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Alex Kimani

Alex Kimani

Alex Kimani is a veteran finance writer, investor, engineer and researcher for Safehaven.com. 

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‘Nuclear Diesel’ Could Become A Gamechanger In Energy Markets

  • According to the IEA, synthetic fuels are vital in the decarbonization of transport and industry by 2050.
  • Synthetic fuels can be blended in fossil fuels or can completely replace them in existing ships, airplanes or industrial technologies.
  • Nuclear power could help to bring down the production costs of synthetic fuels.
Diesel

Back in February, a  proposal by the EU to completely ban cars that run on fossil fuels by 2035 faced heavy opposition led by the bloc’s largest economy, Germany, as well as Poland and Italy. Although a strong clean energy player itself, Germany is also Europe’s ICE superpower, and feared that such a dramatic move could sound a death knell for its pivotal industry. 

The EU still managed to approve the proposal, but with a key concession: the sale of internal combustion vehicles would be allowed to continue after the 2035 ban only if they run on e-fuels. According to the IEA, synthetic fuels are vital in the decarbonization of transport and industry by 2050 especially in hard-to-electrify sectors such as aviation.

Not to be confused with biofuels, or fuels produced from crops like sugar cane, corn, algae, soybeans, e-fuels or synthetic fuels are liquid fuels produced from natural gas, coal, peat, and oil shale, and include synthetic diesel, synthetic kerosene and e-methanol. Carbon-neutral synthetic fuels are manufactured in two ways. 

The first method uses captured carbon dioxide or carbon monoxide from the atmosphere or an industrial process such as steelmaking, and combines it with hydrogen obtained from water via electrolysis to make efuels in a process known as Fischer–Tropsch. The second category encompasses synthetic biofuels created from biomass that is gasified before being catalyzed with hydrogen using chemical means or through thermal processes.

Synthetic fuels’ biggest draw is that unlike fossil fuels, the C02 they release into the atmosphere when burned in an engine is virtually equal to the amount taken out of the atmosphere to produce the fuel thus making them CO2-neutral overall. To sweeten the deal, ICE vehicles do not require any modifications to run on e-fuels, which can also be transported via existing fossil fuel logistics networks. Further, synthetic fuels can be blended in fossil fuels or can completely replace them in existing ships, airplanes or industrial technologies.

German multinational engineering and technology company BOSCH is a strong supporter of synthetic fuels. According to the company, around half of petrol or diesel cars being sold now will still be on the roads by 2030. By using synthetic fuels (which BOSCH says are completely compatible with current fossil fuels) these legacy vehicles will be able to play a part in cutting CO2 emissions.

Not surprisingly, Big Oil companies such as the U.S.’ ExxonMobil Corp. (NYSE:XOM) and Italy’s Eni S.p.A (NYSE:E) as well as global automakers such as Porsche and Audi are some of the biggest backers of e-fuels (Exxon and Eni are supporters of Europe’s eFuel Alliance).  Related: Russia Downplays Possibility Of Curbing Gasoline Exports

Currently, e-fuels are not produced on scale due to one major problem: high costs. The production of synthetic fuels is highly energy intensive, so much that a recent study by the International Council on Clean Transportation found that e-fuels could cost up to €2.80 per liter ($11.52 USD per gallon), or 3x the current cost of diesel in the U.S. Further, using e-fuels in an ICE car requires about 5x more renewable electricity than running an EV, lowering its value proposition as a clean energy fuel.

The world's first commercial e-fuel plant, backed by Porsche and aiming to produce 550 million liters per year,  was opened in Chile in 2021. Other planned plants include Norway's Norsk e-Fuel, due to begin production in 2024 with a major focus on aviation fuel.

Luckily, Big Oil might just find its white knight in another controversial technology: nuclear energy.

Nuclear Diesel

Using nuclear energy to produce chemicals and liquid fuels is an idea that has long been mooted. Indeed, nuclear energy is strongly oriented towards processes that require high temperatures at affordable prices such as synthetic fuel production and coal gasification. High temperatures increase power generation efficiency of high-temperature gas-cooled reactors (∼50%) and open the possibility to use HTGRs for the process operations.

Unfortunately, it’s really hard to deploy nuclear power at a fast enough clip to achieve our climate goals thanks to the harsh reality of nuclear power projects. Consider that it not only takes an average of eight years to build a nuclear power plant, but also the mean time between the decision and the commissioning typically ranges from 10 to 19 years. Additionally, major commercial hurdles, primarily the large upfront capital cost and huge cost overruns (nuclear plants have the greatest frequency of cost overruns of all utility-scale power projects), make this an even more onerous endeavor.

Enter small modular nuclear reactors (SMRs).

SMRs are advanced nuclear reactors with power capacities that range from 50-300 MW(e) per unit, compared to 700+ MW(e) per unit for traditional nuclear power reactors. Their biggest attributes are:

  • Modular – this makes it possible for SMR systems and components to be factory-assembled and transported as a unit to a location for installation.
  • Small – SMRs are physically a fraction of the size of a conventional nuclear power reactor.

Given their smaller footprint, SMRs can be sited on locations not suitable for larger nuclear power plants, such as retired coal plants. Prefabricated SMR units can be manufactured, shipped and then installed on site, making them more affordable to build than large power reactors. Additionally, SMRs offer significant savings in cost and construction time, and can also be deployed incrementally to match increasing power demand. Another key advantage: SMRs have reduced fuel requirements, and can be refueled every 3 to 7 years compared to between 1 and 2 years for conventional nuclear plants. Indeed, some SMRs are designed to operate for up to 30 years without refueling.

Scores of governments, including the U.S. government, have begun incentivizing SMRs by making them more attractive for lenders and utilities. Back in 2020, the U.S. Department of Commerce launched a Small Modular Reactor Working Group that looks to expedite SMR deployment in European markets in a bid to position U.S. companies to succeed in those markets. Meanwhile, Ghana and Kenya are also looking to develop SMRs to expand their power generation capacities.

Luckily for Big Oil companies and proponents of synthetic fuels, SMRs might be just what they need to finally make e-fuels competitive with fossil fuels.

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Dr. Robert Hargraves, co-founder of ThorCon International, a nuclear engineering company, has proposed the development of ‘nuclear diesel’dubbing it a game-changer in the clean energy transition. According to the nuclear expert:

‘‘Advanced nuclear source energy costs can be 3.5 cents/kWh for electricity or 2 cents/kWh for high-temperature heat. This raw, source energy input cost to manufacture nuclear diesel is less than $1 per gallon. Even after adding new refinery capital costs and operations costs I expect new refineries could produce nuclear diesel at current wholesale prices near $3 per gallon.’’

Although this thesis is yet to be tested in the oil and gas industry, it already has a clear precedent in the chemicals industry: Last year, materials science company Dow Inc. (NYSE:DOW) partnered with small modular nuclear technology expert, X-energy, to deploy X-energy's Xe-100 high-temperature gas reactor technology at one of Dow's U.S. Gulf Coast sites. The Xe-100 reactor plant will provide cost-competitive, carbon free process heat and power to the Dow facility. 

"Advanced small modular nuclear technology is going to be a critical tool for Dow's path to zero-carbon emissions and our ability to drive growth by delivering low-carbon products to our customers," said Jim Fitterling, Dow chairman and chief executive officer.

By Alex Kimani for Oilprice.com

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Leave a comment
  • Mamdouh Salameh on June 20 2023 said:
    Technical innovations remain most of the time technical marvels with so much shortcomings in practice. That is why they end up in a university Lab for training new scientists.

    However, there is a great merit in improving a system that is already working well rather than start anew with a new one that ends up with more new problems.

    What society and the global economy want is cheap reliable energy and they need it now. Therefore, a more pragmatic approach, balancing the desire for cheap, reliable energy with the drive towards green energy, should be adopted by governments and environmentalists.

    And this pragmatic approach is to reduce carbon emissions from fossil fuels and not the actual use of fossil fuels.

    Dr Mamdouh G Salameh
    International Oil Economist
    Global Energy Expert

Leave a comment




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