schaffrannek - tu bergakademie freiberg

DGMK-Conference / PetrochemistryOctober 9 -11, 2019 in Dresden-Neustadt, Germany

Circular Economy – A Fresh View on Petrochemistry

edited by M. Bender, H. Blanke, H. Häger, A. Jess,J. A. Lercher, M. Marchionna, D. Vogt

2019-3Tagungsbericht

Circular Economy – A Fresh View on Petrochemistry DGMK Conference October 9 – 11, 2019 in Dresden, Germany

DGMK-Tagungsbericht 2019-3, ISBN 978-3-941721-98-2

Chemical Utilization of Carbonaceous Waste and Lignite – A Case Study of Sustainable Olefin Production in Germany L. G. Seidl, R. P. Lee, F. Keller, B. Meyer Institute of Energy Process Engineering and Chemical Engineering, TU Bergakademie Freiberg, Germany Abstract Plastics are an important chemical product and indispensable in all areas of daily life. In the dominant linear economy, crude oil and natural gas are imported as carbon raw materials for its production in Germany. Following utilization, the majority of plastic waste is incinerated (53 % in 2017) to generate heat and electricity. While recyclers aim to further expand material recycling, this potential is limited by impurities and contaminants in plastic waste as well as increasingly complex plastic composites. To achieve Germany’s ambitious CO2 reduction goals by 2030/2050, carbon intensive industries such as the energy, chemical and waste management sectors are under pressure to change their modus operandi towards sustainable production and disposal of plastic waste. In this context, a coupling the energy, chemical and waste management sectors to produce chemical products such as plastics from domestic primary and secondary carbon feedstock alternatives can play a critical role in supporting the transition from a linear to circular carbon economy. Gasification, in enabling the conversion of alternative carbonaceous raw materials (e.g. biomass, lignite, different types of waste) into synthesis gas (i.e. carbon monoxide and hydrogen) for the subsequent synthesis of e.g. methanol and light olefins, is the key technology to facilitate such a carbon transition in the chemical industry. Via gasification, plastic waste is given a second life as secondary carbon feedstock for chemical production. This not only contributes to the conservation of primary carbon resources; it furthermore aids the reduction of Germany’s total CO2 emissions through avoiding the need for waste incineration. In this work, a roadmap for the transition towards a circular carbon economy is presented as an alternative to the current linear carbon economy. Specifically, key parameters of a circular carbon economy based on chemical production via gasification of domestic primary (i.e. lignite) and secondary (i.e. plastic waste) carbon feedstock are comparatively evaluated against those of a linear carbon economy which is based on chemical production from imported oil. Scenarios are generated for 2030 and 2050. Integration of renewably produced “green” hydrogen via electrolysis is also considered in the scenarios. Key sustainability indicators are defined as (1) carbon recycling rate in products, and (2) CO2-emissions along the process chains. Detailed mass- and energy-balances are generated with validated process models by flowsheet simulation using Aspen Plus®. The overall carbon balance is presented in mass-flow diagrams. In the 2030 scenario, even without integration of “green” hydrogen, carbon recycling rates of up to 45 % and a reduction of CO2-emissions by 35 % can be achieved compared to the reference case. With integration of “green” hydrogen, the carbon recycling rate is observed to increase. In the 2050 scenario, presuming large-scale production of renewably generated

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DGMK-Tagungsbericht 2019-3

“green” hydrogen is available, carbon recycling rates of above 90 % can be achieved. This corresponds to a reduction of CO2-emissions by 95 %.

Introduction In 2016, a total of 20.6 million tonnes of mostly imported primary carbon (i.e. fossil) resources were used as feedstocks for the German chemical industry. Of these, naphtha and other oil fractions accounted for the largest share at 74 %, followed by renewable raw materials (13 %), natural gas (12 %) and coal (1 %) [1]. Naphtha is the key feedstock for chemical production. Through the use of naphtha steam crackers – a key process for the production of a wide range of platform chemicals – light olefins can be produced. Light olefins such as ethylene and propylene serve as the basic building blocks for the production of plastics [2]. Plastics are an important chemical product and indispensable in all areas of daily life. In line with the European waste hierarchy, plastic waste should be directly reused and plastic waste which cannot be directly reused should be recycled. Waste incineration and landfilling are given the lowest priority and should be avoided as much as possible [3]. In Germany, recycling of plastic waste refers predominantly to material recycling (also known as mechanical recycling). Despite being a world leader in waste recycling, in 2017, only 17 % of post-consumer plastic waste was materially recycled in Germany [4]. In order to meet the new recycling-quota of 58.5 % by 2019 and 63 % by 2022 for plastic packaging as stated in the German Packaging Law the recycling industry is under pressure to increase material recycling of plastic waste [5]. However, the potential of material recycling for plastic waste is limited for multiple reasons. These range from the issue of additives (flame retardants, fillers, etc.), the inseparability of plastic composites (especially those with carbon and glass fibre reinforcements), contamination problems to decreasing quality of the recycled material compared to virgin material ("downcycling") [6]. For plastic waste which is not materially recycled and channelled back into production processes, about 12 % are exported while the remaining (about 53 %) are incinerated in waste-to energy plants [7]. In the dominant linear economy, waste incineration therefore plays a crucial role in plastic waste management in Germany. Not only is it a solution for disposing of mixed and dirty plastic waste materials which are not suitable for material recycling, downcycled materials – at the end of their lifespan whereby material recycling is no longer feasible – will also have to be incinerated. With the ban of plastic waste imports by China and other South East Asian countries the situation is getting critical as existing waste incineration plants in Germany are already operating at their full capacity. Although waste-to-energy plants enable waste to be used one more time to generate electricity and heat, it is important to note that all carbon contained in plastic waste is released as CO2 into the atmosphere during the incineration process [8]. Hence, building new waste incineration plants would not be a sustainable solution for plastic waste disposal as they will contribute to Germany’s total CO2 emissions, which is not supportive of Germany’s ambitious CO2-reduction goals by 2030/2050. To facilitate the sustainable disposal of plastic waste, new recycling processes that can convert plastic waste into high-quality products are thus urgently required. Considering that material recycling technologies are reaching their limits, chemical recycling whereby plastic waste could be used as a secondary carbon feedstock for chemical production represents an increasingly attractive option compared to incineration. Largely neglected by the waste management industry till now due to higher investment costs and complexity of operation compared to mechanical recycling and incineration, and by the chemical industry for similar reasons compared to naphtha steam cracking, chemical recycling could be a game-changer for both the waste management and chemical industries by changing plastic waste from a problem which has to be resolved to a valuable domestic carbon resource which could be used for chemical production. The chemical utilization of plastic waste could support a carbon transition from the current linear “extraction-production-utilization-disposal” economy to a “production-utilization-production” circular carbon economy where waste could be used as raw material for

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new chemical production. Not only will this contribute to resource conversation by replacing primary fossil feedstock for chemical production with secondary carbon feedstock, at the same time, it will increase the supply security of the chemical industry which in German currently depends on fossil imports. Gasification – in enabling the use of plastic waste as secondary carbon feedstock for the production of synthesis gas, which could then in term be used for subsequent synthesis of e.g. methanol and light olefins – represents a key technology for the transition towards a circular carbon economy. In the current presentation, we examined gasification-based process chains for the chemical recycling of plastic waste as feedstock for chemical production to answer two key research questions namely (1) How sustainable is the chemical utilization of secondary carbon resources such as plastic waste via gasification compared to current oil-based chemical production, and (2) Compared to oil-based chemical production, does waste gasification remain sustainable when lignite is utilized as a co-feedstock? Using oil-based chemical production as the reference case, scenarios for 2030 and 2050 are generated and evaluated based on two sustainability indicators namely (1) carbon recycling rate in products, and (2) CO2-emissions along the process chains. The technological evaluation of the proposed scenarios for a circular carbon economy is carried out via detailed mass- and energy-balances with validated process models generated by flowsheet simulation using Aspen Plus®. The upstream CO2-emissions of lignite mining and oil extraction, upgrading and transport are retrieved from the GaBi LCA database. Overall carbon balances are presented in mass-flow diagrams.

Roadmap for the transformation towards a circular carbon economy We developed the following scenarios for a step-wise transformation towards a circular carbon economy, where the raw material base for the production of methanol and the light olefins ethylene and propylene will be gradually converted from imported, fossil resources to domestic carbon carriers:

(1) Status quo: Linear carbon economy where platform chemicals are produced from oil and natural gas, and waste incineration is the norm for waste disposal (following utilization and/or after material recycling)

(2) Scenario 2025-2030: Domestic carbon resources gradually displace oil and natural gas as feedstock for the chemical industry (via gasification for synthesis production and in subsequent processes for olefins production). We assume that the market entry will take place with small gasification plants (input 25 t/h). Waste feedstock will be refuse derived fuel (RDF) made up of “mixed and dirty” plastic waste materials which are not suitable for material recycling as well as municipal solid waste (MSW). Additionally, domestic lignite will be used as backup fuel to compensate for the limited availability of waste feedstock as well as carbon losses in the process. In addition to co-gasification of waste and lignite for chemical production, we also extended the evaluation to include electrolysis plants for the production of “green” hydrogen in order to reduce the carbon losses in the process chain.

(3) Scenario 2030+: By this time, we anticipate that increasing e-mobility will result in a decline in fuel consumption, and hence fuel production via conventional naphtha steam cracking. As this is coupled with the olefins production, there will be a gap in chemical production which can be closed by gasification plants. Hence, we assume that olefins production from domestic carbon sources will incrementally increase such that large-scale gasification plants with an input of 100 t/h will be possible. This will require an extension of the raw material base from RDF and MSW to include further waste and biomass (increasingly upgraded municipal waste, sewage sludge, waste wood). At this

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period, using domestic lignite as co-feedstock remains an option until the anticipated phase-out of lignite power plants and open cast mines in 2038.

(4) Scenario 2050+: Similar to Scenario 2030+, in Scenario 2050+, we assume that large-scale olefins synthesis plants operating with an input of 100 t/h will continue utilize RDF, MSW as well as waste wood and sewage sludge as carbon feedstock. However, by this stage, we assume that sufficient power can be provided by renewable energy to operate large-scale electrolysis plants. With this, maximum integration of “green” hydrogen generated via electrolysis can take place. Theoretically, the carbon cycle can be closed, i.e. a fully circular carbon economy for plastics can be realised.

Methodology Process chain modelling To evaluate the transformation scenarios described above, the simulation software Aspen Plus® is used to model small plants for the production of methanol and large plants for the production of olefins. With its extensive experience in the field of carbon conversion technologies, the Institute of Energy Process Engineering and Chemical Engineering (IEC) at the TU Bergakademie Freiberg possesses an extensive proprietary model database for individual processes. New models for gasification and methanol-based olefins synthesis were developed. Detailed mass and energy balances from the process chain modelling subsequently form the basis for further evaluation. The process chain models supported the development of the overall carbon balance for different production routes (i.e. process chains). This facilitated the assessment of the sustainability of using secondary carbon feedstock via gasification (i.e. waste gasification) in comparison to current oil-based chemical production; and the evaluation of whether waste gasification remains sustainable with the integration of lignite as a co-feedstock. To enable the comparative analysis of the carbon balance of different process chains, two key sustainability indicators are utilized namely (1) carbon recycling rate in products, and (2) CO2-emissions. The carbon recycling rate (CRR) refers to the ratio of carbon in the products (methanol or olefins) to the carbon in the input materials. The higher the CRR, the closer we are to achieving a circular carbon economy. CO2 emissions are calculated for the entire process chain. It is also important to note that chemical production processes require electricity. However, in instances whereby renewable energy is not 100 % utilized, the production process will “import” CO2 via its electricity consumption. Our carbon balance evaluations accounted for such “imported” CO2 for electricity consumption during chemical production. It is assumed to correspond with the German CO2 emission targets for the energy sector i.e. 343.8 g(CO2)/kWh for the 2030 electricity mix and 38.2 g(CO2)/kWh for the 2050 electricity mix [9]. Additionally, our evaluations of CRR and CO2 emissions do not differentiate between biogenic and fossil carbon. In addition to a comparative evaluation of the carbon balances of different production routes, an economic evaluation of CAPEX and OPEX is also carried out. Finally, calculated production costs are compared with current market prices of methanol, ethylene and propylene to assess the competitiveness of waste gasification. Altogether, 34 process chains are developed for the circular economy and the different scenarios for the circular carbon economy with different feedstock combinations. In the current presentation, 6 selected cases will be presented to illustrate the comparative evaluation of the linear economy which is based on crude oil with the different scenarios for a circular carbon economy based on RDF and lignite as feedstock.

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Linear vs. circular carbon economy

(1) Linear economy based on petrochemical production with waste incineration: The linear process chain begins with the extraction, upgrading and transport of crude oil to a refinery, followed by distillation in a refinery and production of olefins in a naphtha steam cracker. The light olefins then undergo polymerization to plastic materials which are incinerated at the end of their life.

(2) Circular carbon economy based on gasification of waste (and lignite): The process chains for a circular carbon economy are divided into gasification or synthesis gas production, gas purification and conditioning followed by product synthesis. The selected gasification process is a slagging gasifier operating at 40 bar. Validated mass- and energy balances for pure waste as well as co-gasification of waste and lignite are available from test campaigns carried out at IEC’s 10 MWth pilot plant in Freiberg. The hot raw gas from gasifier (about 1.100 °C) is cooled by pressurized water scrubber to separate chlorides and ammonia. The cooled raw gas has a H2/CO ratio of roughly 1, which has to be increased to 2.1–2.3 for the subsequent methanol synthesis. The adjustment of the H2/CO-ratio is carried out in a sour water-gas shift reactor, which produces CO2 as a by-product. In a selective gas scrubbing process based on the Rectisol wash, the sour gas components CO2 and H2S are separated using methanol at temperatures as low as -55 °C. Concentrated CO2 can be used, for example, in a CO2-based methanol synthesis. H2S is fed to an OxyClaus plant where it is processed into elemental sulfur. The purified and conditioned synthesis gas is then compressed to 80 bar for methanol synthesis. Conversion in the methanol synthesis is incomplete and therefore unconverted synthesis gas is recirculated in order to ensure high yield. In decentralized production of methanol, raw methanol is upgraded in two columns to AA grade quality (> 99.85 wt.-% methanol). For the centralized production of olefins, upgrading to AA grade quality is not required and the water content of the raw methanol is only reduced to 20 wt.-% in a single distillation column. Olefins are produced in a two-stage reactor-regenerator fluidized bed system using the Methanol-to-Olefins (MtO) process. In the highly exothermic synthesis, coke formation deactivates the catalyst within a few minutes. The catalyst must therefore be continuously regenerated by burning off coke. Long-chain C4+ by-products are passed through an Olefins Cracking Process (OCP) to further increase the yield of light olefins. The raw product from the MtO synthesis then undergoes a multi-stage cryogenic distillation process to gain ethylene and propylene at polymer quality. In MtO synthesis combined with OCP, total methanol conversion of approx. 99 % and a combined selectivity to ethylene and propylene of approx. 90 % can be achieved. The by-products of the synthesis are recycled into the gasifier to further increase carbon efficiency. Wastewater treatment, gas treatment and syntheses all produce flash and purge gases distributed throughout the process chain, which are incinerated causing diluted CO2-emissions. For this presentation, feedstocks utilized for the evaluation are a high-calorific refuse derived fuel (RDF) and domestic lignite from the Schleenhain opencast mine in Germany (see Table 1).

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Table 1: Characterization of carbon feedstock

Proximate analysis [wt.-%, dry] High calorific

Refuse Derived Fuel (RDF)Lignite

Schleenhain opencast mine

Moisture (after drying) 2.10 12.00 *Fixed carbon 11.11 32.58Volatile matter 73.46 56.90Ash 15.43 10.52 Ultimate analysis [wt.-%, dry]

Ash 15.43 10.52Carbon 64.89 65.19Hydrogen 8.45 5.10Nitrogen 1.05 0.53Chlorine 2.28 0.00Sulfur 0.28 1.90Oxygen 7.62 16.76 Lower Heating Value [MJ/kg, dry] 26.538 26.023Higher Heating Value [MJ/kg, dry] 28.962 27.252

*Moisture 50 wt.-%, as received

Comparative evaluation of carbon balances for different production routes Status quo The current linear plastics carbon economy served as benchmark for the subsequent evaluation of other scenarios for a circular carbon economy. Figure 1 shows the overall carbon balance of this linear economy for a representative input of 1000 t/h carbon in naphtha.

Figure 1: Carbon balance of the linear plastics carbon economy with petrochemistry and waste incineration

The total specific emissions amounted to 5.81 kg(CO2)/kg(olefins). The largest share of CO2 emissions resulted from waste incineration at the end of the products’ lifespan (54 %). Another 20 % of CO2 emissions is associated with upstream emissions during extraction, upgrading and transportation of crude oil. Three important insights can be drawn from the carbon balance results. First, the current linear economy has a CRR of 0 % as all carbon in the feedstock is emitted as CO2 at the end of the product lifespan. Second, results highlighted how naphtha steam cracking is not the only process emitting CO2 for the current petrochemical production route. Such a “tunnel view” of CO2 emissions for petrochemical production will result in a neglect of 2/3 of the overall emissions by the linear carbon economy. Last but not least, significant carbon savings can be achieved by avoiding waste incineration and using waste as an alternative carbon feedstock for chemical production.

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Scenario 2025-2030 The carbon balances for two small-scale decentralized plants with a gasifier input of 25 t/h for the production of methanol are presented in Figure 2. Both cases utilized a feedstock composition of 80 wt.-% RDF and 20 wt.-% dried lignite.

Figure 2: Carbon balances of methanol production based on 80 wt.-% RDF and 20 wt.-% dried lignite

Case 1 showed a possible market entry into the circular carbon economy with perspective 2025 to 2030. Assuming that power demand of the plant can be fully met with renewable energy, a CRR of 47 % for methanol with specific emissions of 1.54 kg(CO2)/kg(methanol) is observed. The largest share of CO2-emissions originated as concentrated CO2 from the gas purification. These concentrated emissions can be reduced or completely eliminated with the integration of “green” hydrogen. In contrast, assuming that the general 2030 electricity mix is used for chemical production, additional CO2 will be imported into the production process. As such, total specific emissions are observed to increase, albeit only slightly to 1.67 (CO2)/kg(methanol). Case 2 presented a perspective for 2025 and beyond which expanded the plant from Case 1 with an electrolysis unit for producing hydrogen from renewable sources. It thus illustrated the potential reduction of CO2 emissions by integration of “green” hydrogen. The electrolysis capacity of 50 MWel corresponded to approx. 30 % of the thermal capacity of the gasifier. The CRR can thus be increased to 60 % and specific CO2 emissions reduced by 42 % to 0.90 kg(CO2)/kg(methanol). This is however with the assumption that the power demand can be fully met by renewable energy sources. In contrast, assuming that a general 2030 electricity mix with its associated imported CO2 is utilized for chemical production, the resulting specific

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emission will increase to 1.66 (CO2)/kg(methanol) which is similar to total specific emissions for Case 1 under similar framework conditions. Altogether, our results highlighted the critical role of a renewable energy supply not only in the production of “green” hydrogen, but also in enabling lower CO2 emissions during the chemical production process. Nevertheless, even without a fully renewable energy supply, hydrogen integration via electrolysis using the available 2030 electricity mix (with its imported CO2) may still be desirable as it will increase the production capacity of the waste gasification process. Specifically, with the same feedstock input into the gasifiers, Case 2 will yield 28 % more methanol than Case 1.

Scenario 2030+ Compared to Scenario 2025-2030, Scenario 2030+ included an additional olefins synthesis. From 2030 onwards, the production of olefins in large-scale plants (see Figure 3) with a gasification capacity of 100 t/h is expected. Case 3 illustrated the base plant and Case 4 included the integration of “green” hydrogen. Analogous to the small plants for decentralized methanol production, a feedstock ratio of 80 wt.-% RDF and 20 wt.-% dried lignite is assumed.

Figure 3: Carbon balances of olefins production based on 80 wt.-% RDF and 20 wt.-% dried lignite

As illustrated in Case 3, assuming that 100 % renewable energy is utilized for chemical production, this resulted in a reduction of CRR (now related to the products ethylene and propylene) slightly from 47 % to 45 %, with specific CO2-emissions of 3.78 kg(CO2)/kg(olefins). Compared to the specific emissions of 5.81 kg(CO2)/kg(olefins) for the linear carbon economy which is based on petrochemistry and waste incineration, this represented a reduction of CO2

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emissions by 35 %. Even with the assumption that the chemical production relies on a general 2030 electricity mix, the specific emissions remains low at 3.85 kg(CO2)/kg(olefins). This still corresponded to a significant carbon savings of 34 % compared to the linear carbon economy. In Case 4, the plant from Case 3 is extended with an additional electrolysis unit for the integration of “green” hydrogen. The electrolysis capacity selected is 200 MWel and corresponded to approx. 30 % of the thermal capacity of the gasifiers (comparable to Cases 1 and 2). The addition of hydrogen increased the carbon recycling rate to 59 % corresponding to specific emissions of 2.23 kg(CO2)/kg(olefins). Compared to the benchmark case, a CO2-reduction 62 % is achieved. However, it is important to note that similar to the decentralized production of methanol, this reduction assumed the availability of renewable energy. Assuming instead that the 2030 electricity mix is utilized to power the electrolysis, the imported CO2 from the electricity mix will result in an increase in total emissions to 3.87 kg(CO2)/kg(olefins), which essentially cancelled out the reduction in process-specific emissions which has been gained with the integration of hydrogen.

Scenario 2050+ In this scenario, we assumed that phase-out of lignite mining in Germany is completed and gasification is carried out with 100 wt.-% RDF, with a maximum integration of renewable hydrogen. Hence, Case 5 (see Figure 4) illustrated a largely CO2-neutral circular carbon economy which is based on waste and renewable hydrogen.

Figure 4: Carbon balance of olefins production based on 100 wt.-% RDF

By eliminating the CO-conversion unit, integrating CO2 from gasification via CO2-based methanol synthesis and utilizing the O2 from electrolysis to completely eliminate cryogenic air separation, a CRR of 91 % is achieved. Assuming that enough renewable energy is available for the processes and electrolysis, the emissions now amounted to only 0.31 kg(CO2)/kg(olefins), resulting in CO2 emission savings of 95 % compared to the linear carbon economy. Even assuming that a general 2030 electricity mix for 2050 is used rather than renewable energy, CO2 emissions will remain low at 0.73 kg(CO2)/kg(olefins).

Comparative overview of CRR & CO2 emissions The comparative evaluation of the scenarios based on the indicators (1) carbon recycling rate in products, and (2) CO2-emissions along the process chains carbon are summarized in the Table 2.

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Table 2: Summary overview of CRR, specific CO2 emissions and CO2 savings of different scenarios compared to status quo

CRR Specific CO2 emissions CO2 savings compared to Status QuoStatus Quo 0 % 5.81 kg(CO2)/kg(olefins) Comparison basis Assume electricity mix for the scenarios Scenarios without integration of hydrogen generated via electrolysis

2025-2030 47 % 1.67 kg(CO2)/kg(methanol) Not comparable 2030+ 45 % 3.85 kg(CO2)/kg(olefins) 34 %

Scenarios with integration of hydrogen via electrolysis2025-2030 60 % 1.66 kg(CO2)/kg(methanol) Not comparable

2030+ 59 % 3.87 kg(CO2)/kg(olefins) 33 % Scenario 2050+

2050+ 91 % 0.73 kg(CO2)/kg(olefins) 87 % Assume 100% renewable energy Scenarios without integration of “green” hydrogen via electrolysis

2025-2030 47 % 1.54 kg(CO2)/kg(methanol) Not comparable 2030+ 45 % 3.78 kg(CO2)/kg(olefins) 35 %

Scenarios with integration of “green” hydrogen via electrolysis2025-2030 60 % 0.90 (CO2)/kg(methanol) Not comparable

2030+ 59 % 2.23 kg(CO2)/kg(olefins) 62 % Scenario 2050+

2050+ 91 % 0.31 kg(CO2)/kg(olefins) 95 %

Economic evaluation and sensitivity analysis The mass- and energy balances generated by flowsheet simulation formed the basis of the economic evaluation. To compare economic potential of the five cases presented above, the levelized cost of production for methanol and light olefins are calculated. The methodology applied is based on recommendations by the National Technology Energy Laboratory (U.S. Department of Energy) for coal gasification projects [10]. Table 3: Global economic assumptions

General Assumptions

Location Germany, „green field“

Start of operation case 1 to 4 2030

case 5 2050

Operational period 25 years

Construction period (Investment cost during construction)

case 1 & 2 2 years (year 1: 40 %, year 2: 60 %)

case 3 to 5 3 years (year 1: 20 %, year 2: 40 %, year 3: 40 %)

Price increase 1 % p.a.

Inflation rate 2 % p.a.

Land 3 % of bare erected cost

Engineering, procurement and construction (EPC) 15 % bare erected cost

Project contingency 15 % of bare erected cost + EPC

Project Financing Shareholder capital 40 %

Debt capital 60 %

Shareholder interest 10 % p.a.

Debt interest 5 % p.a.

Interest rate 7 % p.a.

Availability case 1 & 2 case 3 to 5 Availability during 1st year of operations 50 % 40 % Availability during 2nd year of operations 88 % 70 % Availability in regular operation 88 %

Variable Cost electricity 60 EUR/MWhCO2 price 37 EUR/t (2030); 100 EUR/t (2050) lignite 20 EUR/twaste (gate fee) -100 EUR/t

The levelized costs of production for methanol and light olefins – subdivided into capital and

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operational expenditures (CAPEX & OPEX) – are shown in Figure 5. The European market prices for methanol and light olefins are obtained from METHANEX [11] and VCI [12] respectively. As can be seen in Figure 5, the levelized costs of production for methanol and light olefins are approximately at or above current market prices for all cases. However, it is important to note that a direct comparison with current market prices is only possible to a limited extent. This is because the economic evaluation assumed framework conditions for the time horizons 2030 and 2050 which are not accounted for in the current market prices (in particular, the economic evaluation assumed much higher prices which have to be paid for CO2 emissions compared to current CO2 prices). Furthermore, a price premium for the production of “green” chemicals is also not considered. For concepts without electrolysis (Cases 1 and 3), capital costs accounted for more than half of the levelized costs. With an integration of additional hydrogen from electrolysis, the share of OPEX will increase due to the higher costs for electricity. All cases with electrolysis showed higher levelized costs of production than the cases without electrolysis. This indicated that under the assumed economic and technical framework conditions, the CO2 savings from additional regenerative hydrogen cannot compensate the additional investments which are required for electrolysis and associated electricity costs. The cases for centralized olefin production (Cases 3, 4, 5) generally showed more competitive costs compared with decentralized methanol production. In Case 3, production costs are observed to be in the range of current market prices. Therefore, converting methanol to high-value olefins appeared to be more favourable.

Figure 5: Levelized cost of production for decentralized production of methanol and centralized production of olefins (ethylene and propylene) compared to current market prices.

Additionally, a sensitivity analysis is carried out for key parameters namely plant availability, gate fees (disposal revenues for waste), CO2 prices and electricity. The results are presented in Figure 6.

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Figure 6: Sensitivity analysis of production costs for selected parameters

Plant availability: This parameter will have a significant impact on product production costs. The lower limit of 70 % corresponded to a 26 % reduction in annual operating hours which in turn will result in an increase of production costs by 67 to 71 %. In contrast, increasing overall availability to 95 % would reduce production costs by 16 to 18 %. The availability of the chemical recycling process is largely determined by gasification which is the key conversion process at the start of the process chain. Disturbances ranging from impurities and inhomogeneities in the feedstock material to equipment failure may disrupt regular operations and the production of synthesis gas. The risk of gasifier outages can be partly mitigated by operating several gasifiers in parallel. In our evaluation, this parallel operation is considered for the centralized production of olefins. Here, all four gasifiers are assumed to be operating at partial load. If one gasifier experienced operational problems forcing a turndown or even shut-down, the other gasifiers can increase their production to ensure a constant supply of synthesis gas. For decentralized methanol production only one gasifier is considered. This significantly increased the potential risk for outages. In theory, several smaller gasifiers of similar combined capacity could be applied. However, this would result in higher investment costs due to unfavourable economies-of-scale. Considering that decentralized production of methanol already resulted in production costs above current market prices, this approach is deemed unfavourable. In summary, to guarantee high overall availability and in turn lower production costs, we recommend the centralized production of chemicals employing several gasifiers operated in parallel as the preferred route. Gate fees: Gate fees (i.e. revenue) for the disposal of waste vary between 0 and -200 EUR/t. The lower limit of 0 EUR/t represents the scenario where no fees can be obtained from the market. With regards to the existing waste and recycling industry in Germany, this would be associated with serious upheavals as waste incineration in particular is largely dependent on disposal revenue for an economical and profitable operation. If no gate fees can be obtained,

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the production cost will increase for all cases considered in our scenarios. This increase will be largest for plants without electrolysis (Case 1: 34 %; Case 3: 37 %) and lowest for plants with electrolysis (Case 2: 21 %; Case 4: 22 %; Case 5: 11 %). In the case of Case 5, as production cost is dominated by the CAPEX and OPEX of electrolysis for maximum hydrogen integration, even without any disposal revenue, overall production cost will only increase minimally. Therefore, for Scenario 2050+, provided costs for electrolysis and renewable are low, plants operating chemical recycling facilities might be able to waive gate fees. With regards to of higher gate fees up to 200 EUR/t, the cases without electrolysis showed the greatest sensitivity for production costs (Case 1: 34 % and Case 3: 37 % decrease in costs). This showed the economic potential for the chemical recycling of problematic waste fractions (Typical examples: high-calorific wastes, fibre-composite materials, high alkali and halogen contents, etc.). For such waste fractions whose disposal are challenging, though volume potential is limited, higher gate fees can be charged. For example, in 2017, 268,000 tonnes of high-priced shredder light fraction were treated in Germany. In contrast, while the volume potential of mixed municipal waste at 22 million tonnes is significantly higher, disposal revenue is much lower [13]. For this reason, we suggest that market entry of chemical recycling facilities in 2025 to 2030 should focus on high-priced problematic waste fractions to increase profitability. Later on, when capacity expansion and the addition of electrolysis has reduced their dependence on gate fees, the chemical recycling plants could expand to their feedstock spectrum to include waste fractions with lower disposal revenues but higher volume potential. CO2 prices: The prices for CO2 emissions (i.e. prices for European Emission Allowances) is examined in the range of 0 to 200 EUR/t. The sensitivity of individual cases to CO2 prices is largely determined by the use of electrolysis to increase the carbon recycling rate and reduce CO2 emissions. For decentralized methanol production, the cost lines did not intersect in the upper variation range (refer to Figure 6). In other words, the CO2 savings gained with the 50 MWel electrolysis in Case 2 are not sufficient to compensate for the additional costs required for the electrolysis as illustrated in the comparison to Case 1. In contrast, the integration of renewable hydrogen becomes economically advantageous for central olefins production starting at a price of 155 EUR/t CO2. Electricity: As expected, the cases with electrolysis show a high sensitivity to changes in the price of electricity, whereas the sensitivity of the cases without electrolysis is extremely low. Similar to the sensitivity analysis for CO2 prices, the cost lines of decentralized methanol production did not show an intersection either – even in the extreme case of "free electricity". Hence, the CO2 savings through decentralised electrolysis in Case 2 cannot compensate for the additional capital costs required as illustrated in the comparison Case 1. For centralized olefins production, additional electrolysis will become economically favourable at electricity prices below 20 EUR/MWh.

Conclusions In this work, a roadmap for a transformation from the current linear economy which is based on petrochemistry and waste incineration towards a circular carbon economy which is based on gasification of waste materials and lignite for the production of methanol and light olefins is presented. To illustrate the key steps for such a transformation process, five cases are defined. Sustainability performance was determined by flowsheet simulation using Aspen Plus® and complemented by an economic evaluation and sensitivity analysis for key parameters. The main findings are summarized below:

Even without the integration of renewably produced “green” hydrogen, a CRR of up to 47 % (methanol) or 45 % (olefins) can be achieved. In comparison to the current linear economy, this will result in a reduction of CO2 emissions by 35 %. Thus, the chemical recycling of waste via gasification and subsequent synthesis of methanol and light olefins could make a significant contribution in transiting the carbon intensive chemical

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industry towards a circular carbon economy. This is already possible in the near future (Scenario 2025-2030).

Lignite could serve as an auxiliary feedstock to support continuous production in case of restricted market supply of waste feedstock. While co-gasification of waste with lignite would not be necessary in terms of process performance, its utilization can help to buffer against “bottlenecks” as well as price fluctuations of waste feedstock supply. Our evaluation showed that even with integration of lignite, significant carbon savings can be achieved compared to the linear economy. Thus, co-gasification of 80 wt.-% waste and 20 wt.-% lignite could support the introduction of chemical recycling into the market.

Provided electricity from renewable sources is available, the integration of such “green”

hydrogen from electrolysis can significantly increase the CRR and further decrease CO2 emissions. In contrast, if electricity from fossil energy sources with a large carbon footprint is used, the imported carbon footprint from such fossil-generated electricity will potentially cancel out any decrease in process-specific CO2 emissions, making its effect on CO2 emission reduction negligible. However, focusing on product yield, the integration of hydrogen from electrolysis – even from fossil generated electricity – could still be an attractive option in order to increase the production of methanol and olefins at a constant feedstock supply. This increase of synthesis production lowers the impact of gate fees on overall production cost.

In the long-run (Scenario 2050+), CRR above 90 % corresponding to a decrease in CO2 emissions of 95 % compared to the current linear economy is possible. With an integration of renewable hydrogen to substitute the CO-shift reactor and a utilization of the remaining CO2 from gasification via CO2-based methanol synthesis, it is possible to achieve a largely carbon-neutral chemical recycling process for the production of light olefins. It should be noted that this will depend heavily on the availability of renewable energy at low cost and the successful scale-up of electrolysis (Multi-MW scale for single plant, GW-capacity at national scale).

On the world market, light olefins promise higher value than methanol. In our

evaluation, we observed that decentralized methanol production will result in higher production costs than current market prices for grey methanol. However, this could still be a competitive option, especially with higher CO2 prices which will penalize conventional petrochemical production processes, and with the opportunity to obtain premium prices for “green” methanol produced from waste. In contrast, centralized olefins production without electrolysis can already achieve production costs which are within the range of current market prices.

Our Sensitivity analyses showed that plant availability will have a significant impact on

production cost. Consequently, ensuring high availability must be a main priority for concept design and operation of chemical recycling facilities. In this work, a concept for ensuring high availability was already considered for the centralized production of olefins: gasification is carried out in four parallel reactors operating at partial load. If disruptions occur in one gasifier and force a turndown or even shutdown, the load of the remaining gasifiers can be safely increased to ensure constant production of synthesis gas until the disabled gasifier can re-enter regular operation.

Chemical recycling for the production of olefins with additional electrolysis can achieve

economically favourable performance at electricity prices below 20 EUR/MWh, or if CO2 prices rise above 155 EUR/t. Within the range of the sensitivity analysis, small-scale decentralized methanol production of methanol with electrolysis cannot achieve competitive performance against the base case without electrolysis. While such low

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electricity prices for renewable energy in Germany are unlikely considering current taxes and duties, CO2 prices could very well increase drastically due to policy makers e.g. setting a minimum price or shortening the market supply of CO2 certificates. A drastic increase in CO2 prices would put significant pressures on conventional petrochemical and waste management industries to invest in alternative processes with lower CO2 emissions.

Assuming a long-term perspective with large-scale integration of renewable hydrogen

(e.g. Scenario 2050+), the impact of gate fees (revenues to be obtained from waste feedstock) on overall production cost and process economics is found to be significantly reduced. This is due to increasing production capacity with a constant waste input and OPEX being largely determined by the price of electricity. In view of these underlying conditions, chemical recycling might be able to forego any gate fees in the long run.

Acknowledgement This research is supported by the German Federal Ministry of Education (BMBF) through the research project grant no. 03SF0559B. Any opinions, findings, conclusions and recommendations in the document are those of the authors and do not necessarily reflect the view of the BMBF.

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chemischen Industrie 2019. [2] J. G. Speight, Handbook of Industrial Hydrocarbon Processes, Elsevier 2011. [3] European Parliament and the Council, On waste and repealing certain Directives:

Directive 2008/98/EC 2008. [4] Plastikatlas: Daten und Fakten über eine Welt voller Kunststoff, Heinrich-Böll-Stiftung,

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[12] Verband der Chemischen Industrie e.V (VCI), Chemiewirtschaft in Zahlen 2017 2018. [13] Statistisches Bundesamt (DESTATIS), Umwelt - Abfallentsorgung 2017 2019.

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