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Feasibility of Green Hydrogen-Based Synthetic Fuel as a Carbon Utilization Option: An Economic Analysis

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  • J. Lemuel Martin

    (Cambridge Centre for Advanced Research and Education in Singapore (CARES), 1 CREATE Way, Singapore 138602, Singapore
    Energy Research Institute @ NTU (ERI@N), Nanyang Technological University, Singapore 637141, Singapore)

  • S. Viswanathan

    (Energy Research Institute @ NTU (ERI@N), Nanyang Technological University, Singapore 637141, Singapore
    Nanyang Business School, Nanyang Technological University, Singapore 639798, Singapore)

Abstract

Singapore has committed to achieving net zero emissions by 2050, which requires the pursuit of multiple decarbonization pathways. CO 2 utilization methods such as fuel production may provide a fast interim solution for carbon abatement. This paper evaluates the feasibility of green hydrogen-based synthetic fuel (synfuel) production as a method for utilizing captured CO 2 . We consider several scenarios: a baseline scenario with no changes, local production of synfuel with hydrogen imports, and overseas production of synfuel with CO 2 exports. This paper aims to determine a CO 2 price for synfuel production, evaluate the economic viability of local versus overseas production, and investigate the effect of different cost parameters on economic viability. Using the current literature, we estimate the associated production and transport costs under each scenario. We introduce a CO 2 utilization price (CUP) that estimates the price of utilizing captured CO 2 to produce synfuel, and an adjusted CO 2 utilization price (CCUP) that takes into account the avoided emissions from crude oil-based fuel production. We find that overseas production is more economically viable compared to local production, with the best case CCUP bounds giving a range of 142–148 $/t CO 2 in 2050 if CO 2 transport and fuel shipping costs are low. This is primarily due to the high cost of hydrogen feedstock, especially the transport cost, which can offset the combined costs of CO 2 transport and fuel shipping. In general, we find that any increase in the hydrogen feedstock cost can significantly affect the CCUP for local production. Sensitivity analysis reveals that hydrogen transport cost has a significant impact on the viability of local production and if this cost is reduced significantly, local production can be cheaper than overseas production. The same is true if the economies of scale for local production is significantly better than overseas production. A significantly lower carbon capture cost can also the reduce the CCUP significantly.

Suggested Citation

  • J. Lemuel Martin & S. Viswanathan, 2023. "Feasibility of Green Hydrogen-Based Synthetic Fuel as a Carbon Utilization Option: An Economic Analysis," Energies, MDPI, vol. 16(17), pages 1-20, September.
    • Handle: RePEc:gam:jeners:v:16:y:2023:i:17:p:6399-:d:1232715
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    References listed on IDEAS

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    1. Cameron Hepburn & Ella Adlen & John Beddington & Emily A. Carter & Sabine Fuss & Niall Mac Dowell & Jan C. Minx & Pete Smith & Charlotte K. Williams, 2019. "The technological and economic prospects for CO2 utilization and removal," Nature, Nature, vol. 575(7781), pages 87-97, November.
    2. Lindstad, Haakon & Asbjørnslett, Bjørn E. & Strømman, Anders H., 2012. "The importance of economies of scale for reductions in greenhouse gas emissions from shipping," Energy Policy, Elsevier, vol. 46(C), pages 386-398.
    3. John Bistline & Geoffrey Blanford & Maxwell Brown & Dallas Burtraw & Maya Domeshek & Jamil Farbes & Allen Fawcett & Anne Hamilton & Jesse Jenkins & Ryan Jones & Ben King & Hannah Kolus & John Larsen &, 2023. "Emissions and Energy Impacts of the Inflation Reduction Act," Papers 2307.01443, arXiv.org.
    4. Vishal Ram & Surender Reddy Salkuti, 2023. "An Overview of Major Synthetic Fuels," Energies, MDPI, vol. 16(6), pages 1-35, March.
    5. Patrick Buchenberg & Thushara Addanki & David Franzmann & Christoph Winkler & Felix Lippkau & Thomas Hamacher & Philipp Kuhn & Heidi Heinrichs & Markus Blesl, 2023. "Global Potentials and Costs of Synfuels via Fischer–Tropsch Process," Energies, MDPI, vol. 16(4), pages 1-18, February.
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