News Article

Wal van Lierop

March 3, 2021

Carbon Capture, Hydrogen, Fission or Fusion: Which Can Take Us To Net-Zero By 2050?

Previously published on 

More than 110 countries and countless companies have pledged to reach net-zero emissions by 2050, but can they get there with existing technologies? Probably not.

The world is counting on electrification to replace fossil fuels, which means that global power demand could double between 2020 and 2050 according to McKinsey. The grid is nowhere near prepared. Wind, solar and battery technology have already achieved a lot, but they are not baseload power solutions. Advancements in energy efficiency, biomass, solar heat and geothermal are also encouraging, but altogether, existing technologies can neutralize only 50% to 60% of carbon emissions, at best. No wonder Bill Gates believes that new “breakthrough technologies” are essential for reaching net-zero emissions, as he argues in his new book.

But the net-zero equation is complex. The transition to battery-powered electric vehicles, for instance, will cause 10 to 14x increases in demand for nickel, aluminum, phosphorous, iron and copper by 2030, Bloomberg estimates. As reserves become depleted and increasingly difficult to mine, extraction could require even more consumption of diesel fuel and fresh water.

In the hard-to-abate industries that require heat and steam power, the situation is even more complicated. Cement, chemicals and metals, for example, still depend on power plants fired by coal and natural gas. Under the Paris Agreement, industrial clusters like the Port of Rotterdam, the German Ruhr area and others around the world must retire coal-fired plants by the early 2030s. But what is the alternative? What technologies can neutralize the 40% to 50% of emissions that are hard to abate, and do so at acceptable cost? Net-zero emissions by 2050 is a pipedream unless we answer that inconvenient question.

Let’s consider the four options that have garnered the most attention:

  1. “Point-of-Source” Carbon Capture for Coal-Fired Plants

Summary: Impact – Limited; Roll-out Time – 2021-5; Cost – Affordable; Feasibility – Doable

A lot of good news has emerged from the carbon capture, utilization and storage (CCUS) space. Today, it is possible to retrofit coal-fired power plants with nano-filtration systems that capture about 90% of carbon emitted. These “point-of-source” capture solutions will be critical over the next 20 years, before more impactful net-zero technologies scale. Ideally, the captured carbon will be recycled into other industrial processes, like cement making.

Most carbon emissions, however, need to be stored permanently, and so far, there is no cost-effective way to do that at scale. Carbon pricing may change that by unlocking a CCUS marketplace that becomes attractive for investments—similar to how subsidies in solar unlocked investment opportunities a decade ago. Still, point-of-source carbon capture probably will not be a permanent solution, and the technology should not be used to excuse the ongoing extraction of coal and building of more coal-fired plants.

Direct air carbon capture (DAC)—which can take place anywhere—will be important too. But before it could work at scale, the cost would need to fall dramatically, and there would need to be steep increases in carbon taxes. Hence, DAC likely will not play a significant role before 2030.

  1. Hydrogen

Summary: Impact – Moderate; Roll-out Time – 2021-35; Cost – Expensive; Feasibility – Moderate

There is renewed interest in hydrogen now that many countries and companies have made it a pillar of their net-zero strategies. Unfortunately, hydrogen has disadvantages that limit its impact on emissions.

Hydrogen is a storage solution rather than a source of energy, meaning it is by default more expensive than the solar or wind power used to produce it. Energy consultant Michael Liebreich, founder and former Chairman of Bloomberg New Energy Finance, notes that for hydrogen to be stored, it must be compressed to 700 times atmospheric pressure and chilled to -253° C. Proper storage is critical because the “Houdini” of gases, as hydrogen is known, leaks easily and is highly flammable. Not a good combination. Once asked for his perspective on hydrogen fuel cells, Elon Musk put it succinctly: “I just think that they’re extremely silly.” Take that with a grain of salt coming from the CEO of a battery-powered electric vehicle company.

Today, most hydrogen is produced through steam-methane reforming, a process that uses natural gas as feedstock and releases carbon emissions (which can be captured). Hydrogen can be “green” if the producer electrolyzes water using renewable energy for power, but this is an inefficient and expensive process with exuberant space requirements. As an example, for green hydrogen to play a meaningful role in the electrification of the Netherlands, the entire North Sea would need to be filled with wind turbines, and even that wouldn’t provide enough clean power. Imports and heavy subsidies would be necessary.

Despite its drawbacks, hydrogen may play a role in the energy transition—just not the leading role many oil and gas companies have marketed to the public. Jade Cove, a venture firm, argues that “Hydrogen is Big Oil’s Last Grand Scam” – yet another disinformation campaign to make their pipeline infrastructure, LNG terminals and natural gas look valuable even as the world abandons hydrocarbons.

  1. Nuclear Fission

Summary: Impact – High; Roll-out Time – 2028 & beyond; Cost – Expensive; Feasibility – PR nightmare

Fission could contribute significantly to the energy transition, but the global public has turned against it, as it involves splitting atoms to start a potentially hazardous chain reaction. France, which derives about 70% of its electricity through low-carbon nuclear power plants, is increasingly alone and actually cutting its nuclear capacity. The radioactive output can pollute ecosystems or be weaponized into nuclear arms. The recent meltdown at Fukushima illustrated that fission reactions can still run out of control, even with 21st century technology.

Small modular reactor (SMR) technology from companies like NuScale do make fission safer, cheaper and faster to bring online. Even so, NuScale and its peers now fight an uphill battle against a skeptical public and its regulators.

  1. Fusion Energy

Summary: Impact – High; Roll-out Time – 2028 & beyond; Cost – Moderate; Feasibility – Promising

Nuclear fusion is the holy grail of electrification. It could provide abundant, cheap, clean and safe baseload power. Rather than split atoms as in a fission reactor, a fusion reactor collides hydrogen isotopes together to produce helium and heat. The same process occurs in stars. One kilogram of fusion fuel, derived from seawater, is equivalent to 55,000 barrels of oil and is enough to heat 10,000 homes for one year. And unlike fission, fusion produces trace amounts of radioactive material that cannot be weaponized.

Proven in the lab, fusion has recently entered the scale-up phase. The publicly funded international experiment ITER is building its first reactor, which experts believe will generate net positive energy by the late 2030s to mid-2040s. Meanwhile, more than 25 private companies are racing to complete demo plants by 2025 and the first commercial plants by 2030 or sooner [In full disclosure, I am investor in one of these companies]. Raising enough funds from investors, once the main roadblock for fusion, is becoming less of an issue.

Fusion offers significant advantages over the alternatives discussed. It provides consistent baseload energy sufficient to replace coal-fired plants for heavy industry, mega-cities and electric mobility. Unlike solar and wind, it is not contingent on geography, and it blows hydrogen out of the water in terms of net energy output and cost.

Of note, fusion reactors can be relatively small (250MW) or big through modular scaling. This makes investments approvals more feasible than for traditionally big fission plants. Plus, fusion’s smaller base sizes could make the technology relevant for powering marine vessels or even rockets to Mars.

If fusion comes online by 2030, net-zero by 2050 is achievable. It’s beyond time that the International Energy Agency (IEA), Bloomberg, etc., add fusion to their annual energy predictions and start telling decision-makers that it is a viable alternative to coal-fired power plants.

Nothing is Off the Table, But…

Fusion energy is not a panacea that will make other clean technologies irrelevant. Solar, wind, geothermal, hydropower, solar heat, fission and hydrogen all have roles to play in the energy mix of the future. The priority, however, is to prepare for the electrification of everything, and fusion is the missing link in achieving a net-zero energy mix by 2050. ESG and impact investors please take note: net-zero by 2050 is not only possible but likely if the world backs fusion. Let’s stop dragging our heels.


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