In the often-heated debate about climate change and the cutting of carbon dioxide emissions, it may take a cool-headed CEO, leading a company located in one of the coldest countries on Earth, to make a decisive impact.
After having spent most of his professional career in sunny California, Mr K-C Tran moved to Iceland a couple of years ago to become one of the founders of Carbon Recycling International (CRI).
This teams two Icelanders and two Americans who envisioned the same business model: to capture carbon dioxide from the flue stack emissions of industrial plants and to convert it into renewable methanol by using sustainable energy. And as the company name indicates, their ambitions for CRI are not limited to Iceland.
Of French-Vietnamese extraction, as he describes himself, Mr Tran is a firm believer in ‘walking the walk and talking the talk’. However, this is one of the rare occasions when Mr Tran has felt inclined to give an interview and to offer his own key insights into the success factors for a company that not only has cracked the chemical equation for recycling carbon dioxide into fuel but also has proved to be capable of putting research into practice, with its first commercial-scale plant with an annual capacity of 5 million litres scheduled to come on line shortly.
What is your professional background?
‘When I entered the energy sector as a young engineer, the first wave in environmental protection took place: to cut back acid rain. I worked on an innovation to produce coal with a low amount of sulphur in it so coal-fired plants would meet emission limits. All four founders of CRI have a background in the energy sector. Also, one is now the owner of a paper recycling company.’
Can you explain your outlook on renewable energy?
‘It is primarily dominated by biomass at the moment. However, the available amount of this material depends on the weather, the seasons, etc. You need water, sun and land. Not every country is rich in those resources. Like Iceland, we cannot plant corn or beets here so it’s very difficult to make ethanol. But we have abundant supplies of renewable energy.
If you look outside, you can see the steam over there from the geothermal power plant. The energy in that steam has been taken out, but it still contains gases with about 90% of carbon dioxide, so it is a very rich source that is currently untapped. It is also a stable source.
The price of carbon dioxide doesn’t change with the weather as biomass does. And no matter what we do, the end state of our industrial process, especially when it comes to combustion and transport, is carbon dioxide.’
(The CRI plant is built in conjunction with HS Orka’s 75 MW Svartsengi power station, located some 47 kilometres south west of Reykjavik.)
How has CRI developed since starting up in 2006?
‘First, we established the principles to turn carbon dioxide into fuel, filed patents and looked at the scalability of the process. Second, we worked on a design for the plant, what the standard size should be, the financial requirements, and how to make the product economically viable.
This whole process is like Rubik’s Cube. You have to look at it from many angles: capital and operational expenditure, logistics, fuel quality directives, incentives, and the acceptance of our fuel by oil companies and the public.
There are still lots of barriers because the transportation market and civilisation as a whole are based on fossil fuel. All the rules, laws, technologies – they are all integrated. So you need to move in a certain rhythm to get all the pieces together. It is like a lock, and we have to unlock it.’
Who is funding CRI?
‘More than 20 angel investors and two venture capital firms – Titan and Audur. We have had several rounds of funding that are getting progressively bigger. Of course, acquiring capital became more difficult during the crash, especially when it came down to building the plant.’
How about Landsbanki, one of the Icelandic banks that have gone bankrupt?
‘Landsbanki was actually an angel investor and we have a long history together, both in terms of banking as in investments. We have been transferred to the new Landsbanki, which is named the New Bank of Iceland. Potentially, this could become a large investor.’
Where do you produce methanol at present?
‘On the outskirts of Reykjavik, we have a small pilot plant with a capacity of 3000 litres per year. It runs on steam from the power plant, which is captured and brought in bottles to our plant. The hydrogen comes from a nearby Shell station where they have an electrolyser to make hydrogen. Earlier, Iceland was heading towards a hydrogen economy and this was part of a test project.’
When will the new plant open?
‘It will be ready this summer. Much to my sadness, this has been delayed for several months. The equipment is built in the United States where they have different standards to Europe, so additional testing took more time. Obtaining all the necessary permits slowed us down. During the winter, which lasts a long time here, construction is also more challenging.
Initially, production will start with 2 million litres (of annual capacity). This is going to expand to 5 million litres in the next phase, which will be finished by the end of 2012. At that capacity, the plant will capture approximately 4500 tonnes of carbon dioxide, which comes down to 10% of what this power plant is emitting in total.’
How do you turn carbon dioxide into fuel?
‘The steam from the power plant is quite clean. There are trace levels in it, such as hydrogen sulphide, but most of it can be removed. We use multiple techniques for this, both absorption and adsorption. More than 70% of the carbon dioxide is taken out. This carbon dioxide is in a low energy state so you need a reaction that is efficient to make renewable fuel. For this, we use a copper-based catalyst that we had to develop ourselves.
Until now, only carbon monoxide has been used to form syngas, hence catalysts are primarily designed for this gas. We have been testing various types to find the most selective one that has the highest efficiency and doesn’t create unwanted by-products such as methane.
After synthesising carbon dioxide with hydrogen, which we obtain from electrolysing water, you have crude methanol. This mixture of methanol and water has to be distilled: it is boiled at different temperatures to separate the water from the methanol.’
Of which innovation are you most proud?
‘That would be the syngas production. To interact directly with the emission, to bring it to the purity you need, in order to process it as syngas – and not just syngas, but carbon dioxide-rich syngas – that area is most critical. Once you get to this level, the process is well understood.’
How about hydrogen sulphide as a by-product?
‘The amount generated in this plant is fairly low and can be re-directed into the steam. At a larger plant, it can be solidified and used to flatten places, like roads. We can also make fertilizer out of it or use it as a feedstock for other chemicals.’
What has this first plant cost to construct?
‘I would prefer not to disclose this since it is sensitive information. But we are competitive with any other kind of renewable energy plant. The design of the plant has been made very carefully, as has how to manage it. It’s compact and can be built in modules. That is how we control costs.’
I read it was US$ 8 million?
‘It’s not far from that number but it is still not low enough.’
What about revenue?
‘With crude oil at US$ 55 per barrel, we are competitive. Our methanol is a supplement to gasoline and we are pricing it at that level. At present, we are preparing to sell our fuel to Iceland Oil and Securitas – the largest security company in Iceland – and they are performing fleet tests with a 3% blend, according to European Union regulations. This also correlates to our production volumes.
The gasoline consumption in Iceland is about 180 million litres annually. If you take 3% of this, it comes close to the 5 million litres that we are going to produce. So we need to be up and running before we can launch our fuel.’
How about deliveries to Green Energy and Harvest Energy?
‘We are finalising our agreement with Green Energy, but I cannot comment further at this stage. It is the largest renewable energy company in the United Kingdom. Clearly, we need to meet quality standards, to find a formula for the price that makes everybody happy, and to have a reliable delivery before we can bring our fuel into their supply line. All that needs to be worked out. This is very time-consuming, so we don’t do much with Harvest Energy at present.
Countries like the United Kingdom, but also Sweden, the Netherlands and Germany, are very proactive. Those are primarily the countries we are aiming at. Recently, we also joined the Methanol Institute in the United States, which has lots of companies as a partner that would be of interest to work with in the future.’
And how do you see the future?
‘Cars will be more adapted to different kinds of fuel that run on a higher percentage of renewable methanol or ethanol in combination with gasoline. So you can switch to different fuels, blends and also to electricity.
The next step for us will be a 10% blend. We also want to work with ethanol to make, for example, a blend of 7% methanol and 3% ethanol, or the other way around. At our pilot plant, trials are currently performed to see what type of biomass is most sustainable and costeffective.’
And in the near future?
‘We have just finished a feasibility study with Landsvirkjun for the construction of a 50-million-litre plant, in conjunction with the Krafla power plant located in the north of Iceland. Technically it is possible and now it comes down to the economics: how we can work together to create maximum benefit for each company.
With HS Orka, we have a memorandum of understanding for another 50-million-litre plant located at its power plant in the Eldvörp area.’
Some people were against a renewable methanol plant at Krafla since Alcoa needs energy for a new smelter. Is this still the case?
‘The Alcoa smelter requires enormous amounts of energy, more than 400 MW. Our plant needs 50 MW, so I think we will fit in. On a country scale, it could be more interesting to diversify, and not to look into one commodity such as aluminium.
That is the reason why we have small projects of 50 MW, so the value of energy can be distributed to many parts of the country. Our plant could be combined with a polysilicon plant or with a biotech plant such as ORF Genetics that is located down here.’
Is Century Aluminium still a partner of CRI?
‘We did look at working with Alcoa and Century Aluminium in an early stage. This industry is a major source of industrial emissions, but the carbon dioxide in it is very diluted – around 3%. So it is not a good place to start for us.
Very concentrated carbon dioxide can be found in the emissions of other industries, like power generation, ethanol production, paper-making and, of course, cement production where exhaust contains about 20% or above carbon dioxide.
As for renewable energy, countries with geothermal energy such as Canada or Hawaii would be a good fit, or countries with a lot of wind or biomass.’
(Recently, CRI signed a memorandum of understanding with Australian-based company Altona Energy for the construction of a renewable methanol plant – with an annual capacity of 100 million litres of renewable methanol – at the Arckaringa coal-to-liquid project. This project is a joint venture between Altona and CNOOC-NEIA, a subsidiary of Chinese oil major CNOOC.)
Some algae oil companies have shifted their focus from producing fuel to chemicals to make more money. Why isn’t CRI moving in this direction?
‘The impact of fuel is enormous. If our solution can help the world with fuels, that will be very worthwhile. Chemicals are big as well, but it is about passion, where you want to put your energy. Of course we need to combine the pragmatics with the passion and the energy behind it. We need to make a proper return on investments to our shareholders, but you also need to have some kind of soul in the machine, so to speak.’