If anything in your value stream uses fossil fuels, and you are competing with organizations which don't have fossil fuels in their value streams, you are going to be losing business fast in the coming years.
The energy crisis in Europe continues to diminish as prices return to something approaching useful. Cleantech investor and co-host ofI wondered what the impact of the EU emissions trading scheme budget guidance would be. I recently looked through the, noting that it turned into US$203 per ton of CO2 in 2030 in 2023 dollars, $287 in 2050 and $296 in 2050, roughly aligned with the social cost of carbon that Canada and the US EPA agree on.
This is natural gas-focused and each of those commodities has a primary pathway for its creation which uses natural gas. Electricity is generated in natural gas generation units which emit about 0.4 tons of CO2 for every MWh, along with 0.2 tons of CO2e from leaking methane in Europe .4,982,000 btu of natural gas per ton of cement. At 36,303 btu per cubic meter and 0.76 kg per cubic meter of natural gas, that’s just over 0.1 tons of natural gas. When that burns, it creates just under .
Today the EU ETS doesn’t apply to methane and other carbon dioxide equivalents like NOx. In 2026, it will. And that’s when the carbon border adjustment mechanism will kick in and all of the embodied CO2 and CO2e in imported goods will be priced as if they were manufactured in the EU. The world’s third largest economy is effectively applying a carbon price to every country that exports to it from anywhere in the world, which is to say almost all of them.
In 2030, using the EU’s budget guidance for business cases of $203 per ton of CO2e which includes the methane, the numbers go up considerably. Up $122 per MWh, $87 per ton of cement and a whopping $386 per ton of methanol. You can’t decarbonize natural gas generation without bolting on a lot of technology at great expense and burning a lot more energy to get it down to merely worse than wind or solar. The additional costs aren’t at the level of the projected carbon prices, but they are still vastly above the carbon price on wind and solar. As natural gas electricity is already more expensive than wind and solar, it’s just going to be less and less competitive over time.
There’s no pathway for methanol that isn’t much more expensive than it is today, so anywhere that there is an alternative, it is likely to be used instead. One way or another, the price for methanol is going way up.
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