Carbon capture could be an important tool for tackling climate change. Can we find productive ways to use that carbon?

Summary

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Energy Gang Podcast Summary

Episode: Carbon capture could be an important tool for tackling climate change. Can we find productive ways to use that carbon?
Date: September 22, 2025
Host: Ed Crooks (A)
Guests:

• John Ferrier (B), Senior Research Analyst at Wood Mackenzie
• Sarah Lamaison (C), CEO and Co-founder of Dioxycle
• Tim Vandenberg (D), Climate Tech Innovation Lead at the World Economic Forum

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Overview

In this episode, Energy Gang explores the current and future potential of Carbon Capture and Utilization (CCU) as part of the global toolkit for climate change mitigation. The discussion delves into how CCU differs from Carbon Capture and Storage (CCS), the sectors where CCU offers the greatest potential, associated policy and regulatory landscapes, economic challenges, and prospects for scaling up investment and impact. A special focus is placed on using captured carbon to create chemicals and fuels, and on the barriers standing in the way of wider deployment.

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Key Discussion Points and Insights

1. What Is CCU and Where Does It Fit In?

[01:01–03:21]

• Sarah Lamaison (C) introduces Dioxycle and succinctly outlines CCU’s promise: “We have developed a novel technology that turns carbon emissions – CO, CO₂ – into clean essential chemicals like ethylene … using just electricity and water.”
• The difference between CCU and CCS is highlighted: CCU converts captured emissions into valuable products, whereas CCS focuses on permanent storage (“in essence inherently non-productive” – B, [09:28]).

Notable Quote:

“CCU provides a dual decarbonization opportunity… you’re avoiding [CO₂] emissions from producing a chemical, and you’re also using emissions from elsewhere. Your total potential decarbonization opportunity is like 4 to 5 [tons per ton of product].”
— Sarah Lamaison, [04:07]

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2. Sectoral Focus: Strengths and Limits of CCU

[03:21–06:25]

• Chemicals sector: CCU is especially important where direct electrification or other low-carbon alternatives are not practical. For instance, chemicals are “the industry of carbon,” so CCU can enable decarbonization that CCS alone cannot.
• Hard-to-abate sectors like aviation fuel and building materials are natural CCU candidates, as highlighted by Tim Vandenberg (D): “It allows for substitution of virgin fossil carbon, hopefully at scale, creating a circular carbon economy.” [06:25]

Notable Quote:

“For industries that are still… dependent on carbon feedstocks, what CCU does is allow us to substitute captured carbon for virgin fossil carbon.”
— Tim Vandenberg, [06:33]

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3. Policy Landscape – Europe vs. US

[10:42–17:38]

• Policy support is greater for CCS than for CCU almost everywhere (B, [10:54]), because emissions reductions are easier to measure and align directly with targets.
• In the EU, existing frameworks can perversely disadvantage CCU:

  “A CCU plant… is paying for the emission as if they had emitted it, which means the CCU industry is put at a disadvantage versus fossil. I don’t think that was ever the intention.”
  — Sarah Lamaison, [12:55]

• The US offers robust support through the 45Q tax credit, which raised incentives for carbon utilization projects ($85/ton for CO₂ or CO used) ([15:54]).
• Policy uncertainty, especially in Europe, deters new CCU projects and makes investor decisions riskier.

Notable Quote:

"We are healthily cynical… we never bet on any policy support. But it would of course change a lot of things."
— Sarah Lamaison, [13:47]

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4. Measuring and Valuing Climate Benefits

[19:04–23:47]

• CCU’s climate impact is harder to measure and model than CCS, especially considering the ultimate fate of carbon in products.
• Debates around “cradle-to-gate” vs. “gate-to-grave” emissions accounting:

  "If you are taking the emission from a steel mill and converting it into plastic, you’ve just emitted less – you've divided by two the emissions. We need people to understand this benefit."
  — Sarah Lamaison, [21:15]

• Need for clearer, technology-agnostic policy incentives and standardized lifecycle assessments.

Notable Quote:

"Policies should be technology agnostic… so the market can decide which technology proves themselves, then all credible routes will have a chance."
— Tim Vandenberg, [17:56]

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5. Economics of CCU Projects

[24:04–32:16]

• Project viability varies hugely by feedstock (biogenic, atmospheric, fossil-derived) and end product.
• Building materials: Some CCU applications are already near cost-competitive (1–2x conventional).
• Sustainable Aviation Fuels (SAF): 3–10x costlier than fossil jet fuel, largely due to green hydrogen costs ([25:25]).
• Chemicals (e.g., ethylene): Greater potential for cost parity, thanks to process simplification and possible lower energy inputs.

Notable Quotes:

"Fuel is dirt cheap as a feedstock. It’s extremely hard to compete … chemicals are different because chemicals are hard to make, there’s complexity, there’s opportunity to undercut."
— Sarah Lamaison, [27:13]

"By working through carbon monoxide electrolysis… we believe we can reach, for example, recycled polyethylene type of level in terms of pricing in the short term, and then we have a path to cost parity."
— Sarah Lamaison, [31:12]

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6. Scaling Up, Investor Appetite, and Market Signals

[34:02–39:16]

• Investor appetite is fragile, particularly amid broader headwinds for decarbonization tech.
• Valley of death: Many CCU startups rely on grants, but transitioning to venture capital remains a major obstacle. “Patient capital” with longer timelines and risk appetite is critical.
• Diversification in potential revenue streams and flexibility in business models attract investors in an uncertain regulatory environment ([36:35]).
• Initiatives like the World Economic Forum’s Uplink CCU Challenge help build ecosystems that connect innovators, industrial partners, and policymakers.

Notable Quote:

"Patient capital—where there’s a longer investment timeline and higher risk appetite—is uniquely important for CCU."
— Tim Vandenberg, [35:35]

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7. Final Thoughts & What’s Needed Next

[39:16–42:16]

• Tim Vandenberg: A narrative shift is needed to rally more players:

  “Every ton of CO₂ reused is a ton of fossil carbon that doesn’t need to be extracted… that’s a very powerful license to operate.” [39:27]

• John Ferrier: Backing CCU to provide learning, scale, and downstream benefits—without overburdening with well-intended obstacles ([40:29]).
• Sarah Lamaison: Focus on ruthlessly pragmatic application; maximize impact per energy and dollar spent and avoid misallocation that could damage sector credibility.

  “Be obsessed by two metrics: megawatt-hour per ton CO₂ abated and dollar per ton CO₂ abated… apply the tech that has the highest potential for each sector.” [41:15]

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Notable Quotes — Quick Reference

• "CCU provides a dual decarbonization opportunity…" — Sarah Lamaison, [04:07]
• "For industries dependent on carbon feedstocks, CCU allows substitution for fossil carbon." — Tim Vandenberg, [06:33]
• "CCS is inherently non-productive; CCU can supplement revenue streams…" — John Ferrier, [09:28]
• "A CCU plant is put at a disadvantage versus fossil." — Sarah Lamaison, [12:55]
• "Policies should be technology agnostic…" — Tim Vandenberg, [17:56]
• "If you are taking the emission from a steel mill and converting it into plastic, you’ve just emitted less…" — Sarah Lamaison, [21:15]
• "Patient capital is uniquely important for CCU." — Tim Vandenberg, [35:35]
• "Be obsessed by: megawatt-hour per ton CO₂ abated and dollar per ton CO₂ abated." — Sarah Lamaison, [41:15]

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Key Timestamps

• 00:04 – Introduction and guest intros
• 01:12 – What Dioxycle does & the basics of CCU
• 03:21 – Where CCU fits into decarbonization
• 05:39 – Why CCU vs. CCS; sectoral advantages
• 10:42 – Policy landscape: CCS vs. CCU support
• 12:55 – Europe’s policy disadvantage for CCU
• 15:54 – U.S. 45Q tax credit, incentives
• 19:04 – Challenges in measuring & valuing CCU climate benefits
• 24:04 – Economics: project costs and competitiveness
• 34:02 – Investment appetite and pathways
• 39:16 – Final thoughts & crucial next steps

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Tone and Takeaway

The discussion is highly pragmatic and measured, weaving optimism about technical progress with deep realism about market, policy, and economic challenges. While citing hope and recent breakthroughs, the guests repeatedly urge a focus on hard data, segment-specific solutions, and greater policy and financial alignment to realize CCU’s promise.

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For listeners seeking a strategic overview of CCU’s future—and frank, well-informed perspectives on policy, economics, and practical deployment—this episode delivers a comprehensive and nuanced analysis.

Transcript

[A]

Hello and welcome to the Energy Gang, a discussion show from Wood mackenzie about the fast changing world of energy. I'm Ed Crookes and on today's show, we're going to be talking about carbon capture and utilization, or ccu. I think it's a really important part of the toolkit for tackling greenhouse gas emissions for reasons we're going to be discussing during this show. And to talk about it, I'm joined by my colleague John Ferrier, who's a senior research analyst at Wood mackenzie. John's work focuses on the valuation of carbon and capture, utilization and storage projects and on analyzing key policies and regulations. Hi, John. Welcome to the Energy Gang.

[B]

Thanks, Ned. Great to be here.

[A]

Absolutely. Yeah. Great to have you here. We're also joined by Sarah Lamaison, who's the CEO and co founder of Dioxycle, which is a clean tech startup working in this area of carbon capture and utilization. It's developing a new electrolyzer technology called carbon electrolysis, which can be used to convert waste carbon emissions into sustainable chemicals and fuels. Sarah, great to have you here.

[C]

Thank you. Nice to be here.

[A]

We'll probably get into what Dioxycle does in a bit more detail a bit later on, but just as a kind of headline for the listeners, how do you describe what it is that the company does? What's your elevator pitch?

[C]

Well, at DIY Cycle, we have developed a novel technology that turns carbon emissions so CO, CO2, carbon monoxide, carbon dioxide into clean essential chemicals like ethylene, which is the world's most used organic chemical using just electricity and water. So, I mean, happy to go into more details, but hopefully that's, that's enough for the elevator.

[A]

Yeah, absolutely. And I think that's a great illustration that of what we're talking about here on the show. When talk about carbon capture and utilization, I think often people are more familiar perhaps with carbon capture and storage. People are familiar with the idea of capturing carbon emissions from industrial processes, power generation, whatever, and compressing it, storing the carbon dioxide under the ground. What we're talking about here is actually taking that carbon dioxide and doing something productive and valuable with it, as you say, like turning it into chemicals and other products. And finally, we're also very pleased to welcome to the Energy Gang Tim Vandenberg, who's a climate tech innovation lead at the World Economic Forum, where he brings together innovators and policymakers to work to accelerate clean energy technologies. And you're also just publishing your new white paper on the subject, carbon Capture and Utilization. Right. This podcast is going out on Monday, September 22nd. It's the first day of Climate Week. And you're launching this new report then, right?

[D]

Exactly, Ed. And thank you. Thank you for having me on this podcast and wonderful to be here. And you're exactly right to note that we are starting off Climate Week from our side with a collaboration with Wood McKinsey on indeed a white paper that looks into scaling carbon capture and utilization pathways.

[A]

Great to have you on the show. Welcome to the Energy Gang. Thanks very much for joining us as well. I introduced this show by saying that I thought carbon capture and utilization was an important part of the toolkit for tackling climate change, reducing greenhouse gas emissions. And I thought it would make sense to start off by thinking a little bit about why that is and where carbon capture and utilization can fit into the broader landscape of technologies for decarbonizing the energy system. Maybe. Sarah, perhaps could I start with you on this one? What is the particular contribution of ccu and why is it important?

[C]

So, first of all, I want to start by saying that CCU is not the answer to everything. I think it's very important that we think holistically about decarbonization and that we do implement the technology that are the most efficient on a ton of CO2 abated per megawatt hour used in the right order, and so by priority, starting with the ones that have the highest decarbonization potential. So when we think about decarbonizing a furnace in an industry, it's very likely not CCU'd. That is the answer. And we should just electrify the furnace instead of like first, you know, turning CO2 into methane and then reusing that methane to for furnace. However, there is one particular industry that cannot be decarbonized, which is the chemical industry, because it is the industry of carbon. So for this industry, I think CCU can play a very, very important role. And so the advantage of ccu, especially for the chemical industry, is double. First, one key aspect is that CCU provides a dual decarbonization opportunity because when you think about chemical processes. So for example, to produce ethylene, the world's most used organic chemical, used in plastics, surfactants, and a number of construction material, the way it's produced right now emit 1 to 2 tons of CO2 per tonne of ethylene produced. So by doing CCU now you're first avoiding these 1 to 2 tons of CO2 emitted per ton of ethylene produced, but you're also using other source of emission and repurposing them to make the ethylene. And so now you're not only avoiding the 1 to 2 tonnes, but you're also using 3.14 tons of CO2 per tonne of ethylene you're making. And so your total potential decarbonization opportunity is like 4 to 5. So that's the first point. And the second point I think that is very valuable about CCU is the fact that it can retrofit existing assets, meaning that now when we think about the speed and scale at which we need to scale these technologies to reach net zero, CCU offers a way to leverage existing assets, billion dollar assets that are already there and really help teaching existing incumbents how to use these novel process while also leveraging these assets which are already amortized. And so I think it's a low capex approach to these hard to abate sectors and to provide them with a way to reduce their emissions.

[A]

Right. That is really interesting actually. And that does begin to answer a question that I've often had about ccu which is so probably a lot of people will be more familiar with carbon capture and storage. Why go to utilization instead? What are the benefits of that route? And I think you've made that very clear. I think clearly there are some issues, there's barriers, obstacles and challenges as well and we'll get into those in a moment. But yeah, okay, I do see the point about CCU as opposed to ccs. Tim, maybe bring you in on this. What's your take on this? And you're publishing this report for Climate Week on ccu. Why do you see it as an important group of technologies?

[D]

Yeah, I think Sarah, you know, did a deep dive on this already for the chemical industry. Right. But if I, if allow me to zoom out a little bit like how we look at CCU is more as a complementary tool to decarbonize and specifically to potentially defossilize industries that are still for now very dependent on carbon feedstocks. Right. But it is about the source of that carbon feedstock. Is it a fossil base or is it a sustainable source of carbon? Right, so think for example aviation fuel, chemicals, building materials, those are sectors where we can't electrify everything. And what CCU does in those instances is that it allows to substitute capture carbon for virgin fossil carbon, hopefully at scale, creating a circular carbon economy. Right. That's the ultimate systems wide end goal of these technologies. Hopefully. But what we see right now is that the potential of CCU to do that system unlocking is hindered by things such as, for example, policy frameworks, they often undervalue that contribution because the climate benefits from CCU are harder to quantify than permanent storage, as you noted on ccs. Right. But if we are serious about net zero, we need both tools. So it's not one or the other. We are saying we need a holistic approach across CCUs. Right. CCS for removals and CCU for a circular carbon economy. And so for us the opportunity now is to create clear technology agnostic incentives and assets such as like standardized lifecycle assessments so the utilization pathways can be properly recognized or at least starting to be properly recognized.

[A]

Right, got it. Thanks very much. And I want to get into some of those issues, like the policy barriers you mentioned in a moment. Before we do though, John, you cover the whole of the industry, the whole of the CCUS industry. Where do you see utilization fitting in alongside storage? And how would you characterise the state of the industry today?

[B]

Yeah, well, I think the key point is it's still at a very early stage and if we look at the CCS project pipeline, there's a lot more advanced projects we're seeing. The scale of emissions being handled is much greater than we're seeing with ccu. Perhaps another interesting point to kind of pick out. We've talked a bit about chemicals, we've talked about fuels, and the real point here is with CCU we're talking about a wide range of different applications with different emissions benefits, as Tim has mentioned. And there are also types of CCU which in essence function similarly to conventional CCS. Right. So we have things like CO2 treated building materials, treating alkali minerals with CO2 to generate carbonates which store carbon over centuries. That is sort of functionally, from an emissions benefit perspective, equivalent to ccs. So we're seeing some of that and the same kind of incentives that are useful for ccs. Carbon pricing, for example, can more directly apply to those. So some are more advanced, some of the policy frameworks are better suited to some applications that currently exist. There's a lot of policy development that's needed. So carbon capture and storage is definitely seeing more momentum behind it. I think what's interesting from a carbon capture perspective is that carbon capture and storage is in essence inherently non productive. It's an additional cost for the most part. And the projects that are progressing derive revenue from the regulatory support that they receive, or EOR or something like that.

[A]

EOR enhanced oil recovery. So that's taking carbon dioxide, injecting it in the oil field to get the oil out more easily.

[B]

And there is a degree of contention around that. Some people consider that to be utilization, others don't. I think we generally consider that it isn't utilization. And if you look at the IPCC definition that classifies CCU as carbon within a product in the absence of regulatory support, you know, if you have an opportunity to use the CO2 stream that you're capturing and direct it towards, you know, as a feedstock to produce a product, you can start to supplement your revenue that you get from subsidy with something else. And so we are seeing the first signs that CCU can be used to help kind of offset some of those CCS costs as well. So they kind of. There's a degree of kind of interplay as well.

[A]

Right, so let's talk about policy for a bit. Is it the case then that at the moment there is more policy support for CCS for storage than there is for utilisation? Is that fair?

[B]

Yes, absolutely. I think that's very clearly true. There are subsidy mechanisms around, popping up all over the world around ccs. Business models in the uk, all sorts in Europe, in the US as well, although you also have a tax credit for utilization as well. So proportionately there's definitely more support behind ccs. We are starting to see more around ccu, but I think given the kind of the spectrum of end products we're talking about, that presents a bit of a policy charge. I think from a policy thinking, perspective, policy strategy perspective, there are much clearer visions around the role that CCS is expected to play. And I think that's feeding in as well to how much subsidy support there is.

[A]

Right. Are there particular reasons for that then? Why is it that you think storage has generally been favoured until now?

[B]

I think to be honest, it comes down to prioritizing emissions reductions very quickly. And I think, as sort of Tim's mentioned, with ccs, emissions reductions are more measurable, more tangible in many cases. Conceptually you have an emission source here, you need to intercept that. And in many cases using off the shelf technologies with CCS essentially. And so I think there's a simplicity to that. I think when you have carbon pricing that directly values those emissions reductions, that's the source of revenue and you can start to hang additional subsidy off of that. So I think it's largely just this sense of we need tangible emissions reductions. Now countries have the nationally determined contributions, they have their emissions reduction targets, whereas CCU is far more complex. You're talking about avoided emissions in some cases, you're talking about conventional reductions in other cases. You're talking about removals in some cases and you're also talking about a range of different products which might require very specific incentives to try and incentivize. There might be demand side measures or they might be other forms. So it's just the complexity around CCU and the diversity as well.

[A]

Right, Sarah, so how do you see this then? So at dark cycle you are trying to navigate this complex policy landscape. You're doing it for real. How much is policy helping you right now?

[C]

The European policy landscape is quite harsh, to be honest, on ccu, because I think the intention has been good initially and how incentives has been set up around the EU ETS framework, etc. However, what happens right now in Europe is that if you take a chemical plant that is taking fossil feedstock and turning that into a chemical, this chemical plant within the EU ETS framework is going to pay for the emissions they are emitting. However, they're not going to pay for the carbon content that is embedded in the chemical and that is living at the gate of their factory. However, if you look at a CCU plane now, if you take the same plant, but now consider the source of carbon is not fossil, but it's an emission, actually the plant still needs to pay for the emission as if they had emitted it. So now the plant is paying for that, which means that the CCU industry is not even advantaged, it's not even neutral, it's put at a disadvantage versus fossil, which I don't think was ever the intention of the European Commission. And it's really a loophole that a number of companies and groups have been trying to fix for a number of years. And now we are really hoping for the EU ETS revision that is coming to fix that problem. And that's going to be very important. So to answer specifically on our case, we actually never bet on any policy support. I like to say that we are healthily cynical, although that's quite sad. But anyway, it would of course change a lot of things, you know, and that's also why I think there's not so many companies doing CCU right now. When you think about climate tech in general, you have a lot of people doing like geothermal, like a number of things, electrification. But CCU is still like quite a niche pool of companies because of this in particular, because not only you have to create a new technology and now you also have to face this kind of non level playing field, which is hard in the U.S. interestingly, as part of the One Big Beautiful Bill, because as you Were saying, I don't remember if it was you team or John. The 45Q tax credit recognize carbon utilization and provide a tax credit for carbon utilization. And one big beautiful bill, increase that tax credit from 60 to $85 per ton of carbon utilized, which can be CO2 or CO, which is interesting because there are some interesting pathways that are not talked about enough in CO valorization. And so actually now we are seeing our economics being really, I mean, uplifted in the US which is also unexpected. But I think it also comes to the point that you were mentioning that EOR is considered in the US as utilization. And I think that was, you know, we are kind of piggybacking this and benefiting from the support to EOR and more the oil and gas industry right now.

[A]

Right, Because Dialogue Cycle, you have dual headquarters, right? You're based in Paris where you are now and also and you have a headquarters in the San Francisco Bay area where I actually happen to be myself right now. So you have the option, I guess of investing in Europe or the US Is the US now then actually a much more attractive market to invest in because of that 45Q credit you're talking about.

[C]

When you think that 1 ton of ethylene to be produced takes over 3 tons of CO2 or I mean a bit less of CO to be made, a $25 per ton of CO2 means three times that 75 doll ton of ethylene you're producing of differential. And you know, in the U.S. ethylene is sold at like, I mean somewhere between 600, $700 per ton. It varies. So you're talking about more than 10% just because of that increase in in tax credit, which is huge. So yeah, I mean the answer is right now Europe is a hard environment to be in from a CCU perspective. However, you have also some price dynamics that changes a bit. This because in Europe ethylene production is based on NAFTA cracking and not ethane cracking. Like in the cost base is actually higher. So your incumbent that you're trying to disrupt is higher, but your electricity price is also higher. So there is a lot of these questions that are very important. And so when we think about where to locate a project, we really think about like a country, a specific grid, you know, is it ERCOT in Texas, Is it France with like the very nuclear heavy base, base load and actually quite low pricing. And we really have to think about region by region project to find the best combination of regional pricing, electricity pricing and availability of carbon emissions.

[A]

So Tim how do you think about this then? When you hear Sarah and John talking about the policy landscape and some of the issues Sarah's been talking about in Europe, is there a real problem there and is there a case for policy reform to introduce significantly more support for utilization?

[D]

I mean, the underlying dynamic here is that, you know, policy frameworks around the world are really fragmented and inconsistent, so we should push for more global interoperability between these policy frameworks. Right now, for example, as they both mentioned earlier, you know, there is a reward that is more rewarding for permanent storage, but it often then overlooks, you know, the climate potential of utilization. And that's not done on purpose. Right. But I think what we globally need to go towards is we need technology agnostic policy that don't necessarily back a perceived winner too early, which I think is why we now have so much like so many subsidy penalties, if you will, on ccu, because so much policy is favoring ccs. And that's also because simply we don't know yet. A lot of these pathways in both fields are in its early infancy. Right. So we don't know yet which one at scale will be the winner. Right. And so instead design policies so that the market can decide which technology proves themselves, then all credible routes will have a chance to get off the ground. And so I think that's the overarching theme here in policy that we need to work towards at a global scale.

[A]

So you've been mentioning some of the issues around measuring exactly how many emissions are prevented by utilization technologies. As John was saying earlier, there's a whole range of different utilization technologies. And is the issue then that the kind of ultimate fate of the carbon dioxide or the carbon monoxide, possibly in some cases in terms of getting to the atmosphere is unclear often. I mean, to take an example, I mean, maybe Sarah, get you on this, you use your captured carbon to make ethylene. That ethylene then goes to make plastic household goods stays locked up in plastic for a long time, but eventually does it not kind of breaks down and the carbon would get released into the atmosphere in some form is part of the problem with these policy frameworks not being as supportive as they could be, that this is all so uncertain. We don't know, as I say, we don't know ultimately where the carbon's going to go. Somebody, the industry, whoever it is, needs to do a better job actually of kind of following through with the full life cycle of these emissions.

[C]

Yeah, I mean, that's a great point. And unfortunately, I think there's Just a lot of like perhaps misunderstanding there because like we have to think about the question of carbon really from like the cradle to gate. So how is the chemical produced and then the gate to grave. So what happened then in the end of life of the product? Because if you really focus on that cradle to gate, it doesn't matter what happened at the end. As long as you treat all the types of chemicals the same way and you say a plastic, whether it's from fossil origin or from renewable carbon emission or bio origin, at the end it might ultimately with that amount of probability be reimited. If we assume that's the fate of it, we can just focus on how is it produced and how is it produced. Now it's very clear, it's very clear to understand the benefit of ccu, when you think about the comparative system, which is how 45Q tax credits, how the GRIT model does it, you have to think about the different scenario and the comparative scenario. So imagine now you have a steel mill that is making steel and emitting carbon and you have a cracker that is emitting carbon and making ethylene. If we simplify scandalously, if I can say you emit 1 ton of CO2 per ton of steel, 1 ton of CO2 per ton of ethylene, what you can really understand intuitively is that if you are now taking the emission of the steel mill and converting that into the plastic, you have just emitted less, you've divided by two, like the emissions. Because now you're, you're extracting only once fossil carbon and this fossil carbon is being reused. So it's simple to say, yeah, and now you've divided by two the emissions, whatever happens at the end of life. And I think this is a message we need to get out so that people understand the benefit and don't have to do the mental exercise of like, okay, but what happened at the end of life, which is the same fate regardless of the origin of carbon.

[A]

That's really interesting. And so Tim, are you hopeful that policymakers are kind of developing an understanding of some of these issues are thinking about this? I mean, presumably the way if you talk to a lot of people in policy and regulation as well as in the industry, how much of an education job is there to do to get people to understand some of these issues that Sarah's been talking about?

[D]

I think if you look across all the different stakeholder groups that have a stake in ccu, policymakers, industry incumbents, innovators, as Sarah, there needs to be more awareness raising across the Board, how does CCU fit in the broader climate mitigation picture? How do you incentivize it? To Sarah's point, should we do new life cycle assessment at the point of source of carbon rather than the emissions point? And so I think that's what is very crucial to these initiatives that we do at the World Economic Forum, which is kind of like creating a pre competitive collaboration space, in this instance the CCU innovation ecosystem that that was driven by the World Economic Forum and uplink their innovation platform that brings together these innovators, these industry incubancy policymakers, but also financiers because unlocking finances to scale, these technologies also has its own hurdles and barriers. So kind of understand in a pre competitive capacity in terms of how can we collaborate, where is actually the opportunity? And only then if you have that space for conversation, can we actually be serious about scaling. So definitely there is an awareness raising exercise that needs to be done and that we're doing with with work like this. But it's very much a collective effort across the board.

[A]

Okay, so we talk quite a lot about policy and what policy can do to help cceu. I wanted to talk a bit about what the industry can do for itself to help it develop and grow. Maybe John, bring you in on this first of all, but how do the economics for CCU projects stack up at the moment?

[B]

Oh, that's a good question. And again I'll probably be a stock record and hear and say it's very variable. I think it comes down to on the capture side, what kind of CO2 source you're capturing from on the one hand. So there's a big focus across different CCU pathways to use biogenic and atmospheric CO2. For example, biogenic is sort of more in keeping with the usual cost that we would see on a conventional kind of post combustion capture project.

[A]

And sorry to be clear then, so biogenic this would be what from vegetation?

[B]

Yeah, essentially there's sort of two groups of CO2 source from an emissions benefit perspective, the kind of the focus unavoidable process emissions. So this might be something like a cement plant in which you know you will produce CO2 in making cement unrelated to fossil fuel use. And then there are emission sources that are considered kind of part of circulation in essence. So you have biogenic emissions. So if you've burned biomass for fuel, because as plants take out CO2 from the atmosphere as they grow, that CO2 is considered to just be returning to the atmosphere and not added anything to circulation. And similarly for atmospheric, so those are the kind of the two distinctions.

[A]

And again, to be clear, atmospheric then. So that would be capturing carbon dioxide from the atmosphere, so direct air capture and so on.

[B]

But again, it comes down to the kind of end product that you're producing. Right. So, you know, we see cost multiples for CO2 treated building materials much closer to cost competitiveness today. One to two times. But then kind of on the more extreme end with sustainable aviation fuel, we were looking at three to ten times the cost of conventional aviation fuel. And in that case, the bulk of that cost is driven by green hydrogen. So up to 80% of that cost is the cost of green hydrogen and then by extension the cost of electricity. So there's a broad range of different kind of cost multiples depending on the product you're talking about.

[A]

Right. So that's really interesting. So in that 10 times, as you say, at the sort of the extreme end for sustainable aviation fuel, that really sounds like a prohibitive cost if you're asking people to voluntarily pay 10 times the price of the conventional product. If you're asking policymakers to support regulations, policies that would force consumers to use a product that's 10 times the price of the conventional product, that really doesn't seem like it's going to be viable. And probably even if you're only two or three times the price of the conventional product, again, that's going to be a very, very big challenge in terms of adoption, in terms of finding a commercially viable future for those products. I think, I mean, Sarah, I don't know where you are now at dark cycle in terms of your costs relative to conventional production, but when you think about this, are you thinking that you ultimately have to get to a point where you can be cost competitive without subsidy against conventional products?

[C]

Yeah, I wouldn't be here if I didn't believe there was a path to cost parity. But I think it really depends on the products. And that's the reason why at Dioxycle, we are right now not making saf because you have to think about. It's all about what is the incumbent? How simple and cheap can the incumbent be so that you as the alternative, when you're taking CO2 or CO and using electricity to produce that same product, you have a chance to compete. The problem with fuel is that it's extremely simple to make. You just. I mean, I don't want to say you just dig a hole, but like, you have very limited amount of refining and so like it. It's dirt cheap as a feedstock, it's dirt Cheap and that's a big problem because it's extremely hard to compete because it's also very energy dense. And we are just not paying for the energy when we are taking fossil fuel. We are just not paying for the energy that has been accumulating for millions of years in that fuel that we are now benefiting from. So it's extremely hard to think we can compete even just you know, a 2x3x just at that point in terms of like the premium. Chemicals are different, chemicals are different because chemicals are hard to make. Actually when you look at a process scheme to make ethylene, it's like it's absolutely massive. It's like multi step process, high temperature, high pressure, it's very complex. And so where there's complexity, there's opportunity to undercut, to simplify, to reduce the number of step, to reduce the amount of capex that is in there. And so that's why we have been focused especially on things like ethylene and small molecules, C1 to C3 molecules, which is the sweet spot for carbon electrolysis, the type of technology we are developing. Because instead of breaking down fossil fuel through these very complex high pressure multi step processes, we can selectively build it up in a direct, very straightforward process and make it selectively and directly using carbon emission and electricity. And now if we are energy efficient enough in that process, we have a chance to compete. And so that's really like the thesis behind what we are doing at Dioxycle. And so now if you want to go one level deeper in that you have to think about the price in dollar per ton of the product you're making versus the number of electrons, the energy consumption it takes to make that product, there is a full hierarchy. So for example, products that have a lot of oxygen in there, like carboxylic acids, like formic acids, you're using animal nutrition, acetic acid, these kind of things, they are heavy molecules. So in terms of dollar per ton it's high because it's heavy. The oxygen are very, very heavy. And it's only like two to four electrons processes. So you can actually produce that with a minimum energy input in a way. So you have interesting potential margins. There's ethylene, you need more electrons. But as I said, very complex process. The incumbent that did massive scale, that also poses other question of like people want to back integrate because not everyone can build a 1 million ton per annum cracker to make ethylene and invest 3 billion when they need just like 100 kiloton per annum, you know, things like that. There's a lot of other dynamic at play and again, like opportunities to undercut this cost to reshore manufacturing and things like this. And so that's really thinking about that mapping that we are finding what are these best products to make in terms of the market size. And so the decarbonization opportunity, I mean the defossilization opportunity and also the trade off between the amount of energy you need versus the value of the product you're creating.

[A]

That is fascinating. Yeah. I don't know how much you want to disclose about your business plan, but in terms of where you are now relative to conventional production, how your costs stack up and where you think you might be in five years, in 10 years, I mean, how long is that pathway to being cost competitive without subsidy?

[C]

Yeah, I mean right now for our first plant we plan to be in the range of recycled material pricing. To be completely transparent, what we have done that is new is that we are really working through carbon monoxide electrolysis. And by doing this, by making a two step process through carbon monoxide electrolysis, we can really reduce the amount of energy needed because of some technical advantages. And we can also use carbon monoxide emissions which still have some energy in there which otherwise would be released as CO2. And so by doing this we reduce the amount of energy we need. Plus we also improve the performance, the energy performance of our technology. And so by doing that we believe we can reach, for example, if we are thinking about polyethylene, recycled polyethylene, type of level in terms of pricing in the short term. And then we have a path to cost parity. Of course it's all about the cost of energy. So we have to be smart in terms of like where do we locate these projects. But there is a clear path to cost parity because as I said, we are healthily cynical or pragmatic as it's said as we say it, you know.

[A]

Politically, correctly, indeed realistic, perhaps you might say realistic, whether policy can be relied on. Indeed.

[D]

And maybe, if I may, we already see CCU solutions where it is more cost competitive right now. And if we can create in the near term scale in those solutions, that is very important because it also builds confidence. And I think that is very important because on the one hand if you want to scale these technologies, you're dependent on policy, but on the other hand you're also very much dependent on investor appetite. You're very much dependent on demand signals from industry players because they want to offtake these solutions. Right. And so that also comes into play. And so I think what Sarah and John are touching here on is actually there are different technology pathways at different levels of maturity, but there might be a potential spillover effect. And then once we get to the first pilots, Right. And then to the first of a kind plants, and then we go into replication, then we also will see the CAPEX and the OPEX per unit drop. Right. So think the same playbook that we had for solar and wind technology as well. And hopefully over time we of course hope that innovation and costs will go down in other fields that we are highly dependent on. Right. So if we have declining costs in green hydrogen or renewable power, that will have a positive spillover effect in CCU and then efforts like public procurement. Right. Like for example in New York, they have a cement mandate to buy green cements. That also gives a very important signal that the public sector is confident in these technologies as well. Right. So I think you need to also think about where does confidence building come from when you want to bring down the cost in a space like this? And we are seeing some promising movements in, in those directions. And I think the question now is, is how can we catalyze multi stakeholder action to start doing that more at scale?

[A]

Let's talk a bit about investors as one of those key stakeholders then. It feels like over the past, let's say three years or so, investor appetite for investing in decarbonization in general has faced a lot of challenges. Actually the numbers stayed fairly strong through into last year. But you've got to think that this year in particular, obviously change of administration in the United States, growing focus in many parts of the world on energy security and affordability, concerns about rising energy costs and so on, all of those things seem to be creating an environment where it is harder now to raise capital for low carbon technologies than it was two or three years ago. Is that true do you think, Tim? And is that something that CCU is facing right now?

[D]

100% and you can't generalize it across the CCU? Right, right. Because like some solutions are more cost competitive already and they will have an easier time in interacting the financing that they need. Right. But I think what we need to do there is that we need to zoom out a little bit and understand the fragmentations in the entire financial value chain, if you will. If you look at a lot of the early stage CCU projects that we see right now, they're heavily dependent on grant funding from the public sector. But how do you then go from there to when you have your technology revenue level at 4 or 5 to early stage VC funding. Right. And there's like your first valley of death as you call it. So I think what is also the focus of the paper is I don't think innovation is the issue. There's enough innovation and we're seeing a lot of promising pathways coming out of the universities and business and whatnot. But it's more about how do we unlock finance to actually scale those innovations there and there. We then need to think about what are some of the new financial mechanisms that we can leverage in support of this. And so I think for CCU in particular, what's very important is patient capital, right? Where there is a longer investment timeline, where there's a higher risk appetite to actually invest in these solutions, and where there's also a higher level of comfort with potential failure of your investment. Right. And so I think we highlight in the paper also some promising examples in the field of programs that do this. And Tencent in China through their CarbonX program is doing exactly that. Right. They take on a higher risk and they focus more on patient capital so that these technologies have a longer time to develop themselves. And I think those kind of new financing models are uniquely important for the CCU space in particular.

[A]

That's very interesting. So John, what are you seeing in terms of investor appetite for ccu?

[B]

I think certainly there is a bit of concern about policy risk that's emerged. Although the 45q was enhanced, I think the run up to that enhancement was a bit volatile and other sources of funding were withdrawn. And certainly when we've been speaking to particularly early VC investors, they now look for CCU startups that they are considering investing in to have multiple sources of potential revenue beyond a single piece of subsidy, a single piece of legislation. And that really is to protect against the failure of that legislation or a shift in political priorities. So you know, that's a big concern. You're continuing the American example. I think we also heard other countries that are perceived as more stable. I mean the investment tax credit in Canada was picked out as a potentially more stable subsidy to draw on. So those kind of policy concerns have found their way into investment spheres. But you're also seeing, seeing some recognition of that from startups side as well. We spoke to particular CCU startup Carbon to Stone, who are producing carbonated alkali materials, essentially a direct air capture process. But their pitch has kind of, they've kind of adapted their pitch to investors to be able to kind of pivot to what their needs are. So on the one hand, they can position themselves as a direct air capture company generating removals credits if that appeals. But they can also pivot to being a waste upcycling company or both, depending on the specific investors they're speaking to. So it's this kind of flexibility and diversity in revenue stream I think is really valued.

[A]

So Sarah, how are you finding it then in terms of getting support from investors? What's it like out there?

[C]

Yeah, beyond investors, there's a number of organizations and initiatives that are very, very important for the ecosystem. So for example, at Dioxygo we were lucky to be selected as a Uplink CCU Challenge awardee, which is a joint initiative between the World Economic Forum and the Ministry of Energy of the Kingdom of Saudi Arabia, which really brought together a number of academic but also industrial partners like Sabic Aramco, Stanford University of Michigan. And so what's really great about these kind of initiatives is to really give us the forum to get our message out there. And so for example, with the World Economic Forum, that really makes that link with industrial players and policymakers to really bring together what we need to get a project bankable. So the offtake on the industrial side with the demand, but also like the policymakers aware that the technology are ready and then being able to put that together to really get a first of a kind project funded.

[A]

Right, got it. Yeah, that is really interesting. Quickly, before we go then, final thoughts from all of you, if I can maybe Tim, start with you. What's the crucial thing you think people should think about?

[D]

Well, if I have to, to say one thing to, I hope also builds kind of like a collective sense of credibility of ccu. Right. Is that albeit in early stages, CCU is already happening. Right. We have the making of jet fuel from captured carbon in Europe, we have methanol production in Saudi Arabia, we have low carbon concrete happening in North America. Right. And Every ton of CO2 reuse is a ton of fossil carbon that doesn't need to be extracted. And I think think what should be an incentive, you know, to mobilize more players into this space. And especially for industries that are under under pressure from regulators and customers are hard to paid sectors, that's a very powerful license to operate. And so I hope that we can rally more around that narrative in terms of how do we leverage also CCU to become more competitive, to create new economic resilience opportunities and then hopefully as it scales also a potential climate benefit it. So I would leave it at that.

[A]

Thanks. John, what do you think in terms of making CCU a reality at scale.

[B]

I think progressing with a degree of confidence and kind of backing these technologies and giving them an opportunity to scale, to improve, to realise learning efficiencies and not perhaps placing too many obstacles that are there with the best of intent, but that ultimately undermine the downstream benefits that you're seeking to get. We do see some ambition emerging around CCU in the eu, for example. So it's just about giving that the relevant backing to actually see that happen.

[A]

And, Sarah, final thought from you. What do you really need to succeed?

[C]

We spent the last four and a half years proving that this technology could work. We stabilized for thousands of hours, something that, you know, hadn't been shown stable before and really, like, really increased the energy efficiency. So there is a path. And so now we just need for it to be a will there, because if we are supported, if we can raise, you know, the right capital, we can make this happen. So I think it's like a message of hope. The one thing I'll say, though, is that, that I think we have to be ruthless and very pragmatic about what are good cases for CCU and what are not good cases for ccu, to make sure the credibility of the field is not damaged by some poor allocation of capital and development in certain areas. And so I would really be obsessed by two metrics, which are the megawatt hour per ton of CO2 abated, and really be ruthless about making sure we apply the technology that have the highest potential for each sector, whether it's electrification or ccu, depending on the sector, or a number of other things, and then also the dollar per ton of CO2 abated, because we want to make sure, like, ideally we have a price of carbon, a global price of carbon. That would be like a great solution, but we have to make sure that the dollars are spent at the right place for the technology that can actually scale now and to make sure that we get to an optimal path to scale.

[A]

Yeah, I 100% agree. I think that's a really important point. And I think. I think, as you say, if there's one takeaway that everyone should be thinking about from the show, that certainly is one of the key ones. Unfortunately, we do have to leave there. But thanks very much, all of you. Thanks, John.

[B]

Thank you very much.

[A]

Many thanks, Sarah.

[C]

Thank you.

[A]

Many thanks, Tim.

[D]

Thanks to you, Ed. Thank you.

[A]

It's been great talking to you. A really fascinating discussion, I think thanks to our producers, Tabi Biggins Gilchrist and Dan Cottrell. And above all, as ever. Many thanks to all of you for listening. We really do value your feedback. Please do keep that coming and we'll be back soon with all the latest news and views on the energy transition. Until then, goodbye.