Season 3, Post 31: Take-off for greener travel?
Many of us, your author included, have missed flying. It’s now increasingly possible again, albeit with the hassle of multiple entry forms, tests and queues (depending on the location). While travel should get easier as vaccination levels increase, aeroplanes do generate large carbon footprints. Globally, the aviation industry produces 2% of all human-induced carbon dioxide emissions.
Good news them for both the planet and travellers that guilt-free flying may become a distinct possibility. Direct Air Capture is an emerging technology that can help bring emissions to zero and also remove carbon from the atmosphere. The process works by capturing carbon dioxide from the air and then combining it with hydrogen to create what is becoming known as ‘synthetic fuel.’ The technology has been pioneered by the privately-owned Canadian firm, Carbon Engineering, which first demonstrated its potential in 2015. The company’s initial batch of synthetic fuel was produced in 2017.
Carbon Engineering is jointly constructing several facilities which will help capture carbon from the air. One facility in the Permian Basin (said to be the world’s largest) intends to capture 1m tonnes of CO2 annually, while another (planned for Scotland) aims to remove between 500,000 and 1m tonnes each year. There is a distinct likelihood that some of this removed CO2 may end up being repurposed for jet fuel. Importantly, the UK government is taking a lead in this respect. A feasibility study into net zero jet fuel usage will be published early next year. Carbon Engineering is working with a UK partner, Lanza Tech in this respect and both British Airways and Virgin Atlantic are involved.
The vision of imminent net-zero air travel may still be pie in the sky (no pun intended), but developments in this respect underline the importance of hydrogen in helping to make the world greener. We first made the case for hydrogen in our 2020 thematic work. Forget about air travel for a moment and consider that journeys by road account for 74% of all transport emissions (versus just 12% from aviation). Green hydrogen discussions are becoming increasingly relevant as costs fall. In the future, we expect fuel-cell electric vehicles to complement battery electric vehicles. The biggest challenge, in our view, remains not just commercialising novel technologies, but also scaling them with appropriate supporting infrastructure. There are no shortages of businesses in the field, even if it remains unclear who will be tomorrow’s clear winners.
12 August 2021
The above does not constitute investment advice and is the sole opinion of the author at the time of publication. Past performance is no guide to future performance and the value of investments and income from them can fall as well as rise.
Alex Gunz, Fund Manager
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