On the windswept lava plains of Iceland's Reykjanes Peninsula, the 75 MW HS Orka Geothermal power plant generates clean electricity. So clean, in fact, that the same deep source of earthly, hot water that feeds its turbines also pours into the internationally popular Blue Lagoon bathing spa located next door, caressing over 400,000 bathers a year with purportedly curative properties of silica, algae and healthy bacteria.

But Iceland, for all its renowned renewable energy, is not, technically speaking, “carbon free.” The steam that HS Orka and the island's other geothermal plants release into the air contains carbon dioxide.

The fraction is small compared to the amount that a fossil fuel plant delivers – about 5% of a coal-fired plant, 11% of natural gas, by some estimates. But CO₂ it is. One man, K.C. Tran, has his eye on it and likes what he sees. Tran is CEO of Reykjavik-based Carbon Recycling International. When he looks at the plumes wafting into the Icelandic air, he doesn't so much see a polar ice-melting greenhouse gas. Rather, he sees a compound that he can convert into methanol that could help power cars and trucks more efficiently and make a significant dent in the world's CO₂ footprint.

Like the controversial advocates of carbon storage, Tran wants to capture CO₂ before industrial processes like HS Orka's power generation send it sky high to an environmentally damaging location. But unlike the carbon storage movement, Tran does not propose dumping the carbon somewhere underground or undersea where, critics say, it would eventually find its way back to the atmosphere.

Rather, as the name of his 5-year-old company states, he wants to recycle the CO₂ – by turning it into methanol or putting it to other good uses.

“We often describe our technology as liquid electricity because we store the electricity in the form of liquid, for consumption in today's internal combustion engine based cars,” says Tran. “It is similar to storing electricity in a battery. We capture CO2 and turn it into renewable methanol for gasoline blending in the US and EU.”

His idea taps neatly into the “methanol economy” advocated by George Olah, a Nobel Prize winner in chemistry, back in the 1990s. Olah posited that methanol, rather than other alternatives like hydrogen and ethanol, could supplant fossil fuels.

One big advantage that methanol has over hydrogen as a potential fuel for cars, is that it is a liquid that can make use of the existing petrol distribution infrastructure. Hydrogen would require an altogether new one. As a further benefit, Tran claims that Carbon Recycling's methanol is “renewable methanol”, which absorbs carbon during its production. Methanol produced from fossil fuels like natural gas and coal give off CO₂ during their synthesis.

Lower emissions

A renewable methanol-powered engine would still emit CO₂. But the emissions are 30% of the emissions of standard gasoline, when taking into account both the production and refining of the fuel as well as its end use, says Tran. At the least, Carbon Recycling could help reduce Iceland's reliance on imported petrol and could serve as a test bed for larger scale methanol deployment in other countries.

Powering automobiles with methanol is more than a proven concept: it has a high octane rating, and some racecars in the U.S. already run on it. But realistically, the automobile industry could not move overnight to methanol cars, because existing engines would require a retrofit to operate on a predominantly methanol fuel. And much R&D currently underway by the majority of car manufacturers seems to be moving in the direction of electric vehicles.

The engines, could, however, run on a blend of methanol and petrol, and that is where Tran is focusing his early commercial efforts. He is providing methanol to Icelandic petrol supplier Olis, whose green and yellow filling stations dot the roads of Reykjavik, in much the same way that Shell, BP, Total, Exxon, Mobil, Chevron, Texaco and other ubiquitous gas stations line the highways of Europe and the U.S.

As this story was going to press, Olis was preparing to road test petrol that it has blended 3% with Carbon Recycling's methanol. It has equipped one pump at a station in western Reykjavik with the RM3 fuel, which will power several designated cars until April.

A long way to go

Olis hopes the experiment helps reduce carbon emissions, as claimed by Carbon Recycling. But, with a methanol blend of only 3%, operations director Samuel Gudmundsson says the company is not expecting any improvement in fuel efficiency. Greater carbon reduction would result from a stronger mix of methanol, but regulators in Iceland allow only 3%, notes Gudmundsson. Similar restrictions exist in other countries.

Would Olis like to use a higher concentration of methanol? “Absolutely, as long as it is accepted by the authorities and proven to be harmless to the car fleet and the environment,” says Gudmundsson. “But you have to start somewhere.”

The Olis experiment will last until April, at which point the company will decide whether to continue and possibly offer the blend as a standard product to the general public. Gudmundsson says Olis will test several criteria, but he would not elaborate on them.

Methanol is known as a toxic substance – ingesting it can cause blindness, for example – so the company might want to examine possible effects like engine corrosiveness. From a safety perspective, pure methanol gives off very little light when it catches fire, although that would not be an issue with a 3% blend.

And there is another possible limitation to any future plan to supply the general public: Carbon Recycling has to scale up production beyond the limited amount of methanol it currently makes. CEO Tran expects that to happen by March, when the company plans to open what it calls an “industrial scale” methanol production facility. The company is putting the finishing touches on a 5-million litre a year plant situated alongside the HS Orka power station adjoining the Blue Lagoon in Svartsengi, Iceland, 47 kilometres southwest of Reykjavik. Tran calls it “the world's first CO₂ to renewable methanol” plant.

Carbon Recycling is also targeting other country markets such as Europe and the U.S. Tran is not revealing specific plans or possible foreign distributors or manufacturing sites, although the Carbon Recycling website notes that the company plans to export methanol to Europe.

It's also conceivable that he would start collecting CO₂ from sources other than geothermal power stations, such as fossil fuel plants. And why not also capture and recycle CO₂ from industrial emitters, like the steel industry, which according to consultants McKinsey contributes 8% of the planet's greenhouse gas emissions? Carbon Recycling's website lists aluminum giant Century Aluminum as a partner – so is Tran working with them to explore ways to capture CO₂ from smelters in Iceland?

Tran answers that any plans to work with industrial partners on carbon capture, as well as any international expansion plans, are “complex” and “still in the planning stages.” In the U.S., methanol must contend with the ethanol movement, which has strong political backing from the agriculture lobby – ethanol is derived from corn.

Some critics note that ethanol is considerably more expensive than methanol, although possibly cleaner. In the U.S., Congress is considering an Open Fuel Standard, that would require carmakers to equip engines to run on methanol, ethanol or biodiesel. The stipulation would be phased in over several years.

There is yet another factor that might complicate the picture: the CO₂ to methanol conversion process itself consumes electricity. In Iceland, where there is an abundant supply of clean power – the country generates 100% of its electricity from renewable hydro and geothermal – the energy that it takes to make methanol would have minimal CO₂ impact. What's less clear is what impact the process might have in countries powered by coal and other fossil fuels.

For now Carbon Recycling is focusing on Iceland and Olis. “It is a major undertaking and long term commitment,” says Tran.

The next step, he says, will be to build larger production plants with HS Orka and with Iceland's largest electricity provider, state-owned Landsvirkjun.

In December 2010 Carbon Recycling and Landsvirkjun announced tentative plans to build a CO₂-to-methanol plant at Landsvirkjun's 60 MW geothermal facility at Krafla, in northeastern Iceland. The site would produce over 100 million litres of methanol annually – more than 20 times the size of the plant in Svartsengi – and capture 45,000 tons of CO₂ a year.

Construction could begin in the first half of this year, pending completion of a feasibility study this month and of Government approval – Iceland has strong local Governments and environmental groups that can have considerable sway over power projects.

In a joint press release, Carbon Recycling and Landsvirkjun also noted that the two companies would have to “reach mutually beneficial agreements.” Tran is not disclosing details of the financial agreements with partners such as Olis and HS Orka. Carbon Recycling is privately held, backed by investors from the U.S. and Iceland. If the Olis test proves successful, and if Tran and crew can lure carbon storage backers into the Carbon Recycling camp – and export its concept abroad – then perhaps those backers could see an impressive return.

About:

Mark Halper writes for TIME and Fortune magazines, covering many aspects of clean energy.

Renewable Energy Focus, Volume 12, Issue 1, January-February 2011, Pages 56-58