The Exchanges

Q for clean feedstock, which is using CO₂ as the input. This is in the emergent and somewhat sexy category of carbon utilization, uh, and, you know, 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 COT utilization here?

A Yeah, so I would like to start with a disclaimer, which is that, ah, 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, that can soak up CO₂ from other sectors at significant scale. We are emitting CO two 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 CO two. 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, uh, to the climate. So then, so that, that disclaimer made. Let's talk about what we mean here. So, and, uh, so basically, the idea is you can take, uh, 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, um, ethylene, propylene, and others. There was a really gre…

AI assessment note: “Think of it as this is an opportunity for like a truly circular carbon economy”

Q to one, so let's start there, which is, which is hydrogen DRI. Just talk a little bit through, I mean, you know, it's not quite as simple as just, like, swap in the hydrogen, swap out the methane in those reactors. So what is the Technical challenge to doing hydrogen DRI, and then what are the, what, what, how much promise is there there versus like, where are the limitations?

A Yeah, so that is, so hydrogen DRI is, like, the most advanced option for fully decarbonized steelmaking. Um, I think about it as, like, that is the smallest increment of new technology that we need to get to, like, fully or, like, near zero greenhouse gas emissions steelmaking. And the reason why it's a relatively small increment of technology is that, you know, we have this DRI process that's already a commercial process, and you don't actually put the methane directly into the furnace. You make syngas, so a combination of carbon monoxide and hydrogen gas, and that's the gas that's currently used in the, uh, in shaft furnaces around the world. And so, we're already doing a bunch of steelmaking with hydrogen. It's just mixed in, in this syngas. And so, Uh, the, the companies that make these furnaces, they all say that, like, basically you can get up to 70% hydrogen with no changes. You can just keep operating your furnace as normal with up to 70% hydrogen, and so the first and easiest thing to do is you can just start enriching the amount of hydrogen that you put into existing furnaces. There are some technical challenges from once you, if you want to go from 70% to a hundred percent, And those have to do with things like, um, how much heat is generated in the reaction, and so keeping your, your furnace at the correct temperature, making sure that you get what's called full met…

AI assessment note: “There are some technical challenges from once you, if you want to go from 70% to a hundred percent”

Q about this in comparison to maritime decarbonization, where you have, like, We have Maersk clearly publicly making a, a bet, not entirely unhedged, but like making a bet on methanol as the next fuel source for maritime. They're ordering a bunch of methanol-ready ships and investing in the methanol supply chain and so on. Is there an equivalent to that in the steel world yet, or is it still TBD?

A So there are, there are, I would say, well, actually, until recently, I would have said there are four. Now maybe we can claim that there are six, kind of, Serious, large-scale hydrogen DRI projects that are underdeveloped development,, underdevelopment development around the world. There's two in Sweden, two in Germany, and two in the U.S. The two in the U.S. are the new entrants on the list, um, who both of them made their debut a few months ago when the Department of Energy announced that each of them was going to be getting a grant from the taxpayer of five hundred million dollars. So, the two in Sweden are often thought of as the most advanced. The Swedes have a very favorable situation here where they have, um, they have a lot of undeveloped renewable electricity resources, cheap electricity. They also have the highest grade ore in the world. Um, the Swedish government owns the, uh, LKAB, which is their iron ore mining company, and it's just like, it is the queen of the ores. Um, and so, they're very, very well set up for, um, hydrogen DRI. Then, um, the Germans, it's two companies, Tusenkrupp and Salzgitter, and both of them, I think, for, from the German perspective, um, you know, they, they sort of, they, they see the writing on the wall. Um, the European emissions trading system is not necessarily biting hard at their bottom line today, but it's, it, it bites more eve…

AI assessment note: “there are six, kind of, Serious, large-scale hydrogen DRI projects”

Q like 90% of new steel production. The rest, mostly, is the DRI process, right? And people talk about that a lot in the context of decarbonization, which we'll get to a bit later, because hydrogen in a DRI process is one of the pathways. But I think it's worth starting by appreciating that, that DRI represents a pretty small portion today of, of new steel production, but what is DRI?

A Yeah, so DRI stands for direct reduced iron, and so, as I said, more than 90% of the iron making that happens today happens with the blast furnace in that coal-based process. So, but DRI, it's less than 10% of current iron making, but we started this by, this, this conversation by saying we're making two billion tons a year of this stuff, so even a small portion of the global steel and iron industry is, like, A big industry and a fully commercial technology that's used at dozens of sites around the world. And so, the way the DRI works is that, um, instead of using a blast furnace, there's a different kind of furnace that's usually called a shaft furnace. And similarly, what you're doing is that you are putting your, uh, iron ore in the top, and then putting Fuel that can do that chemical reaction that strips off the oxygen atoms from the iron ore in the bottom and having the two kind of move past each other and react with one another, but the DRI process is designed to use a gaseous fuel instead of a solid fuel, so almost all of the DRI that's done in the world today is done with, uh, methane, but sometimes it's done with hydrogen that is Made from coal or other dirty sources. Um, and in theory, you could do it with hydrogen from clean sources, which, as you say, is a, is one of the, kind of, fastest moving decarbonization pathways that we have in the steel industry.

AI assessment note: “DRI stands for direct reduced iron... the way the DRI works is that”

Q So why not? Like, why is no real action happening on CCS and Steel?

A Um, so I think that, uh, my read on the situation is that the thing that people like about CCS is that it, in theory, allows you to keep doing fundamentally the thing that you're doing right now, but with lower environmental consequences. You know, you, you get to kind of keep using, uh, The same process, and ideally the same equipment, um, but instead of putting your trash in the atmosphere, you capture it all, and you stick it underground. Um, that's like, that's the conceptual appeal. The problem is that when you start looking at the details, it's actually really, really hard to do that at a steel mill, because if you look at a steel mill, typically what you find is that there are a few things that That have really, really large amounts of CO₂ kind of coming out of one pipe. Your blast furnace, your basic oxygen furnace, things like that. Um, but those big CO₂ sources, those only add up to typically, like, you know, 60% of the CO₂ on site. And all of the rest of the CO₂ is coming out of, like, dozens of little, like, reheat burners and things in random places all over the site. And so, you could imagine doing a retrofit on a blast furnace and figuring out a way to do CCS on that, um, and these other large sources and having that, like, pencil out at a reasonable cost, but if you wanted to do, if you wanted to get high, get big reductions site-wide, then you have to start goi…

AI assessment note: “it's actually really, really hard to do that at a steel mill”

Q get to some of this as we talk about what the potential solutions are, but suffice it to say, uh, it is more complicated than we are making it out to be, but Most of the emissions comes, or perhaps depending on how you define upstream emissions and how much, how much you calculate that, a lot of emissions comes from just the production of these plastics. Is that right?

A Yeah, no, certainly the production piece, we expect that to be sort of the long, 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. Um, and so to kind of put a bow on this whole thing, when you look, if you look at just the production phase of, uh, plastics around the world, we are talking about, you know, something in the neighborhood of, um, uh, Nine hundred 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, you know, 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, um, There's no real sign of, like, saturation anywhere. It's just more and more and more, and so, uh, you know, current trajectory estimates are that, that, that 1.7 billion tons of CO two that we're emitting today, that might quadruple by 20 50 if something doesn't change.

AI assessment note: “certainly the production piece, we expect that to be sort of the... largest single item”

Q 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 feedstocks. What does that mean?

A Yeah, so like we were talking about before, you know, currently, basically all plastic, except for just a teeny tiny, there's a, you know, you occasionally will see like a biodegradable PLA fork, um, 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 the product, is, is converting your atoms, the atoms in the fossil fuel into the atoms in your product. So that's the energy side versus the feedstock side. And when we think about solutions, we have a set of solutions on the energy side, um, 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 feedstocks. This is like that, you know, that biodegradable plastic fork you might encounter. Um, that is a situation where they are using a clean, they're trying to use a clean feedstock In the form of biomass, but they are almost certainly still using dirty energy, um, or you can try and do both, and there are, you know, and different solutions apply themselves to either the energy side or the feedstock side.

AI assessment note: “So that's the energy side versus the feedstock side.”

Q Right, and we're going to talk about where those emissions come from and how to mitigate them, but auto-recycling, before we move on from that, what percentage of steel is recycled? Like, I know the percentage of new steel that has been recycled, but how heavily recycled is end-of-life steel, I guess, is the question.

A Steel is actually the most recycled material of all, full stop. It's really, really easy to recycle. It recycles beautifully, and it's also- In addition to being, you know, you can melt it down and you can make new steel products out of it very easily. It also, it's very easy to separate from other materials because it's magnetic. So if you have, like, a bunch of mixed metals, you can just put a big magnet next to them and pull the steel out. In places where we have good statistics, which tend to be higher income countries, we usually find something like 85% of end-of-life steel Is collected and recycled. That's probably pretty close to a practical limit. Uh, we might be able to push that up to 90%, but you're never going to get all of the steel. Some of it is ruined, some of it is, like, embedded in concrete that's at the bottom of the ocean. Like, there's always going to be some that you don't get, and so we do a pretty good job.

AI assessment note: “we usually find something like 85% of end-of-life steel Is collected and recycled.”

Q 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, 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?

A 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? Right. Um, And I think a lot of people have that response to the chemical industry. They don't have a, a good mental image of what is included. The short version. Is that what's included is all of the stuff of the, like all the physical stuff in our economy, except for natural materials like wood, metals, and, ah, 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 100,000 or more other products.

AI assessment note: “The biggest pieces... are All the different kinds of plastics, fertilizers, and then”

Q about the feedstock side. And you mentioned the sort of bio, biodegradable fork, uh, as an example, but let's, let's broaden it. You know, bio-based feedstocks is probably the one that's got the most attention. Bioplastics is a term people are probably familiar with. There have been a couple SPACs this year of bioplastic companies, so there's clearly stuff happening in that world. What does that actually look like? Practically.

A So I have to admit, I, there's a reason that I started with clean energy, because I see the, 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, um, and, 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 feed stocks. Um, but, so, the clean feed stocks are, we've got basically two big categories here. We can use, we can get our carbon from, uh, biomass, or we can get our carbon from CO₂. And so, on the biomass side, um, that is perfectly feasible, um, but the, as with everything related to biomass, the problem that you run into right away is, do, where do you, where are you going to get enough of it? So, and, uh, I think it's useful to put some numbers on this. So, currently, um, the chemical industry uses something like 30 exajoules of energy, of fossil energy, for feedstocks, just for feedstocks. Um, And the International Energy Agency estimates that the total amount of biomass available for use for energy everywhere on Earth is something like 55 exe-joules. Um, so if we wanted to replace all of it, we would need more than half of all of the biomas…

AI assessment note: “we've got basically two big categories here. We can use, we can get our carbon from, uh, biomass”

Q probably the thing that most people think about when they, when they think about plastics, uh, and also just reducing our overall demand so that we can bend that curve on the growth of plastics. So let's talk about those in it one by one. Um, what is the world of plastics recycling and reuse like today and how much opportunity do we really have to, to amp that up?

A Yeah, maybe we can start by just, like, I can 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. Um, and they are either in landfills or just, like, dispersed in the environment. They are plastic pollution. Um, Then your other two major options, which kind of, um, uh, a bit more than half of that remaining, about eight hundred million tons, we think has been incinerated, and then about six hundred million tons, so, um, maybe seven or eight percent of all the plastic that's been produced, um, has been recycled in some form. Uh, so, mostly what we do with plastic is we just dump it. And, um, Sometimes there's a, there's, there's sometimes a, there's a tendency on the part of, um, certain interested parties to consider that dumped plastic. You're like, well, you know, look, that's, it's not CO two in the atmosphere. That's carbon stored. And so even for example, like, you know, Shell, which has a large chemical subsidiary, they, in their, they do a big scenario exercise and they have a, 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 ge…

AI assessment note: “about six hundred million tons, so, um, maybe seven or eight percent... has been recycled”

Q 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, how much more expensive is it to produce bioplastic today than to produce plastic?

A Yeah, so the real driver here is around logistics. So, um, can you collect enough biomass in and transport it to your facility at a price that makes sense? Um, 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. Um, It's only gonna require, like, 1.2 tons of petroleum product. Um, 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, um, When people are, you know, ah, and so the question is, um, Like, these, these, these logistic barriers are, um, are fixed in some sense. Uh, even if you have the biomass, you still have to, you know, 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, um, 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 k…

AI assessment note: “to make one ton of these high-value chemicals... require between three and four tons”

Q whole world that is wild and fascinating and we'll come back to, but let's, let's focus in here on plastics. Um, 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?

A 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 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, um, so those are the precursors to those, and then, uh, methanol, which is a, a chemical that is, um, Uh, extremely widely used in a ton of different types of products, but by volume, most methanol goes into plastics as various types of additives. Um, methanol, fun fact, is also why you should not drink bathtub gin, um, because sometimes when you are making bathtub gin, moonshine, whatever you want to call it, you want ethanol, sometimes you get methanol, and it is poisonous.

AI assessment note: “We talk more about the precursor chemicals, which are where most of the energy”

Q 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.

A 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 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, um, but the actual, you know, the actual, uh, recycling itself is a lot of, like, mechanical power and low heat, which is just, you know, is, is like, Not, we already know how to do that pretty efficiently with electricity.

AI assessment note: “Yeah, and a lot of these, the questions about how do we do better recycling”