Red Hydrocarbon is a project to develop a special market for hydrocarbons where there are no net CO2 emissions to the atmosphere.
In other words, CO2 is either not released at all during combustion (with a coal plant with carbon capture) – or it is stored at the same rate it is released (via carbon capture elsewhere) – or there is no CO2 released at all (for example if the hydrocarbon is used to make paint).
The idea is that “red hydrocarbon” takes a growing percentage of all hydrocarbon production, until there is no conventional hydrocarbon production (which we call “black hydrocarbon”) at all.
So we are splitting the hydrocarbon market into two.
The change would be driven by both market and regulation. Perhaps a small market for red hydrocarbon (used to create red petrol and red electricity) could be established initially, and once established, followed by regulation to encourage or force more red and less black.
As an example of how it might work – consider that a country like the UK might have 50m electricity customers (residential + business) paying on average £1000 / Eur 1275 a year – and of these, 5% were willing to pay a premium of 10% for electricity which was 25% “red”.
This 10% premium would generate £250m (Eur 318m) a year (calculated as 50m x 1000 x 0.05 x 0.1) which would pay for a £1bn carbon capture plant in 4 years – and allowing for a 40% price premium for red electricity (generated with carbon capture).
A regulator could make rules limiting the supply of ‘black hydrocarbon’ which can be produced every year – ideally with a curve where the % red hydrocarbon in every oil and gas company’s portfolio must gradually increase from 0 to 100 over 30 to 60 years.
Energy buyers could also set targets (via choice or regulation) about how much ‘red’ energy they would like in the energy they buy.
Please contact Rex Gaisford to discuss further on firstname.lastname@example.org.