How CO₂-to-diesel technology could help reach net-zero emissions targets: a Canadian case study

Carbon capture, utilization, and storage (CCUS) is an attractive technology for the decarbonization of global energy systems. However, its early development stage makes impact assessment difficult. Moreover, rising popularity in carbon pricing necessitates the development of a methodology for deriving carbon abatement costs that are harmonized with the price of carbon. We develop, using a combined bottom-up analysis and top-down learning curve approach, a levelized cost of carbon abatement (LCCA) model for assessing the true cost of emissions mitigation in CCUS technology under carbon pricing mechanisms. We demonstrate our methodology by adapting three policy scenarios in Canada to explore how the implementation of CO₂-to-diesel technologies could economically decarbonize Canada’s transportation sector. With continued policy development, Canada can avoid 932 MtCO₂eq by 2075 at an LCCA of CA$209/tCO₂eq. Technological learning, low emission hydroelectricity generation, and cost-effective electricity prices make Quebec and Manitoba uniquely positioned to support CO₂-to-diesel technology. The additional policy supports beyond 2030, including an escalating carbon price, CO₂-derived fuel blending requirements, or investment in low-cost renewable electricity, which can accelerate market diffusion of CO₂-to-diesel technology in Canada. This methodology is applicable to different jurisdictions and disruptive technologies, providing ample foci for future work to leverage this combined technology learning + LCCA approach.