From Waste to Value: How Carbon Dioxide Can Be Transformed into Modern Life’s Essential Products

The chemicals industry faces a dual challenge: removing fossil fuels as both the building block and fuel source of its products. This article explores the role of an emerging technology innovation — ‘CO₂ utilization’ — in decoupling the chemicals industry from fossil fuels.

We count on the chemicals industry to produce the products and services that form an integral part of our lives — from fuel in the planes and ships that transport goods around the world, to the materials used in buildings that house us, and the molecules in paints, packaging, and personal care products. The fossil fuel intensive chemical production process currently accounts for between four and six percent of global emissions, and with global demand for these products on the rise, chemicals production is expected to increase by as much as 46 percent by 2050. To meet our climate goals, it will be necessary to transition to cleaner production methods.

Carbon molecules are at the heart of the chemical industry’s products. They form the feedstocks needed for chemical manufacturing, and are sourced mainly from fossil fuels. Therefore, the industry must focus on “defossilization” and reducing emissions versus decarbonization.

One defossilization pathway is carbon utilization, a process in which carbon dioxide is captured from industrial or atmospheric sources to be reused as feedstock and converted into both durable and nondurable products. Although this process is energy intensive, it can help produce high value chemicals and fuels with a much lower carbon intensity compared to conventional fossil feedstock routes. By 2050, CO₂ utilization along with other solutions can represent an 89 percent reduction in the amount of carbon derived from fossil fuels used in chemicals. Chemicals accounted for 10 percent of commercial-scale carbon utilization projects announced in 2023, and has been growing in recent years. However, the climate impacts of all carbon utilization pathways are not the same and must be considered carefully in order to drive real emissions reductions.

The source of carbon dioxide and the way in which it is used together determine the true emissions reduction potential of various carbon utilization pathways

Carbon dioxide feedstock for utilization can originate from biogenic sources such as sustainably sourced biomass or captured from industrial processes using biomaterials such as paper and pulp manufacturing and ethanol production. It can also be captured from the atmosphere or ocean using carbon removal technologies such as direct air capture. It is important to evaluate the overall lifecycle emissions of the product to prioritize utilization pathways that result in net-negative emissions.

A report on carbon dioxide utilization published by the National Academies of Sciences, Engineering, and Medicine organized emissions reduction outcomes based on sources of carbon and the ways that carbon is ultimately utilized. It illustrates that biogenic CO₂ is among three carbon sources capable of achieving negative lifecycle emissions or net carbon removal. On the other hand, utilization of CO₂ from fossil fuel combustion in short-duration products (e.g. fuel that is combusted shortly after production) could result in net-positive emissions, or more emissions than just using the conventional fossil fuel product.

CO₂ utilization pathways for chemical manufacturing

CO₂ utilization is a promising new pathway for reducing emissions, and will need to be paired with other emissions reduction solutions such as fuel switching, electrification, alternate feedstocks, etc. to meet chemicals sector goals. Some examples of CO₂ utilization technologies are:

1. Electrochemical synthesis: Low emission sources of CO₂ and water are reacted together in electrolyzers powered by renewable electricity to make chemicals.
2. Thermochemical synthesis: This technology is commonly known as Fischer-Tropsch synthesis or Power-to-X where CO₂ and clean hydrogen are reacted together using high temperature heat and catalysts to make chemicals.
3. Biochemical synthesis: In this route, biomass or other carbon sources undergo microbial synthesis to manufacture chemicals.

Source: IDTechEx Research, 2022

Approaches for bringing down the cost of CO₂ utilization

Three approaches that can bridge the cost gap and help CO2 utilization scale:

#1: Improving process efficiency and energy efficiency

The efficiency of converting feedstocks into desired products (process efficiency and product selectivity) are among the most significant cost drivers for CO₂ utilization processes. Improving efficiency and selectivity is crucial to achieving cost parity with conventional chemical production methods. Low-emission thermochemical production relies on availability of clean hydrogen as a key feedstock, so thermochemical pathways are influenced by clean hydrogen prices, access to large quantities of hydrogen, and process selectivity.

#2: Improving product selectivity by researching and testing new catalysts

CO₂ utilization chemical reactions also produce a wide range of hydrocarbons, alcohols, and oxygenates which need to be separated to fully realize their individual market value. ​During a chemical reaction, the bonds between atoms are broken, rearranged, and rebuilt into new molecules. Catalysts make this process more efficient by lowering the activation energy, which is the energy barrier that must be scaled for a reaction to occur. The International Energy Agency (IEA) has estimated that catalyst-related process improvements could reduce the energy impact of the most carbon-intensive chemical products by between 20 to 40 percent. Additionally, coproducing easily separable products, such as a liquid and a gas, can avoid energy- and cost-intensive separation steps.​

#3: Securing access to large volumes of reliable, low-cost feedstock and electrons

In electrochemical ethylene production, electricity is the primary energy input, converting low-energy CO₂ molecules into high-energy products. Availability of low-cost renewable electricity, and large-scale volumes of carbon and hydrogen play a big role in the scalability of CO₂ utilization pathways.​ Cost-sharing between stakeholders for behind-the-meter electricity can unlock reliable energy supply. Scaling learning rates for electrolyzer technology can mitigate green hydrogen supply constraints.​ Moreover, synthetic and biomass feedstocks will see demand from other sectors (aviation, building materials), and prudent biomass use is necessary to avoid land use change impacts.​

The cost of CO₂ feedstock varies based on where it’s sourced from. CO₂ captured from industrial sources such as steel mills could cost $50/ton, whereas engineered removal of CO₂ from the atmosphere using direct air capture could cost as much as $250-600/ton. But the feedstock CO₂ price has a relatively small influence on overall CO₂ utilization cost. For example, increasing CO₂ feedstock price from $50/tCO₂ to $250/tCO₂ (representing a 400% increase) would only increase the cost of electrochemical ethylene production by 19%.

The path forward for CO₂ utilization in the chemicals sector

Suppliers, buyers, policymakers, financiers, and other stakeholders innovating on CO₂ utilization should consider factors related to the co-benefits and human health impact of these projects. Thoughtful policy design can help differentiate between the value of fossil and non-fossil CO₂ in the marketplace and incentivize sourcing of non-fossil CO₂ to maximize the benefits of CO₂ utilization for chemical production. Demand creation through voluntary mechanisms and supply incentives are crucial to activate a market for emissions-differentiated chemicals.

In the short term, the economic viability of CO₂ utilization-derived chemicals faces challenges due to higher production costs and the current economic structures that favor fossil-derived products. Policy support, carbon pricing, and incentives can make this technology competitive. Despite the higher initial costs, the long-term environmental benefits of deploying CO₂ utilization are significant. Reducing greenhouse gas emissions, decreasing dependency on fossil fuels, and contributing to climate change mitigation efforts represent critical trade-offs that may justify the higher costs in the context of global sustainability goals.