The many pathways to decarbonizing chemicals

From the studios of Post-Script Media and Canary Media. I'm Shail Khan, and this is Catalyst. Problems plastics are pretty great in many ways. Everything that makes them great is exactly the same thing that makes them terrible. Right. Like, what's great about them is that they're waterproof and they never break down. What is terrible about them is exactly that. It's the third largest source of industrial greenhouse gas emissions in the world, and the fastest growth sector for oil demand with no end in sight. But solutions about this week pet your chemicals. What if utilities can meet surging electricity demand with energy assets already in homes and businesses? Uplight is making this possible by turning customers and their smart energy devices into predictable grid capacity through an integrated demand stack. Uplight's AI driven platform activates smart thermostats, batteries, EVs, and customers to generate shift and save energy when the grid needs it most. Learn how Uplight is helping utilities unlock flexible load at scale, reduce costs, and accelerate decarbonisation at uplight.com. Catalyst is brought to you by antenna group, the communications and marketing partner for mission driven organizations developing and adopting climate, energy, and infrastructure solutions. Their team of experts helps businesses like yours identify, refine, and amplify your authentic climate story. With over three decades of experience as a growth partner to the most consequential brands in the industry, their team is ready to make an impact on day one. It started today at antennagroup.com. I'm Shail Khan, I'm a partner at the venture capital firm Energy Impact Partners. Welcome. Before we get into this week's topic, a bit of personal news if you'll allow me. You don't really have a choice, I suppose, so you will allow me. Anyway, this week my team at EIP and I were finally able to announce what I've been working on almost exclusively for the past 18 months. We launched a new fund called our Deep Decarbonisation Frontier Fund, or the Frontier Fund for short. It's where we seek to identify, invest in and partner with bold entrepreneurs taking big swings at big problems in climate with revolutionary technologies. We've been investing out of this fund for about a year now and we already have a portfolio I'm extremely proud of, ranging from forum energy and multi-day energy storage to Boston Metal and Steel Decarbonisation to Nitricity and Zero Missions Fertilizer and on and on. If you're building something audacious and fundamental to a net zero future, get in touch. From now on I get to stop being slightly cryptic on this podcast whenever I talk about what I do. On to the topic at hand. Before I crossed over to the investor side years ago, I had a brief period of time where I found myself in front of a lot of oil and gas company executives. My job was basically to present to them the disruptive future driven by climate tech that was going to introduce an existential threat to their business in the coming decades. I have this very distinct memory of one such meeting in Europe where after clamoring on about renewables and storage and vehicle electrification for an hour or so, one of these execs looked at me with what I remember to be a wistful look in his eye and said, "Well, we'll always have chemicals." And it wasn't crazy. Petrochemicals are a significantly smaller share of oil and gas demand than transportation is today, but they're growing faster. The International Energy Agency predicts that petrochemicals will be the largest source of demand growth for oil through 2050. They're already the third largest source of industrial greenhouse gas emissions behind steel and cement. And while steel and cement seem like relatively straightforward, if incredibly difficult sectors to decarbonize, just in the sense that the end products are mostly uniform, chemicals are complex, multifaceted and used in everything from plastics to fertilizer to pharmaceuticals to clothing. Demand for plastics alone has already doubled since the beginning of this century and shows no signs of slowing down. But as usual, a bevy of approaches are on their way to start transforming the sector. So to talk through them, I turned to my own industrial greenhouse gas emissions guru, Rebecca Dell, Rebecca is the Program Director for Industry at the Climate Works Foundation. And just trust me, she's worth a listen. Here's Rebecca. Rebecca, welcome to Catalyst. Thanks. I'm so excited to be here. Okay, let's talk petrochemicals. And I think on the outside, it's sort of a daunting category to understand and to think about from a greenhouse gas emissions perspective and solutions therein because it's multifaceted. There's a lot of components to it, petrochemicals is like an umbrella category. So let's start by maybe having you walk us through the big buckets. Like when we say petrochemicals, mostly what do we mean? Yeah, that's a really good question. I remember when I was a kid going to visit my cousin and there was like a big office building of BASF, the giant chemical company near his house. And on the side of the building, it said the slogan of the company, which at the time was something like, we make chemicals. And I remember looking at that and thinking like, what does that even mean? And I think a lot of people have that response to the chemical industry. They don't have a good mental image of what is included. The short version is that what's included is all of the stuff, like all the physical stuff in our economy, except for natural materials like wood, metals and minerals, which are things like glass and ceramic. So everything else is a product of the chemical industry. The biggest pieces, the ones that we need to care about the most from a kind of climate and energy perspective are all the different kinds of plastics, fertilizers. And then there's kind of a big category of other, which includes things like solvents, paints, explosives, and honestly, a hundred thousand or more other products. So those first two then, plastics and fertilizer, those are the ones where most of the collective eye of the decarbonization community is getting trained. Why is that? Because from a pure GHG, some total perspective, those are the two big categories. Yeah, so depending on exactly how you count it, fertilizer and plastic usually comes out to be like between 75 and 80% of all the GHGs from the whole sector. So that's why we focus on fertilizer and plastic. And the reason for that is pretty simple, it's because we produce plastics and fertilizers in increments of hundreds of millions of tons per year, other products. We produce in much smaller quantities and so they're total GHG and energy impact way lower. Okay. So for this conversation, we're going to spend most of our time talking about plastics. Not that fertilizer is an interesting and important. It's extremely interesting and extremely important. So we may have a future conversation just on that. But let's spend just a couple minutes on fertilizer briefly to kind of lay out the big picture there and then we're going to go deep on plastics here. So fertilizer, how do we make it where are the emissions from? Yeah, so fertilizer mostly, so mostly what we're talking about when we talk about fertilizer is reactive nitrogen. So nitrogen is most of our atmosphere, but the nitrogen in the atmosphere is chemically unavailable for use by plants, animals, biological things. So we need to convert it into a form that it can be easily used by. And so mostly the way that we do that is today is through something called the Haber Bosch process. And so we start with fossil fuels, we use them to make something called syngas, which is a combination of carbon monoxide and hydrogen. We combine that hydrogen using a catalyst with nitrogen from the atmosphere and we make ammonia, which we use for fertilizer. And ammonia is the single chemical product that we make in the largest quantity. We make almost 200 million tons a year of ammonia globally. And it's responsible for like one and a half percent of all greenhouse gas emissions just ammonia. And amazingly, given that it is like the thing that we make the most of, there are surprisingly few of these Haber Bosch plants, there's like 300 some of them in the world, which is crazy. It just speaks to the scale of these plants. Yeah, there are just really, really big economies of scale in the way that we currently do this. And so, you know, there are a small number of plants that are making a million tons a year or more of ammonia and that are supplying the whole world. And they tend to be located wherever you can get cheapest access to the energy feed stock that you are using. For most of the world, that is natural gas. It's methane, but in China and in a couple of other countries, they're using coal. And so, wrapping up the fertilizer bit, the other important point to note here from a greenhouse gas emissions perspective, which we'll come back to when we talk about plastics, is that there are emissions both from the production of the product, in this case, the making of the ammonia. We burn fossil fuels, either coal or natural gas to produce ammonia in the Haber Bosch process. But in the case of fertilizer, there's also even more emissions from the application of the product when you put fertilizer in the ground, which I think is maybe, I think of it as like being one of these sort of ticking time bomb greenhouse gas emissions sources that like not enough attention is being paid to yet, but is a huge problem. Yeah. And this is something we're going to talk about with plastics too. A lot of times when we talk about the chemical industry, we're really talking about the production piece where you sort of, you already have your energy inputs and then from where, from there to when you sell a product. But in fact, there are a lot of greenhouse gases that are associated with other steps in the life of a product of a chemical. So starting with your upstream emissions. So if you, for example, are leaking a lot of methane into the atmosphere, when you are collecting the energy for that you're going to turn into ammonia, then that can be a huge additional impact. With ammonia fertilizers, they are, there are kind of two pathways for which when you're using them, you can generate a lot more greenhouse gas emissions. One is that a lot of nitrogen and ammonia fertilizers are the way they're actually used is in the form of urea. So the way you make urea is that you start with ammonia and then you react it with CO2 to make it kind of more stable and easier to use. A lot of people point to this as like the most important CO2 utilization that is already commercialized in our economy. But that's actually a really problematic way of thinking about it because the way you make urea, you start with a pure concentrated point source of CO2 at your factory. You attach all that CO2 to your ammonia, turn it into urea, then you spread urea out on the fields and basically the first thing that happens is a reaction called hydrolysis where the CO2 and the ammonia break apart and the CO2 just goes straight up into the atmosphere. So you've turned this point source of pure CO2 at your factory into a dispersed source of CO2 all over your agricultural fields, much, much harder to control. The other big way that ammonia creates greenhouse gas emissions as you use it is that it converts into N2O, which is a really, really important non-CO2 greenhouse gas, which again off gases from your fields. And so with ammonia, it's like, you know, I think it's about 2/3, 1/3 greenhouse gas emissions from the production and from the use. And then as we'll talk about with plastics with more durable products, there's also additional greenhouse gases that can come up in how you're disposing of the product at the end of its life. Okay. Good segue. So ammonia is its own whole world that is wild and fascinating and will come back to. But let's focus in here on plastics. Talk us through the life cycle emissions, how to think about the life cycle emissions from plastics. Also, I guess related to this and more broadly, like plastics are not a uniform category in and of themselves. So how much is this variable depending on the type of plastic? Yeah. So usually when we talk about this from a kind of energy and emissions perspective, we focus. We talk not so much about the plastics themselves, like something, you know, not materials or chemicals that product that consumers would like recognize as a piece of plastic. We talk more about the precursor chemicals, which are where most of the energy and most of the greenhouse gas emissions come from. And so there's kind of a short list of those, the most important of those precursor chemicals. The top two are ethylene and propylene. So you've probably heard plastics referred to as polyethylene and polypropylene. Those are the two biggest categories of plastics. So those are the precursors to those. And then methanol, which is a chemical that is extremely widely used in a ton of different types of products. But by volume, most methanol goes into plastics as various types of additives. Methanol, fun fact, is also why you should not drink bathtub gin because sometimes when you are making bathtub gin, moonshine, whatever you want to call it, you want ethanol. So you get methanol and it is poisonous. Useful. Thank you. That's a good tip. Yeah. Safety tip. Let the professionals make your boost. Yeah. I need to go open up the drain in my bathroom. Sorry. Hold on a second. Yeah. And then there's also a set of, there's a set of chemicals, which we call BTX, since we're benzene, talluane, and xylene, which are sometimes also called light aeromatics. So those, that, those set of chemicals, ethylene, propylene, methanol, and BTX are collectively, mostly what we're talking about when we talk about plastic. Okay. Let's talk about the, let's talk about them as a category because it's going to be impossible for us to go through each one of them individually, but they share fairly common characteristics from a life cycle mission's perspective. So as you described before, as is the case with ammonia, there's emissions to consider all the way from upstream to, in this case, kind of end of life. So let's run through that value chain, I suppose, and talk about where the emissions come from and what drive them. Yeah. So the first is, of course, this issue of upstream methane leakage is incredibly important and is often thought of as sort of like out of scope for conversations about decarbonizing the chemical industry, and it should not be because, you know, even under what we, what are sort of best guess of current leakage rates. So in the US, that's like two and a half percent average leakage rates. That can, over a 20 or 30 year lifetime, that can double the climate impact of your fossil fuel inputs, which is, so if we don't talk about the upstream leakage and we don't account for that when we talk about our solutions, we might miss half the problem. Then when we talk about, then you have your production, energy use, and there it's really important to think about one of the ways that the chemical industry is quite different. And particularly the plastics industry is quite different than a lot of other industrial activities is that you're not just using these fuel inputs as fuel, like all this fossil fuel that we're currently using. Most of it, in fact, we're not burning, we're only burning about 40% of it for energy. The other 60% of it, we're actually converting into the products themselves. So plastics are carbon-based chemicals. Where do we get all those carbon atoms? We get them from the fossil fuel inputs. And so this is why the chemical industry is the most energy intensive industrial sector, but it's only like the third most greenhouse gas intensive industrial sector because most of the energy is actually not going into the atmosphere, it's going into the physical product itself. Right. So just to reiterate that and maybe try to put an example on it, there's a good comparison to steel making here where like steel, we use less energy to make steel. But the way that we make the steel is basically burning all the coal that we use. We combust all that coal, turns into carbon emissions, and that's why steel is the single largest source of industrial greenhouse gas emissions, despite using less input energy. Whereas in chemicals, the input energy might be coal still or it might be natural gas. We burn some of it to run the process, but we actually just use the rest of it to convert into whatever that polycarbon chain is going to be. Yeah. And this is, there's like a sting on the end of this, which we're going to get to in a second, because a popular way of disposing of plastic at the end of its life is to burn it. The reason why that's popular is that it's got a ton of energy. You get a lot of energy out when you burn plastic. You get in fact about as much energy per unit of weight as you get from just like burning petroleum. Because mostly what plastic is, is petroleum in a different form. It's really important to remember, and this also comes up, we're going to come back to this issue of like, it's usually we talk about this is energy use versus feed stock use. So the amount of your input that you just consume is energy in order to do your production process versus the amount of your input that actually gets fixed into your product. This is going to come back a lot when we talk about solutions, because if you want to replace all the fossil fuel that's currently going in, that is like an eye watering amount of energy. It's way more energy than just the energy consumption of the sector. Okay. That's the production side. There is a bunch of other nuance that determines how much emissions come from these processes, ranging from what the inputs are to how much is consumed, to how much is burned, to what you're including within the scope, direct-resistant direct-energy. I think we'll get to some of this as we talk about what the potential solutions are. But suffice it to say, it is more complicated than we are making it out to be. But most of the emissions come, or perhaps depending on how you define upstream emissions and how much you calculate that, a lot of emissions comes from just the production of these plastics. Is that right? Yeah, certainly the production piece, we expect that to be sort of the largest single item in the total budget. And then as I kind of already alluded to, so plastics don't emit a lot of greenhouse gases when you use them. They're mostly inert in their useful life, but they can emit a lot of greenhouse gases when we, at the end of their life, because we like to incinerate them. And so to kind of put a bow on this whole thing, when you look, if you look at just the production phase of plastics around the world, we are talking about something in the neighborhood of 900 million tons of CO2 that's getting emitted. But if you look at the whole life cycle, estimates are more like 1.7 gigatons. So almost twice. And in case anyone was wondering why we're having this conversation, if you hadn't noticed, plastics are very popular and they're getting much more popular. They basically, the amount of plastic that we have been generating has been rising exponentially for decades now. There's no real sign of saturation anywhere. It's just more and more and more. And so current trajectory estimates are that 1.7 billion tons of CO2 that we're emitting today, that might quadruple by 2050 if something doesn't change. Right. And it's a very different kind of outlook from petroleum for transportation, where there are lots of predictions of sort of peaks at various points. And you can kind of see what the trajectory downward might look like in my closet. Plastics is actually a very different story, where it's pretty much secular growth barring some substantial changes on the demand side. Yeah. It's even different from steel. So for steel, we see pretty clearly that somewhere in the neighborhood of like 10 tons of steel per person, kind of deployed out in society, in your built environment and vehicles, everything. Like when you hit 10 tons per person, plus or minus, demand for steel tends to really tail off. And that tends to happen when countries basically get to the bottom of the high income range. And that's because like, you know, you have enough cars. Everybody has modern housing. Everybody has modern sanitation. You don't need to build that many new aqueducts. And so at this point, like most of the steel that you're using is just replacing things as they wear out. And so the demand really falls off. And like, and we see that very clearly in economies around the world. We don't see anything like that for plastic. Really, it's very hard to see any evidence that demand for plastic has somehow saturated somewhere. The grid is changing fast. 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Antenna works with leading brands across the energy, climate, and infrastructure space to do all of this and more. If you're a startup, investor, enterprise, or innovation ecosystem that's helping drive climate's age of adoption, antenna group is ready to power your impact. Visit antennagroup.com to learn more. So big and growing climate problem, I think we've laid out as best we could, the sources of emissions. Let's talk about the solutions then. And I think we'll categorize them in two different buckets. There's solutions on the production side and there's solutions on the demand side. So starting with the production side, you have a framework that I think is useful to think about here to separate out clean energy and clean feed stocks. What does that mean? Yeah, so like we were talking about before, currently basically all plastic, except for just a teeny tiny, you occasionally will see like a biodegradable PLA fork, but in terms of volumes, those are negligible. Basically all plastics today are made out of fossil fuels. And as we were talking about less than half of the energy is used as energy. You burn that fossil fuel to get energy out. More than half of the energy is put into, is converting your atoms, the atoms in the fossil fuel into the atoms in your product. So that's the energy side versus the feed stock side. And when we think about solutions, we have a set of solutions on the energy side. We can use clean energy. You can imagine a world in which we use clean energy to drive these processes, but are still getting the atoms that we need from fossil fuel. You can also imagine a world in which you are trying to get clean feed stocks. This is like that biodegradable plastic fork you might encounter. That is a situation where they are trying to use a clean feed stock in the form of biomass, but they are almost certainly still using dirty energy. Or you can try and do both. And there are, in different solutions, apply themselves to either the energy side or the feed stock side. Yeah. Okay. So an important point to note there, there's two separate things you need to solve for very few things that kind of solve for both simultaneously, but different suites of options on each side. So let's talk about each of them briefly. So starting with the energy side, the energy emissions that currently are generated in the process of producing plastics, what are the categories of solutions there to remove those emissions? Yeah. So there's a couple of like gimmies. So the first thing is that I said that 40% of the total inputs are being used for energy. So 10% of the total inputs, so a quarter of the energy is today it's electricity. So we could just use clean electricity where we're currently using dirty electricity. And so that's one option. And honestly, it's a good one. We should do that. There's no reason not to. That's sort of a function of the way to do that though, either you clean up the grid, which we should be doing anyway, obviously, but like you're subject to the timeline of the grid getting cleaned up, or you time your consumption according to when you can get access to clean electricity, or you sign like a synthetic PPA, or you co-locate with renewables. I mean, it's in some ways, I feel like we know the suite of solutions to get clean electricity, but it's also like easier said than done to actually pull it off. Absolutely. And that co-locating thing, that is a really important issue. I already mentioned with ammonia that like most of these facilities are located where they can get cheap access to their energy feedstock. And so if you are looking for cheap access to natural gas, usually you're looking in a different place than if you're looking for cheap access to clean electricity. And the list of places that have both is not law. But in any case, still, that's the direction we want to go in, but it's mostly out of scope. Then there is the issue of energy efficiency. So again, it's one of these things where we were like, yeah, sure, we should definitely do that, but it's kind of easier said than done. In the chemical industry, in particular, there may be some really big opportunities for energy efficiency that are not available in other heavy industrial activities. And these are things that usually are kind of grouped under the heading of process intensification. And a lot of this is what you're talking about are pretty fundamental shifts in your process that allow for really dramatic differences in energy consumption. And this crosses over to a great extent with electrification. So for example, one of the most energy intensive things in the chemical industry is chemical separations. You have a reactor, you get a soup of a whole bunch of different chemicals out and you want to separate the one from the other. The way we usually do that today is by heating up your soup in a tall, skinny column. And then that will cause the small molecules to rise faster than the big molecules. And you can sort of siphon off at different levels to get different sizes of molecules. This is why if you drive past a chemical plant, mostly what you'll see is just like this ocean of these vertical pipes, like big vertical pipes connected by smaller horizontal pipes, because all of those big vertical pipes are just for separating things out. If we could use membranes or non-thermal processes to separate out different chemicals, we could potentially cut the total energy demand of those separation processes by 80 to 90%. So really large amounts, more than traditional energy efficiency. Right. And to your point, those can be electrically driven processes, which sort of leads us into this other category of electrifications. As you said, we have 40% of overall emissions from energy, 10% of the 40% currently electricity, but what's stopping us from making it 40% of the 40% of the full 40%, why not just electrify the whole process? Yeah. So, you know, this issue of chemical separations, this is one of the kind of main buckets of energy consumption at a chemical plant. And so if we could do this more efficiently, then that would be like one really big bite out of that 40%. Probably we're talking about a third of that 40% is just straight for separations, something in that ballpark. But so, and so, and that people are starting to do this. We've been, you know, we've been doing this for a long time in the form of desalination. There's a reason that people prefer reverse osmosis to distillation-based desalination because it, the thermal distillation process uses a zillion times more energy by which I mean like 10. And so, you know, there's, for example, there's a company that came out of MIT called via separations that's trying to move these kind of membrane-based separations into the world of much larger molecules. And there are other people who are working on it too, so that's one option. And the other, you know, the other, but when we talk about electrification, we also, there are the, you know, there are the processes where we actually are transforming molecules into other molecules. We're not just separating the one from the other. And the big one here is the crackers. So today, the kind of the most energy-intensive part of the whole chemical industry system is, are these processed units that are called crackers, where you can, a lot of them are steam crackers, where you put in a lightly processed fossil fuel. For a light cracker, it would be like ethane. So might come from either co-production with methane, or co-production, it might be like a co-production with oil. For a heavy cracker, you put in naphtha, which is a byproduct of refining. And you get ethylene, mostly. And some of the, and also methanol and some of the other chemicals that you want. And so those processed units are running at high temperatures in anaerobic environments to split the molecules into smaller molecules. And when I say high temperatures, we're usually talking like 700 to 1,100 Celsius, so 1,400 to 1,900 Fahrenheit. So it's really hot. And there are certainly technologies that we can use to convert electricity to temperatures that hot, but nobody has bothered to commercialize an electric cracker, because right now electricity is way more expensive, and so it wouldn't be cost-effective even if it worked. And there are like, while the process technologies exist, they are not mature, because nobody's ever done it before, for aforementioned reasons. So an electric cracker, that's the thing we could do. It's not a thing that exists right now. There are a few announcements, like I think BASF actually announced, they're like building an electric steam cracker somewhere in Europe. I've seen like two or three of them, but it's definitely not, it doesn't become a big thing yet. Yeah, and they're not like full commercial scale. So these are, these are announcements of pilots or demonstrations, they're not announcements of like big process units. Right. Okay, so we've talked a fair bit about cleaning up the energy side of emissions. Let's talk about the feedstock side, and you mentioned the sort of bio-biodegradable fork, because example, but let's broaden it, you know, bio-based feedstocks is probably the one that's got the most attention, bioplastics as a term people are probably familiar with. They're going to a couple of spacks this year of bioplastic companies, so there's clearly stuff happening in that world. What does that actually look like practically? So I have to admit, I, there's a reason that I started with clean energy, because I see the, I see the clean energy side as actually like significantly easier and likely to be significantly cheaper than the clean feedstocks side, and we can, and I'm not the only one who feels that way there are, I can, you know, there's a, there are a number of peer reviewed studies that find like a factor of 10 in the difference in, you know, the effective carbon price that would be required between the clean energy and the clean feedstocks. But so the clean feedstocks are, we've got basically two big categories here. We can use, we can get our carbon from biomass, or we can get our carbon from CO2. And so on the biomass side, that is perfectly feasible, but the, as with everything related to biomass, the problem that you run into right away is do, where do you get, where are you going to get enough of it? So, and I think it's useful to put some numbers on this. So currently, the chemical industry uses something like 30 exo joules of energy, a fossil energy for feedstocks, just for feedstocks. And the international energy agency estimates that the total amount of biomass available for use for energy everywhere on earth is something like 55 exo joules. So if we wanted to replace all of it, we would need more than half of all of the biomass available on earth, just for this one industry. Right. Not to mention that like other industries like aviation, for example, are interested in using biomass as a feedstock, and if you were to try to decarbonize aviation with biobase fuels, that alone would take up all of the biomass in the world as well. Yes, everybody wants the biomass, and there's just not enough to go around. And like, you know, so the total global energy system is something like 600 exo joules of energy that we use per year. So currently biomass is able to supply at most 10% of our energy demand. And so like, not everybody gets to have as much as they want. And I think that, you know, so we just, we have to have a serious conversation about how we want to allocate that biomass, and we have to be very, very cautious about allocating it only to things that do not have other options available to them. What about just from an economic perspective? So setting aside that like at the global scale, biomass probably isn't going to be our full-scale solution to decarbonizing the feedstock of plastics. With that said, as you said, it's totally feasible, and we can do it at individual plant scale, and at individual plant scale, it'll help decarbonize. Can we do it economically? Like how much more expensive is it to produce bioplastic today than to produce plastic? Yeah, so the real driver here is around logistics. So can you collect enough biomass and transport it to your facility at a price that makes sense? And the reason for that is that to make one ton of these high-value chemicals that we've been talking about, these plastic precursor chemicals is going to require between three and four tons of dry biomass. It's only going to require like 1.2 tons of petroleum product. And so you have two problems. One, you have to move a lot more stuff. And two, you have to move solid stuff instead of liquid stuff. And liquid stuff you can put in pipes, and you can pump it, and you can move it very cheaply and easily. And so the question is, these logistic barriers are fixed in some sense. Even if you have the biomass, you still have to, as I said, you have to ship between three and four tons of it for every ton of chemicals that you get out. And the chemical industry today, at least, is set up around very large centralized facilities that are small in number, and they have a very high degree of what's called process integration. So the reason why the chemical industry has lots of economies of scale is not just like because a big reactor can be cheaper per unit than a small reactor. It's also because if you have a bunch of different kinds of reactors, all in one facility, then you can do things like heat cascading. So you have your highest temperature reactor, and then you take the waste heat from that and you send it to a lower heat reactor, and then you don't have to pay to heat that reactor. And so you're integrating all of these processes together, and that adds a lot to the advantage of having big centralized facilities. Big centralized facilities make the logistic problems of biomass even more acute. Now there are some people who have ideas of like, can we make small-scale reactors that we can bring basically out into the field? So one example is there's a company called Charm Industrial that their ideas like, can we build a teeny little reactor that fits in a container, and we can put it on the back of a truck, we can drive the truck to the farm, and we can convert the biomass into at least an intermediate product right there on the field. And then that intermediate product is like an energy dense liquid that can then be shipped very cheaply to a centralized facility. So people are thinking about, are there creative ways that we can get out of the problems? That we can get around these logistic problems, but the logistic problems are substantial. All right, so that's fundamentally the knock on a lot of biomass-based stuff in a bunch of different categories. But let's talk about the other option for clean feedstock, which is using CO2 as the input. This is in the emergent and somewhat sexy category of carbon utilization. And there's a whole universe of using captured CO2, be it point source captured CO2 or direct air capture CO2, to then produce some useful product or good. Plastics being one example of that. How do you think about the opportunity for CO2 utilization here? Yeah, so I would like to start with a disclaimer, which is that we make a lot of plastics, but the mass of plastics that we make is very, very small compared to the mass of CO2 that we make. So people should not be thinking about plastics as a like as a sink of CO2 that they can basically like the can soak up CO2 from other sectors at significant scale. We are emitting CO2 into the atmosphere at the scale of tens of billions of tons per year. We are making plastics at the scale of hundreds of millions of tons per year. So there's two orders of magnitude in between those two. And so when we talk about carbon utilization here, don't think of it as like this is a sink for CO2. Think of it as this is an opportunity for like a truly circular carbon economy that we, you know, that everything that goes out gets sucked back in and we can have these products, but without creating damage from the production of these products to the climate. So then, so that disclaimer made, let's talk about what we mean here. So and so basically the idea is you can take CO2 and H2O and you can electrolyze both of them. You can use clean electricity to cut them in half and get your carbon and your hydrogen from those two inputs and then synthesize those into all of the chemicals that we're talking about, ethylene, propylene and others. There was a really great analysis that came out in science just last year looking at this. And their estimate was that you could, this could start to be cost competitive in certain places under the following extremely demanding conditions. They said what you need is one, $40 a megawatt hour for electricity, which might sound okay, but it has to be available 90% of the time. Yeah, that's the knock on every electrified process is what is the price that you need and what is the capacity factor? Okay, go on. You need a 60% conversion efficiency in, you know, for your process of get, you know, for this electrolysis process of turning CO2 into other chemicals. Now we are in that ballpark for hydrogen electrolysis for turning H2O into H2. We are not for CO2, like not even in the laboratory are people getting 60% conversion efficiencies for CO2, let alone in a commercial setting. We're usually talking about 30, 40% conversion efficiencies. So you need 60% conversion efficiency. And then you need basically an unlimited supply of CO2 that's available, that's, you know, high quality, pure, and you can buy for $30 per ton of CO2, which there are certainly point sources that produce, you know, the produce a lot of byproduct CO2 today, that you can buy for less than $30 a ton. Interestingly, most of them are in the chemical industry. So if you stop using today's processes in the chemical industry, those point sources go away. And you get a very serious question of like, where did that CO2 come from? Who are you buying it from? Mm-hmm. That's interesting. Okay. So there's a narrow set of criteria that if you kind of, you, let's see, I hadn't heard any of those numbers before you said them. And all of them in a vacuum seem plausible, but tight, and you need all three of them to be true simultaneously for the same plan for it to be economic. So it's one of these cases where like, look, if we, if the technology improves substantially over the course of the coming years, and, you know, we continue to drive down electricity, prices, and get better at CO2 capture, and better at CO2 electrolysis, like if all these things happen, then you could picture this working over the long term, but it's certainly narrow, and it requires a lot to be true. Yeah. And I think like, also, like that is sort of, that's what you need for their estimate, for cost competitiveness, at under current market conditions. And as you and I have talked about before, like, I am very bearish on the possibility of decarbonization under current market conditions. Like, I think that the future chemical industry is just going to have to sell its products at higher prices, then they are currently. And like, from a full social cost, that's, that's going to be cheaper for everybody, because they're no longer going to be dumping their climate pollution in the atmosphere. But like that, there, there will be marginal cost associated with that. And every study that has looked into this comes to the same conclusion. The most optimistic studies say that clean production might be 30% more expensive than today's production. Some studies find, you know, it'll be two to five times more expensive. Yeah. And, you know, this gets back to another, you know, broad overarching conversation across a bunch of these sectors, which is, will, can you command a green premium for how long do you need to command it, how big does need to be, who will pay for it. But, you know, if we believe that decarbonization is coming, then as you've said many times, and I've taken a heart, a green premium on something like a chemical precursor does not translate to a huge green premium on the final end product that uses that, doesn't, you know, it doesn't mean my Coca-Cola is going to be substantially more expensive. Oh, absolutely not. Like, what we, you know, even if we're talking about a 50% premium on the, you know, for green ethylene, that still works out to be less than a penny on your bottle of, you know, your beverage in a PET bottle. It's a literally negligible amount of money. And as I understand it, I mean, it's early days, but in ethylene in particular, there is, there appears to be a premium market for clean ethylene. There's a Brazilian company called Brascam that produces bioethylene, that they brand and, as I understand it, they charge their premium and what is otherwise a commodity market. Now it's relatively low volume compared to the overall ethylene market, but, you know, there's some evidence that if you can, if you can do it, somebody will pay for it. I think there are, I think that's true. There are niches and there are environmentally branded, you know, consumer products that really want that, you know, that really feel keenly a, a reputational cost to their plastic packaging. And so really, you know, would be willing to pay for a clean alternative, but that is, that's a really small market. And if you think about, you know, for example, like the kind of the, the most salient category of plastics, which is plastic packaging, which is about a third of all plastic as single use packaging. We use plastic for a lot of other things too, but in that single use packaging category, actually a substantial minority, majority of that is business to business packaging. It's not consumer packaging at all, and it's very hard to see, to imagine a world in which there would be like a green premium on that business to business packaging. Yeah, businesses are the worst. Okay, so we don't have a ton of time left and we've focused entirely on the production side so far, but in plastics in particular, I think it is important to talk about the demand side. And that means both talking about sort of recycling and reuse, which is I think probably the thing that most people think about when they think about plastics and also just reducing our overall demand so that we can bend that curve on the growth of plastics. So let's talk about this one by one. What is the world of plastics recycling and reuse like today and how much opportunity do we really have to to amp that up? Yeah, maybe we can start by just like, I can sort of frame out where what happens to plastic at the end of its life. So we think that like over the whole history of the world, we've made about six and a half billion tons of plastic, about five billion of those tons are still around. And they are either in landfills or just like dispersed in the environment, they are plastic pollution. Then your other two major options, which kind of a bit more than half of that remaining, about 800 million tons, we think has been incinerated. And then about 600 million tons, so maybe seven or eight percent of all the plastic that's been produced, has been recycled in some form. So mostly what we do with plastic is we just dump it. And sometimes, there's a tendency on the part of certain interested parties to consider that dumped plastic, you're like, well, look, it's not CO2 in the atmosphere, that's carbon stored. And so even for example, like Shell, which has a large chemical subsidiary, they do a big scenario exercise. And they have something called the Sky scenario, which is supposed to be their Paris compliance scenario. And what they're assuming is basically, plastic production continues to grow at current rates, but it all just gets dumped into landfills or the landscape and doesn't get turned into CO2, so it's fine from a climate perspective. Why is that not true? From a purely climate perspective, setting aside landfilling and the issues with that, like, is it not true that CO2 stored in plastic and stuck in a landfills, stays as CO2, stuck in a landfill and never gets submitted to the atmosphere? Like, why is that not legit? I won't say never, but it will stay that it will be inert in that landfill for a very long time. The problem is that that's not what we actually do. What we actually do is we mix the plastic in with organic waste and put that in the landfill. And because there's all this plastic mixed in with the organic waste, the organic waste doesn't have any access to oxygen. And so it decomposes anaerobically and emits all of its carbon as methane instead of as CO2, which is what it would emit if it were composted properly. And for every atom of carbon that comes out as methane instead of CO2, it's between 30 and 80 times more climate damaging than if it had been composted properly. So that argument works only if we do a very good job of separating our organics, which we don't do, which we do not do. So, and I think like broadly, when you look at overall environmental outcomes, very few people would consider quadrupling the amount of plastic that's going into landfills and the landscape to be an environmentally favorable outcome, right? A purposeful increasing of landfilling, whatever the impacts on climate change directly, probably not the ideal outcome. Yeah, there's a lot of reasons we don't like that. Now, on the recycling front, in theory, most of the plastics we use are like infinitely recyclable. You can just melt them down and make new products out of them as many times as you want. In practice, we are incredibly bad at retaining material value from one use to the next part of this. And so, this is because we tend to just mix all the plastics together and some of them are easy to recycle and others of them are bad to recycle, are hard to recycle, but in all cases, if you just have like a highly impure waste stream that where everything is getting jumbled together, the material you get out, things that used to be useful additives are now impurities that are compromising material properties. And so, what you get out is like a much lower quality plastic than what you put in, except in rare cases where there do exist some countries or municipalities that have systems where all bottles must be made out of the same kind of plastic and we separate the bottles from all the other plastic and then it kind of works. But, you know, here in the U.S., the EPA estimates that only eight or nine percent of plastic is collected for recycling at the end of its life. And then only about half of that actually gets recycled. And the thing and the product that we get out of the end at the end of that is a very, very low quality plastic. So right now, we are doing a terrible job. And this ties back to the question about like clean energy versus clean feedstocks because it's eventually that even if we have high recycling rights, it's eventually where that plastic ends up is in an incinerator, then the CO2 ends up in the atmosphere, even if we used clean energy to make it. So it has to be infinitely recycled, right? Like it, it, it's potentially theoretically infinitely recycled. But if it's not infinitely recycled, then eventually it just gets incinerated and we're just delaying the inevitable release of CO2 into the atmosphere. Yeah. And a lot of these, the questions about how do we do better recycling? It's less about like kind of high tech, fancy, whiz-bang, new industrial processes and more about like better regulations on the amount, on the type of plastics that we use and the types of additives that are put into them, better logistics systems for collecting and sorting the plastics, including like there's a lot of opportunity for data-driven sorting and better automation of those sorting processes. But the actual, you know, the actual recycling itself is a lot of like mechanical power and low heat, which is just, you know, is like not, we already know how to do that pretty efficiently with electricity. Okay. So last thing that we haven't talked about, which is maybe the first thing we should have talked about when it comes to plastics, is just using less plastic. And, you know, maybe that means reducing demand for products to use plastics. Maybe that means replacing plastic with something else. But, you know, given the outlook, which is this sort of unending growth in plastics and no end in sight, what do we see on the horizon that might bend that curve? Oh, man, Shayla, I wish I knew the answer to that. So badly. Or is it nothing, right? Let me tell you a short but sad story about this. So I, uh, my city, um, a few years back passed a plastic bag ban in an attempt to achieve exactly that outcome. And, uh, after lobbying from the local business community, they said, Oh, well, you can still use reusable plastic bags. You just can't use single use plastic bags. And the definition of a reusable plastic bag was the, that it was made out of thicker plastic so that it was stronger. So so many businesses in my community now just use thick plastic bags as in the same way that they used to use thin plastic bags for disposal. And since I am a huge nerd, I have taken to, uh, I, there was, well, not so much anymore, I finished my experiment. But for, there was a period of a couple of months there, where every time somebody gave me one of these, I would bring it home and make sure it was like clean and dry and then I would weigh it. And yeah, yeah, I was like a period of months in which I was weighing all of my plastic bags. And my, my, my estimate, my rough totally unscientific estimate was that these new, uh, let, you know, uh, legal under the ordinance plastic bags had between four and six times as much plastic in them as the old plastic bags, the disposable plastic bags. And I was, and you know, you just look around and you're like, there's no way that we have reduced the number of bags to one sixth of what it used to be. So I'm pretty sure that this policy has actually increased the total amount of plastic that we are using as bags in my town. Um, it's not good. Yeah. Right. And there are versions of this story that are playing out everywhere. It is so much easier to find versions of the story I just told you than it is to find successful examples of, um, of, of plastic demand reduction. So, you know, Germany, people often point to as like the gold standard of extended producer responsibility for, uh, disposable packaging. Um, and Germany uses more disposable plastic packaging per capita than almost any other country in Europe. And so you're like, how is that the gold standard that, that can't be the best case scenario? Yeah. The problem is plastics are pretty great in many ways. But everything is, the, everything that makes them great is exactly the same thing that makes them terrible. Right. What's great about them is that they're waterproof and they never break down. Right. Right. Um, okay. Well, we're out of time. I feel like we've covered a lot here, which is exactly the point for me with plastics is I think about plastics relative to all these other industrial sectors that have a fair amount of emissions. I think of plastics as and more broadly petrochemicals as being maybe the most complex one because it's, it's not one uniform product that's lots of different products with different processes, different inputs, different outputs, different uses, different end of life. Uh, and so it's, there's a lot to it. But it does feel to me like, you know, if you sort of add up the sum total of all the different things we've talked about on the here is a suite of solutions side, we should be able to at least make a fairly significant dent in the life cycle emissions associated with plastic production. Well, I guess final question for you is like, what is your overall relative to you? Look at a bunch of industrial emissions categories. You could steal and cement and, and aluminum and all these other things too. Where do you place plastics on the, on the list of like, we are most likely to abate these emissions versus we are least likely? So, uh, I come at this from a climate perspective. And so my, my attitude is like, we have to abate all of them. None of these things are optional. None of the things that you and I talk about shale are ever optional. It's just, for me, it's more a matter of like, well, what, where are we closer to the solutions versus where are we farther away? Um, where do we have longer to go? And I do think that the plastics industry is like less advanced than, for example, the metals industries, um, in terms of how far we have to go to get to a climate safe solution. And we didn't really talk at all about, you know, some of the issues around international competition and kind of geopolitics that come into this, which are very important and make it, you know, add another layer of complexity. But there's a tendency, but I do want to push back against a tendency to be like, oh, chemicals, it's just like, it's 100,000 things and it's too hard and it's impossible to understand. Because, you know, as we've discussed today, like seven chemicals gets you three quarters of the greenhouse gas emissions. And so sure, there's a lot of other, a lot of things, a lot of products, a lot of things that the chemical industry does. But if we can make a substantial progress on seven chemicals, then we're most of the way there. Rebecca, thank you so much as always for chatting. We're going to, we're going to do another one before too long. I think fertilizers next on the list. So I love it. We'll come soon. Thank you again. Thank you so much for having me. This was really fun. Rebecca Dell is the director of the industry program at the Climate Works Foundation. Catalyst is hosted by me, Shail Khan. The show is a co-production of Post-Crit Media and Canary Media. Find me, Canary and Post-Crit on Twitter. Tag us if you want to provide feedback on this episode or want to suggest future topics. Seriously, send us topics. Also, don't forget to listen to our companion podcast, The Carbon Copy. It's a narrative news show that explains the forces shaping the energy transition and the changing planet. Get it at Canary Media or anywhere you listen to shows. You can find links for this episode's topic and guest in the show notes or go to canarymedia.com. Our producers are Daniel Waldorf and Stephen Lacey, Sean Marquand, composed our theme song, "Mixing and Scoring" by Ibrou Pignettou. I'm Shail Khan, and this is Catalyst.