Oil companies invest in low-carbon materials

Two major oil companies are backing low-carbon technologies for making products traditionally derived from fossil fuels. Occidental Petroleum and the startup Cemvita Factory are building a pilot plant to make ethylene from CO₂, while Shell is investing in LanzaJet, which is building a facility in Georgia to make jet fuel from ethanol.

Occidental’s Oxy Low Carbon Ventures arm invested in Houston-based Cemvita in 2019. The two companies conducted lab work on the technology, which uses a microorganism and light to convert CO₂ and water into ethylene. The microorganism is engineered with a gene that bananas employ to make ethylene in the ripening process.

Now the companies are scaling up to a 1 metric-ton-per-month pilot plant that will open in 2022. Oxy’s chemical business consumes ethylene to make polyvinyl chloride. Cemvita, founded in 2017, says it has identified more than 30 molecules that can be made from CO₂.

Meanwhile, Shell is investing in LanzaJet, joining investors such as Suncor Energy and Mitsui & Co., which put $15 million and $10 million, respectively, into LanzaJet last year.

LanzaJet’s parent, LanzaTech, developed the technology for converting ethanol into jet fuel with Pacific Northwest National Laboratory. LanzaJet plans to open a commercial-scale plant in Soperton, Georgia, by 2022.

LanzaTech’s core technology makes ethanol by fermenting carbon monoxide from industrial waste gases. The company opened a plant in China in 2018 and is building one in Belgium with the steel company ArcelorMittal. However, this technology won’t be employed at the Georgia facility.

Whereas LanzaTech has some commercial experience, Runeel Daliah, an analyst who covers hydrogen and carbon capture, utilization, and storage for the consulting firm Lux Research, estimates that it will take 6-8 years for Cemvita to validate its process and expand it to commercial scale.

Overall, Lux forecasts that CO₂ utilization will be a $70 billion per year business by 2030 and a $550 billion business by 2040.

Oil companies will need to invest now to have technologies ready by 2030, the target date for some of their first carbon reduction goals, Daliah says. “They will never be able to reach their carbon neutrality goals unless they have these technologies at scale,” he says.