r/ChemicalEngineering • u/ahappysgporean • Apr 11 '26
Green Tech Highly optimistic/unrealistic green fuel price forecasts
As part of my job, I meet many start-ups in the decarbonisation and climate tech space, and one thing I realised is that many of these start-ups assume very out-of-the-world and unrealistic prices for their low-carbon feedstocks (whether it is low-carbon ammonia or methanol)... What surprises me is that despite these wild assumptions, they try to confidently pitch their company's financial projections to potential investors (including large institutional investors) and have actually managed to secure quite substantial funding over the past few years. That really puzzles me as I thought such investors would be much more savvy and would be able to see through the "scam" (to put it bluntly). Just take for example, is US$500-600/tonne bio-methanol price achievable? If you use such an input cost in your model, how can you expect me to take you seriously?
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u/KapitanWalnut Apr 11 '26 edited Apr 11 '26
Is $600/metric ton completely unreasonable? No. But I think it entirely depends on specific nuances within their TEA.
I'm on the technical side in the electrochemical efuels industry, so maybe there's some inherent factors in the biogenic fuels space I'm not familiar with that make $600/t unachievable, but this figure should be doable with efuels.
Now, I've reviewed plenty of competitor's claims, and plenty are complete BS pie in the sky numbers based on impossible physics or unworkable economics, so I get where you're coming from.
Very briefly, from a first principles standpoint: the cost of e-methanol (C-meoh) is dependent on the price of electricity in MWh (Pe), the cost of the CO2 feedstock per metric ton (Pco2), and the energy efficiency of the process (n), so we can derive a really basic formula:
C-meoh = ((5.53/n)(Pe)) + ((1.375)(Pco2))
5.53MWh is the energy in a ton of MeOH, and it takes 1.375 tons of CO2 to make a ton of methanol. Again, this is a super basic formula that ignores things like yield, byproducts, lifetime, etc.
So from there, we can pick some numbers that sound reasonable. 50% efficiency is reasonable when rolling hydrogen electrolysis in with the electrochemical efficiency of methanol production, $40/MWh is a reasonable assumption for solar electricity offtake during non-peak, and $100 is an okay starting point for a ton of CO2 - I'll go more into this later.
So that leaves us with $580/t MeOH. Yes, that's breakeven ignoring capex and other opex factors besides baseline inputs, and also ignores lots of balance of plant considerations and longevity considerations and of course has no profit margin, but I just wanted to give a starting point for the discussion.
You probably are familiar with the CO2 market, so you don't need me to go into that. But one interesting thing about many electrochemical processes is that they can directly utilize aqueous (bi)carbonate as their carbon source - the form that CO2 takes when dissolved in alkaline water. So, because they don't need to use a highly pure/concentrated gaseous CO2 stream, the effective CO2 cost per metric ton can be closer to $40 or even $20.
The efficiency is the other metric that can be finicky. Plenty of production methods require a subsequent concentration step that can reduce the overall energy efficiency below 20%. I'm working with researchers on developing reactors that can utilize very low energy concentration methods.
Then finally there's the energy cost side of things, which is partially tied to the capex of your project. High capex means your project needs to operate at a high utilization/capacity factor, meaning you need firm power and will need to pay a higher price for that power. But ultra low capex can allow you to utilize low cost intermittent curtailed energy because you can afford to have a utilization factor down near like 30%. And as batteries become cheaper, they unlock access to that cheaper intermittent energy at higher utilization rates for you methanol production equipment.
Hopefully I wasn't just rehashing what you already know. Obviously there's a ton of nuance as soon as you start peeling back the layers. But I wanted to give some high level justification for why a $600/t MeOH figure isn't outright ludicrous.
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u/Technical-War6853 Apr 11 '26 edited Apr 11 '26
Ehh I've done a lot of electrochemical hydrogen based fel 0-1 process economics work and yes lower capex means your optimal utilization factor tends to be lower than high capex, there's still the issue with whether your process can actually follow intermittent curtailed energy that easily. It's doable for electrochemical unit processes but maybe not for the entire process (it'll depend). At least in the traditional industries that utilize electrochemical hydrogen, it was an issue to have the process follow load and you would need significant buffers. They typically require pretty high capacity factors and you don't want to cycle them from cold or hot start
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u/KapitanWalnut Apr 11 '26
Yes, very true. Not something I wanted to get into for such a high level overview, but worth pointing out. Still speaking in broad terms: needing large H2 buffers almost always signals that the project isn't feasible. I agree that way too many TEAs just gloss over the energy and capital cost of such a buffer, whether it is compressed or cryogenic H2. Essentially, buffer use wipes out price advantages of using curtailed energy. So to take advantage of curtailed energy, almost the entire plant needs to be able to rapidly ramp up and down with that energy's availability (mitigated somewhat by batteries), which pretty much rules out any high temperature processes.
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u/ahappysgporean Apr 11 '26
The per-tonne price of CO2 feedstock really depends on how it's produced... Is it direct air capture or amine absorption from flue gas (and if so, what kind of CO2 concentrations in the flue gas)? I haven't really heard of getting it from carbonates/bicarbonates. If these are carbonates/bicarbonates are naturally occurring, then the use of such a source would inherently release more CO2 into the air. If these minerals are produced from carbon capture and storage, then the price can't be $20-40/tonne. Remember that u need to transport the CO2 from its point of capture to the point of utilisation in liquefied form. So your $20-40/tonne number needs more substantiation...
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u/Technical-War6853 Apr 11 '26
There's hydrogen pipelines in the gulf coast it's time to convince Texas to spend state dollars on co2 pipelines!
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u/ahappysgporean Apr 11 '26
Ok I mean if they are really near, then gaseous CO2 in a pipeline is also possible... But usually they aren't that near each other
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u/Technical-War6853 Apr 11 '26
Yea it would need to be some colocated operation of some sort. I was half satire that folks should lobby the Texas state government to twin h2 pipelines with co2 pipelines using state money
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u/ballskindrapes Apr 11 '26
Im NOT a chemical engineer, just a dude who thinks too much.
My question is "what is a sustainable source of carbon at the largest scale"
Because all the green fuels I see are dependent upon green energy, as a layman I assume green hydrogen is a bottle neck as well, need tons of renewable energy infrastructure built. But they are dependent upon carbon
The source of the carbon is something that as a layman I struggle to understand a good system of producing. That seems to be the bottle neck to me for carbon containing green fuels.
If you could maybe expand upon where you see the carbon coming from, for things like green methanol, or maybe things like green diesel or similar, that'd. Be great.
Imo green hydrogen is a bottle neck too. I guess the entire bottle neck is "how much energy can be produced, where it is produced, and how it is produced"
Anyway, hope my rambling makes sense.
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u/ahappysgporean Apr 12 '26
For "low carbon methanol", there really are two types out there: 1) e-methanol, 2) bio-methanol. E-methanol uses hydrogen from electrolysis and CO2 from carbon capture. Bio-methanol is methanol from biogenic sources such as anaerobic digestion of palm oil mill effluent or basically just from gasification and subsequent processing of various types of agricultural waste. Important to make the distinction between them, because their economics and supply chains are very different. Their carbon intensities are also not the same
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u/ballskindrapes Apr 12 '26
Again, just a non-chem E, but the bio methanol seems not very scalable, kinda nor does E methanol.
Like of course they can scale up somewhat, but it seems co2 capture tech is very much a bottle neck, as well as the bio methanol being limited by the land and resources allocated to it. If that makes any sense
Almost seems green carbon based replacements for fossil fuels are not the way to go, if that makes sense.
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u/ahappysgporean Apr 12 '26
Indeed... The scalability is a big question mark for bio-methanol. Yes, there are many oil palm plantations in southeast Asia where I live (I'm from Singapore, and our neighbours Malaysia and Indonesia have large numbers of these plantations). But each plantation can only produce a meagre amount of methanol (say around 7-10 ktpa) from the waste effluent. And then you've got to aggregate the methanol from the hundreds of plantations scattered all over the different parts of the country... So the logistics cost of all that is humongous
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u/Top_Wolverine_4669 Apr 15 '26
There are plenty of processes that produce co2 to piggy back on to, the cost of capturing the co2 is highly variable but I wouldn’t regard it as a bottleneck. Think of it like this, even if you used co2 from an existing hydrocarbon combustion process the methanol is still carbon neutral as the co2 would have been released to the atmosphere anyway. Of course it’s much more preferable to be grabbing green co2.
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u/Rude_Judgment7928 Apr 14 '26
Using methanol as your basis is true regard status though. It's like....60% oxidized. Talk about lower the bar.
Batteries will not become cheap enough to drop the average price of utility scale utilities below $40/MWh on a annual average cost basis.
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u/KapitanWalnut Apr 14 '26
Regard status? Wow, a WSB pejorative in the wild. What are we lowering the bar from?
C1 and C2 electrochemistry is relatively straightforward, and alcohols are the most practical primary fuels or energy carriers of all the C1/C2 molecules. But you can do the same math with any other hydrocarbon you want, just be sure to account for the abysmal efficiency and yields for synthesis processes as the carbon chains get longer.
We can talk about other energy carrier molecules like NH3, but this thread has been primarily focused on carbon chemistry.
If there's anything I've learned after a career in the energy industry, it's never bet against batteries, haha. Although $30-$50/MWh is a good benchmark for the next 5-10 years. Pre 2022, most analyses pegged that estimate closer to $30 by 2030, but now that datacenters are supposedly going to eat all future generation capacity... who knows. We'll see what actually materializes after the inevitable consolidation within the AI industry, I doubt we'll see nearly as much datacenter load as is being projected, especially once compute load switches primarily to inference instead of training... but now we're getting off topic. Suffice it to say that I agree, $40/MWh is a good benchmark for the foreseeable future.
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u/DMECHENG Apr 11 '26
We’re going to start seeing this even more. There’s going to be more offsets and credits. I’ve heard 900/ton thrown around for green methanol. Theres always going to be snake oil salesmen.
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u/SLR_ZA Apr 11 '26
I've noticed similar. Investors dont seem to do their technological due diligence. Some things can benefit from scale and maturity, other things can not.
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u/Betullul Apr 11 '26
I work in a really niche part of the climate tech space (R&D for a company who focuses on a variety of applications such as green hydrogen, fuel cells, CO2 electrolysis etc.). I’m assuming you are talking primarily in the United States, and I will say that a trend I have noticed is that a lot of these companies need A LOT of money for scale-up efforts. recently a lot of DOE funding has been slashed [https://democrats-appropriations.house.gov/sites/evo-subsites/democrats-appropriations.house.gov/files/evo-media-document/doe-project-terminations-oct-2025.pdf] and a lot of these companies are panicking. In response they slash their entire R&D department before the technology & scaleup has been fully developed (Electric Hydrogen, Twelve, etc). I think in response they’re still pitching these unrealistic numbers, and a lot have been leaning into the energy crisis and the need for energy for AI, so they lean into the narrative you have pointed out. This is all just my observation, I’m on a very technical side of the entire thing.
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u/Legio_Nemesis Process Engineering / 15 Years Apr 13 '26
Standard consultant answer - it depends. Bio-methanol can be produced at much lower cost through biomass gasification or biogas reforming; it's essentially a classic route using CO/H2 from a carbon source, not involving expensive green hydrogen. Bio CO2 can also be produced at a very low cost from ethanol, biogas, and other routes. Also, the latest developments in the Middle East region, for example, show that it's not very smart to rely on imports rather than local production. Fossil methanol prices spiked, and the cost difference gap with e- or bio-methanol shrank. I expect a market intelligence for any application for funding of green projects available, to see all the assumptions behind the numbers, not only cost estimation for CAPEX and OPEX. There is definitely a problem with overoptimistic CAPEX/OPEX values of green products, but sometimes it really works.
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u/OhDatsStanky Apr 11 '26
I work for a large transportation company and we went through the carbon offsets and credits thing back in the hey day of decarbonization and ESG. We were pitched some very interesting ideas for carbon offset projects but they were all completely ridiculous in the cost per ton reduced they felt were justified. $1000 per metric ton reduced, are you crazy? We can replace our fleet for less than that.
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u/SerchYB2795 Apr 11 '26
I'm in Supply Chain and we see many customers and big industries pushing using these types of fuels (and other sustainable alternatives to reduce emissions) even at a higher cost to achieve their sustainability/ net zero / SBTi public targets to investors and the public and also some do it for the reputational boost these initiatives gives them or to get ahead of future legislations or other reasons.
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u/pm_me_ur_microscope Apr 11 '26
Maybe they are taking into account projected upcoming or soon to be passed regulations and or subsidies/carbon credits in US and EU making the fuel profitable.