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I evaluate the process economics of algal CO2 capture from cement plant, using the GreenFuel Holcim facility mentioned in a previous post. Internal rates of return (IRR) and payback periods for various scenarios are presented. As shown in the above figure, both increased yields as well as higher oil prices significantly influence the economics of algal CO2 capture.
Base case
Capital expenditure: 92 million $, CO2 fixed: 50,000 T/year (2011).
Algal oil production: 1.3 million gal/year.
Cost algal oil: 4 $/gal.
Price of CO2 offsets: 20 $/T CO2.
Timeline considered for IRR calculations: 10 years.
The rest of the scenarios are explained in the figure. Doubling the yields (and CO2 captured) does increase the IRR and lower the payback periods more than doubling the oil prices (mentioned in my last post). Moreover, CO2 trading plays only a minor role by itself, but results in higher IRRs and lower payback periods when considered along with other possibilities. The highest IRR and lowest payback occur when both yields as well as the oil prices are significantly higher than in the base case scenario.
Capital expenditure: 92 million $, CO2 fixed: 50,000 T/year (2011).
Algal oil production: 1.3 million gal/year.
Cost algal oil: 4 $/gal.
Price of CO2 offsets: 20 $/T CO2.
Timeline considered for IRR calculations: 10 years.
The rest of the scenarios are explained in the figure. Doubling the yields (and CO2 captured) does increase the IRR and lower the payback periods more than doubling the oil prices (mentioned in my last post). Moreover, CO2 trading plays only a minor role by itself, but results in higher IRRs and lower payback periods when considered along with other possibilities. The highest IRR and lowest payback occur when both yields as well as the oil prices are significantly higher than in the base case scenario.
10 comments:
How about its production? Will this be always available? or will it be like the wall street issues?
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Keep in mind that CO2 credits are likely to go up with tighter markets. Obama, for example, has suggested getting the USA emissions back to 1990 levels in 2020. That's a rather big cut and it will force the market. Of course the price will likely be volatile, but the long term trend is up under a reasonably aggressive target.
@CyrilR,
Thanks for the comment. You are correct, the price for CO2 offsets will be volatile. In the long-term, it will probably be up.
Now that you brought it, I do not know if one can get CO2 credits on producing algal biofuels from CO2 capture. This process just recycles CO2, and does not really contribute to long-term CO2 reductions. Does corn ethanol get co2 offset credits?
I am not clear that IRR is the correct cost analysis for such a problem. IRR is typically an erroneous method for project horizons of 1 year or greater. I also question the assumptions of the base case. At any rate, this is still a good starting place for discussion. I am doing my thesis on technology roadmapping for biodiesel. I find algae as a feedstock to be much preferred over any other.
@A.J.,
Thanks for the comments. As you mention, the point of the IRR calculations was not to prescribe or proscribe, but to get a zero-order understanding of the process economics. I would be interested in learning more about your work. Lets discuss more offline, you can find my email id in the profile.
Because the economics and environmental effects are greatly influenced by the fuel production per unit area per unit time, your point that algae still look good for biodiesel seems plausible.
BTW, did you check out the IEA biofixation network ? There is a report available from Dr. Benemann that mentions various uses for microalgae, apart from biofuel production.
So do you think that is likely that ever home is going to have a algae farm, make a little money on the side ;) our economy could use that right now! j/k But seriously I found an interesting site today about how to make your own algae reactor here’s the link if anyone else is interested. http://www.algaegeek.com
It is a common problem with intelligent people to begin with an incorrect analysis and state specific conclusions which ignore the exogenous impacts of the implicit assumptions...it is no doubt something that is unavoidable, and I myself do it more frequently than even I am aware. No harm done, and the information you provide is exceptionally helpful. You are correct that IRR is not a perfect analysis but does yield insight to the analyzer. Anyone who does these kinds of calculations understands their inherent error. I guess I am being unnecessarily defensive of my own erroneous conclusion that algae is THE feedstock. It just seems very promising. Will love to discuss further offline. Thanks again for the insightful repartee. Happy Holidays! We will be in touch.
Analysis: Algae for CO2 capture - II <-- that's what i was looking for
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Whenever i see the post like your's i feel that there are still helpful people who share information for the help of others, it must be helpful for other's. thanx and good job.
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