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The aqua blue water is hot, tingling and pleasantly murky. But most of the bathers here at the Blue Lagoon – postcard-perfect hot geothermal pool carved out from ancient lava near Iceland’s Keflavik airport – are unlikely to know that they are swimming in waste water of the nearby Svartsengi geothermal power station. The plant supplies hot water and energy to surrounding communities, and now its other waste product – carbon dioxide – is set to help power UK cars.

Instead of releasing the CO2 directly into the atmosphere like most other power stations, contributing to greenhouse gas emissions, some of the gaseous waste is getting diverted. Whooshing through a pipeline, it goes to a small plant a few hundred metres away, run by Carbon Recycling International (CRI), and gets turned into methanol.


Next week, two van-sized metal containers carrying 23,000 litres of methanol will arrive in the UK to be blended with gasoline, for a maximum of three per cent methanol per litre of fuel sold at the petrol station. The overall amount is enough to power 40 cars for a year, says CRI’s head of business development Benedikt Stefánsson.

That may sound like a drop in the ocean – so why is it a big deal?

Well, cars run on gasoline – a fossil fuel – which massively contributes to greenhouse gas emissions. Europe, like (most) of the rest of the world, has ambitious goals to reduce these, set out in the 2015 Paris accord that is set to tackle climate change. The hope is to keep the increase in global average temperature to well below two degrees Celsius above pre-industrial levels. CRI’s methanol, powered by a nearby volcano, would make a contribution to reducing the carbon footprint of petrol

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“The fuel market in Europe is enormous – and any company that gets three per cent of the fuel market would be a huge revenue earner,” says Jamie Turner, professor of engines and energy systems at the University of Bath.

There is now more CO2 in the atmosphere than there has ever been over the past 800,000 years. The UN’s latest annual review warned that the gap between carbon-cutting plans and the measures needed to meet the climate goal was “alarmingly high”. So far, nations’ pledges extend to just one third of the cuts required by 2030 to keep Earth’s temperature below the two degrees target.


While the US last year announced its intention to pull out of the Paris climate deal, there has been a flurry of other, separate, efforts. For instance, the UK and Canada have started a global alliance of more than 20 countries that aim to phase out coal for the generation of energy. The EU’s renewable energy directive, meanwhile, has set targets for each member state to produce energy from green sources like solar, wind and biomass; the UK wants to meet 15 per cent of all its energy needs from renewable sources by 2020.

As every little helps, Iceland’s (still tiny) carbon recycling plant hopes to make a dent, too – by getting countries to use carbon-neutral fuel from a renewable source.

“From the European gasoline blenders point of view, they need to supply fuels with certain renewable credentials to show that they are doing their bit to decarbonise road transport fuel,” says Turner. “So renewable methanol made in that way is a pretty valuable commodity for a refinery or a blender because it allows them to comply with regulations.”

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So how does Icelandic carbon recycling work?

First, the Svartsengi geothermal power station gets superheated steam from a vent in the ground to power turbines that produce electricity. Before the turbines get to work, though, the plant has to separate the steam from a mixture of CO2 and hydrogen sulphate gases. Then it sends 10 per cent of the gas mixture CRI.


Next, the carbon recycling plant separates CO2 from the mixture, sends hydrogen sulphate back, and adds pure hydrogen to the CO2, which it produces using electricity from Svartsengi to split water. The two components create methanol – about 4000 tons of it a year.

Racing cars such as NASCAR in the US have been running on methanol for decades, and the UK has been adding it to some of its gasoline, especially in the north of the country. With one caveat, though: all of UK’s methanol in petrol currently comes from biofuels. While using biomass helps Britain meander closer to meeting the EU’s renewable energy objectives, critics are concerned that using biomass for fuel gobbles up land and harms food production.

Now, for the first time in the UK, methanol will be coming from a fully renewable source. “If you remove nature from the problem and make a renewable fuel that is not a biofuel, which is what the CRI methanol is, then you don’t have to worry about explaining that your fuel isn’t causing problems in the food chain – you avoid the food versus fuel problem,” says Turner.

In Europe, methanol per litre of petrol is capped at three per cent – add any more, and the car will no longer be under warranty. But it’s not everywhere like that. In fact, says Turner, there is no engineering reason for cars not to fully run on methanol. In China, for instance, 15 per cent of methanol is routinely mixed into petrol for cars, in the hope of tackling air pollution. There are even cars that run on 85 per cent methanol and only 15 per cent gasoline.

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In Iceland itself, six cars have been running solely on methanol (or 'Vulcanol', as CRI calls it), for two years now – a trial by CRI, Chinese car maker Geely (owner of Volvo) and Brimborg, a local dealership. CRI has reported a reduction of more than 90 per cent in CO2 emissions when driving with renewable methanol from electricity generated in Iceland, compared to gasoline.

So can CO2 recycling really help reduce emissions – on a mass scale?

Stefánsson says that Iceland’s pilot plant is easy to scale – and in the end, all you need is a big nearby factory that produces waste CO2, of which there are plenty. “We are designing for steel plants, cement plants, fertiliser and petrochemical plants that release CO2 into the atmosphere every day,” he says.

While Iceland might not be likely to cool down any time soon, volcanoes aren’t freely available everywhere. So any plant outside Iceland would need a source of renewable energy such as wind or solar to make the process fully green. “We will be buying wind and solar energy for the process to make it in the same way as we are doing here, because the carbon footprint of the energy has to be very low, or zero,” says Stefánsson. “In the tank of your car, the energy that you will be extracting from the fuel should be exactly the energy that went in to make it.”

Turner thinks that it might simply be possible to build a much bigger plant in Iceland and keep shipping the fuel abroad. “We are pretty good at shipping fuels around the place,” he says. And it will inevitably be more reliable than biofuels, which depend on the harvest and other factors such as possible blight.

There are other challenges too. While beneficial for the environment, methanol contains about half of the energy to the same unit of volume as gasoline - so if your car ran fully on methanol, you’d have to refuel it more often. It is possible though, Turner says, to turn methanol into gasoline to avoid this issue. “You could tank loads of stuff leaving Iceland and take it to a refinery that turns it into gasoline and it’s still carbon-neutral,” he says. “You will have some energy loss in the process, but if you turn it into gasoline, you have a carbon-neutral fuel that can go into cars that are already on the road.”

Right now, though, renewable fuels are more expensive than gasoline and diesel.


“We have this twisted world in which oil companies don’t have to pay for the pollution that they cause, so people always ask us the same question: are you competitive with oil?” says Stefánsson. “When it should be the other way around, oil companies should be asked: ‘Could you reduce your carbon emissions to the same level that these guys can?’ And they would get into trouble because they can’t, it would cost them an infinite amount of money to do so. They should be really taxed on the CO2.”

Despite shipping only two tiny containers, Stefánsson says he’s really excited about the deal with the UK. “I’m quite happy how the UK government went about this,” he says. “They commissioned several studies and have come to the conclusion that making fuels from electricity is something that is probably an expanding industry in the future – and that it was perfectly competitive with the best biofuels. So they wanted to give it the best incentive to be used by the companies in the UK.”

Iceland's CRI is not alone in its efforts to decarbonise fuels. A number of companies, such as Carbon Engineering in the US and ClimeWorks in Switzerland, are capturing CO2 from the atmosphere. They are all doing it with very little government support, says Turner – aiming to prove that it’s viable to make fuel from renewable energy, within the price of fossil fuels. “They can see straightforward economic argument as long as the science and the engineering can get you there,” he adds.