is 1 MTPA)
Average CO2 use of algae: 0.0005 MTPA/ha.
Revenues from algal biofuel: 5.2 million $/year
Revenues from carbon offsets: 1 million $/year
Total revenues: ~6 million $/year

Results
Capital cost of algal facility: $ 92 million/0.05 MTPA
CO2.
Area needed for 5% of the cement plant's CO2 output (assuming 1 MTPA production): 543 U.S. football fields (5.4 football fields = 1 ha.)

Payback on investment: 92/6 =~ 15 years. In comparison, typical payback for a new chemical plant is ~ 7 years.

Higher CO2 prices (50 $/T CO2), decrease the payback period by ~ 3 years. Higher algal oil prices (6 $/gal) and 20 $/T CO2 prices will result in a payback period of approximately 11 years.

Higher oil and higher CO2 prices will lower this period (11 yrs) by an additional ~2 years. However, doubling the productivity (and the CO2 offset) per hectare decreases the payback time by 50 % (15 years to 7 years).

The revenues from algal biodiesel + carbon offsets will be partly offset by the parasitic losses from the power plant to run the system. I don't have a feel for how much these utility costs would be. Any comments, anybody?

Bottomline The single most important factor that affects the economics is the productivity of algal biomass/unit area. Doubling the productivity (and the CO2 offset) per hectare decreases the payback time by 50 % (15 years to 7 years).
Sphere: Related Content

1 comment:

Per Dahlén said...

Sounds OK.

Send me your e-mail and I will send you a similar calculation for new coalfired palants in SEA.

Per

 
The Energy Webring