The purpose of this note is to point out that the CO2 that will need to be captured to make synthetic fuels is only slightly less than the carbon dioxide emitted by burning the equivalent amounts of fossil oil or gas. The crucial implication is that it might make sense not to focus on synthetic alternatives but to develop massive carbon capture infrastructure instead that makes burning fossil fuels carbon neutral. At present prices, it will be far less expensive to burn oil and gas and then collect an equivalent amount of CO2 than it will be to manufacture synthetic fuels. (Many of the numbers in this article are sourced from an industry research paper, referenced at the foot of the page.)

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Many hard-to-abate sectors, such as aviation and long distance shipping, will continue to need liquid fuels indefinitely. The most commonly accepted route to decarbonisation is to substitute liquid fossil fuels, such as kerosene for aircraft and heavy fuel oil for ships, with synthetic equivalents compounds made from green hydrogen and carbon dioxide. These alternatives can be close to carbon neutral because the carbon dioxide emitted when the synthetic fuel is burnt will match the CO2 required to be captured in order to make the fuel in the first place.

Early sustainable fuels are made today using the carbon in waste organic matter (‘biomass’) but the volumes available globally are a tiny fraction of today’s needs for energy. The carbon atoms necessary for ultra-low fuels will eventually have to come from CO2 largely captured from the air. The probability is that more than 90% of green oils and gases will be using carbon taken from the atmosphere.

Many aviation and shipping operators are already pursuing synthetic alternatives. Parts of the shipping industry in particular are shifting to building new ships that can use methanol (chemical formula CH3OH) made directly from hydrogen and CO2. These ships are termed ‘dual fuel’ because they retain the capacity to use conventional fossil fuels alongside methanol.

There is an another very different route forward. Instead of using low carbon fuels made from zero emission hydrogen and carbon from biomass or the air, industries could continue to use liquid fossil fuels combined with separate capture and storage of CO2. A ship burning heavy fuel oil emits about 3.15 tonnes of CO2 for each tonne burned. If the ship owner captured and permanently stored 3.15 tonnes, perhaps at a specialist direct air capture plant thousands of kilometres away, then the ship would be approximately ‘carbon neutral’.

Of course the immediate reaction to this idea is one of deep scepticism. Any scheme which promises to match the emissions from burning fossil fuels with equivalent sequestration of CO2 will be highly vulnerable to being abused. We cannot be sure that the promised CO2 storage will be permanent, or that it wouldn’t have happened anyway. Ensuring that carbon neutrality arises from truly additional capture of CO2 is a very difficult challenge.

Let’s put aside these obvious concerns about whether the new carbon dioxide storage genuinely balances particular emissions. Instead, we can ask first whether this alternative to synthetic fuels is likely to be cheaper and easier to develop.

Comparing route 1 (manufacturing synthetic fuels using zero carbon molecules) and route 2 (burning fossil fuels and then capturing and equivalent amount of CO2).

· Route one

This example looks at synthetic methanol and compares it to heavy fuel oil for shipping.

The chemical formula of the methanol molecule is CH3OH, meaning it has one atom of carbon, four of hydrogen and one of oxygen. Hydrogen is light, with a molecular weight of one, while carbon and oxygen have weights of 12 and 16 respectively.

So each molecule of methanol has a molecular weight of 32. A tonne of methanol contains 12/32 multiplied by 1000 kg of carbon or about 375 kg . To obtain this much carbon will require the capture of 1.375 tonnes of CO2 as the raw material. This assumes 100% efficiency and a more reasonable assumption might be that 1.4 tonnes of carbon dioxide will need to be extracted from the air to make a tonne of synthetic methanol.

Methanol contains about half as much combustion energy as heavy fuel oil. So every tonne of conventional fuel will need to be replaced by two tonnes of methanol, implying a requirement to capture about 2.8 tonnes of CO2 to make enough methanol to replace a tonne of today’s fuel.

This number compares to the 3.15 tonnes arising from the combustion of heavy fuel oil. This means that synthetic methanol has a carbon footprint of around 90% of conventional fuels for shipping. Of course the 2.8 tonnes from methanol has arisen from an earlier carbon capture process.

The other key ingredient for methanol is hydrogen. Each tonne of the fuel requires about 200 kg of green H2. (This is needed both to be incorporated into the methanol and also to react with the spare oxygen molecule in CO2 to make water – H20 – as part of the chemical reaction). To make two tonnes needs about 400 kg of hydrogen.

The cost of synthetic methanol will probably be dominated by the manufacturing of hydrogen. Extracting CO2 from the air will be the other main burden.

Route 2

As described above, Route 1 extracts CO2 from air, reacts it with hydrogen and creates methanol. The possible Route 2 burns fossil fuel as today, and then captures and permanently stores the amount of CO2 that results from the combustion.

Comparing the economics of each of the two routes

Route one

The key cost is likely to be price of the hydrogen required. As written above, two tonnes of methanol will use about 400 kg of H2. We see a very wide variety of different estimates of the likely price.

· At £1.50 a kg, the price often said to bring comparability with oil and gas, the cost of the H2 necessary to make the two tonnes of methanol would be $600 (before transport).

· Current costs appear to be far higher although details are scarce, partly because of the relatively small number of green hydrogen production plants currently operating. A reasonable estimate today might be $5 a kg. At this price, the green H2 necessary to make the synthetic methanol to replace one tonne of fuel oil would be $2,000.

· The costs of 2.8 tonnes of carbon dioxide captured from the air (often known as DAC) is also very difficult to estimate. Costs as low as $100 a tonne are seen in some estimates for 2030 or before. But prices today may be at least five times this level. (These figures do not include an estimate for the – relatively small – costs of temporary storage). Route one needs about 2.8 tonnes of captured CO2 for methanol that equates to a tonne of fuel oil. Costs are therefore between $280 and approximately five times this price, or around $1400.

· In addition, there will be a small cost for the pure water for the manufacture of the methanol and, more importantly, for the capital and operating costs of the methanol production plant. It’s little more than a guess, but these may add $100-$200 for each tonne produced, or $200-$400 for the methanol to equate to a tonne of fuel oil.

At the very lowest end, each two tonnes of synthetic methanol will therefore cost

Lowest

· H2 $600

· CO2 $280

· Processing, including water $200

Total before transport $1080

At the upper point, each 2 tonnes of methanol will cost much more

Higher end of estimates

· H2 $2,000

· CO2 $1,400

· Processing, including water $400

Total before transport $3,800

Route two

This route requires the purchase of fuel oil and paying for the capture of carbon, plus its storage.

· The price of fuel oil varies around the world but averages (January 2025) about $600 a tonne.

· The estimates for Route one above suggest a range of between $100 and $500 for the cost of direct air capture of CO2. In addition, in route two, a guess might be that CO2 transport and permanent storage costs add another $60 per tonne. Route 2 produces 3.15 tonnes of CO2 per tonne of fuel oil burnt.

At the lower boundary, a tonne of heavy fuel, accompanied by the capture and storage of the amount of CO2 that will be created when that oil is burnt, will cost as follows:

Lowest

· Tonne of heavy fuel oil $600

· CO2 capture $315

· CO2 storage $189

Total $1,104

At the higher end, these figures will be approximately as follows:

Higher end of estimates

· Tonne of heavy fuel oil $600

· CO2 capture $1,575

· CO2 storage $189

Total $2,364

What are the implications of these numbers?

The core finding from this analysis is that it will probably be cheaper to burn fossil fuels and then capture an equivalent amount of CO2 than it will be to manufacture low carbon synthetic fuels, at least until the price of hydrogen has been pulled down from today’s levels.

The 2 tonnes of synthetic methanol needed to replace a tonne of shipping fuel will cost about $1,080 at the very low hydrogen cost of $1.50 per kg. The cost of simply burning oil and then capturing sufficient CO2 from the atmosphere will be slightly higher at around $1.104.

But unless hydrogen falls in price to this level, synthetic fuels will be much more expensive than fossil fuel use plus carbon capture. Although green hydrogen at $1.50 seems possible in parts of the world with the lowest electricity costs, this target will be difficult to meet in most parts of the developed world.

The estimates above suggest at the upper end of the range for CO2 capture and hydrogen manufacture that synthetic methanol might cost as much as $3,800 for a quantity (two tonnes) that matches the energy value of a tonne of heavy fuel oil. At the higher end of the possible cost range, the cost of buying oil and sequestering an appropriate amount of carbon could cost around £2,364, just over 62% of the cost of the synthetic alternative.

Put at its simplest, the commercial future of synthetic fuels depends crucially on the relationship between the cost of green hydrogen and the fossil alternative. That’s because, at least in the case of global shipping, the amount of CO2 that will need to be captured is – very approximately – the same whether new renewable fuels are being made or whether old fuels are used and the concomitant amount of CO2 stored elsewhere. This is probably true for all hydrocarbon fuels.

At the moment, the evidence strongly suggests that it is far cheaper to build a huge carbon storage industry and continue to burn oil and gas than it is to make replacements for fossil fuels from hydrogen and captured carbon dioxide. The core reason is that per unit of energy, current fossil fuel prices are far lower than green hydrogen made from water electrolysis. This isn’t a comfortable conclusion but needs much greater open discussion.

Source for some of the numbers in the article https://www.digitalrefining.com/article/1002891/methanol-from-co2-a-technology-and-outlook-overview#:~:text=Green%2Frenewable%20methanol%20synthesis&text=In%20the%20presence%20of%20catalysts,gases%20and%20purified%20through%20distillation.