Cost Comparison Between Carbon Neutral Fuel and Alternative Low Carbon Energy Options

Abstract

In efforts to reduce carbon dioxide emissions from fossil fuel combustion, public funding for wind and solar alternative energy resources has enabled their evolution toward cost competitiveness with coal and natural gas options for electric power generation. To address combustion emissions from the transportation sector, the European Commission has committed to electrifying transportation, but this solution will not address transportation by air or by sea. Nor does it address continued production of petrochemical products that only require a small fraction of produced hydrocarbons. This study investigates the cost competitiveness of an alternative strategy to market crude oil priced to cover the cost of removing an amount of carbon dioxide equal to that produced through combustion of transportation fuels to be refined from it. This strategy enables continued use of fossil fuel for all transportation modes. The cost comparison considers life cycle carbon dioxide emissions and does not address other externalities related to materials or batteries employed in renewable energy options. Rather, we report known costs for carbon capture, use, and storage (CCUS) with consideration of both nature and technology based carbon capture with focus mainly on geologic storage and utilization. Because road and rail transportation can be electrified, of particular interest is the levelized cost comparison between carbon neutral fuel and electrified transportation, the latter including infrastructure implementation costs. The resulting cost comparison informs investment decisions and justifies marketing fossil fuels on a carbon neutral basis.