The net-zero compatibility test: a simple guide for GHG accounting of CO2 use

Assessing the climate impact of products using CO2 can be a complex task. Their lifecycle assessments include many direct and indirect emission sources which vary from one case to another. However, despite the need to assess the impact of these products on a case by case basis, their carbon footprint ultimately depends on the origin of the basic elements they are made from. This briefing outlines the basic greenhouse gas accounting principles for the assessment of the climate impact of synthetic hydrocarbon fuels and chemicals.

Synthetic fuels and chemicals produced with CO2 are a manufactured copy of products made with fossil fuels today. Products manufactured with CO2 can mimic the chemical composition of products that the petrochemical and chemical industry uses today (e.g., ethylene for plastics production or methane to be used as a fuel). Just as the fossil fuel products they are replacing, these products are made from two basic ‘ingredients’: hydrogen (produced with renewable electricity) and carbon (in the form of CO2). The source of the electricity and the source of carbon are the two key metrics needed to assess the climate impact of CO2 utilisation.

Unlike other electricity-derived fuels and products such as hydrogen or ammonia, synthetic fuels and chemicals require a source of carbon (in the form of CO2 captured from the atmosphere or from an industrial point source). This captured carbon will be released as CO2 to the atmosphere upon combustion of the e-fuel or the disposal of a product (e.g., plastics). This briefing focuses on the differences between using various sources of carbon and outlines the importance of using an atmospheric carbon source to make the product or fuel carbon neutral.

Depending on the carbon source used for the fuel, chemical or product produced, their final use and disposal could cause an 1) additional GHG emission to the atmosphere, 2) not affect the climate or 3) remove carbon from the atmosphere:

  1. Additional GHG emission to the atmosphere

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  1. No impact on the climate

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  1. Removal of carbon from the atmosphere

Capture

 

Given the uncertainty regarding their climate impact, European policies need to regulate and monitor the CO2 source in synthetic hydrocarbon fuels, chemicals and products. This can be addressed in several policy areas:

The EU Emissions Trading System

■ The ETS must require allowances to be surrendered for all emissions, including greenhouse gases that are not directly released into the atmosphere. The only means to circumvent the surrender of allowances must be that the CO2 is permanently stored in a way that it does not enter the atmosphere. This can be met though compliance with the Directive 2009/31/EC or when the CO2 is permanently chemically bound into a product that will never release CO2 to the atmosphere on use or disposal.

■ In the case of reusing CO2 from an ETS installation, where the use of that CO2 does not result in permanent storage, the ETS installation must continue to surrender allowances for the captured emissions. Any emissions reduction resulting from the re-use of the CO2, if any, can thus be allocated to the CO2 user (e. g. synthetic fuel producer).

The Renewable Energy Directive

■ To ensure that atmospheric CO2 use is incentivised and the emission of fossil CO2 is counted in the system, the Renewable Energy Directive Delegated Act on GHG methodology of Renewable Fuels of Non-Biological origin (in this paper referred to as e-fuels and synthetic fuels) enforce the differentiation between atmospheric and fossil CO2.

■ To safeguard robust emissions accounting, the RED should also ensure that credit is not given for CO2 which has already received an emission reduction credit under other provisions of the law. To avoid double counting, all of the relevant climate policies must be harmonised.

ReFuelEU Initiative

■ To ensure policy coherence, the ReFuelEU Initiative should use the same GHG calculation methodology defined under the Renewable Energy Directive delegated act and differentiate between fossil and atmospheric carbon.

■ To ensure that sustainable aviation fuels reduce emissions by 80%, the Initiative should heavily favour the use of fuels produced with atmospheric carbon sources.

Sustainable Product Initiative and the Circular Economy Action Plan

■ For products which are manufactured with synthetic hydrocarbons, such as plastics, the origin of the carbon should be disclosed. If fossil carbon is used in its production and the product is disposed, it’s final disposal will result in an emission of that carbon to the atmosphere. Therefore, it’s important to inform the stakeholders handling the product at its end-of-life.

 

Find the report here:

The Net-Zero Compatibility Test (pdf)