Latest / The Manufacturing Podcast with Fexingo: Factories, Supply Chains, and Industrial Business / How a German Factory Is Making Chemicals from CO2 and Sunlight
Transcript
- Lucas: Luna, I want to take you to a factory in Darmstadt, Germany, that's doing something I honestly didn't think was possible at commercial scale yet. It's a chemical plant that makes ethylene — the building block for plastics, antifreeze, packaging — using only captured CO2 and sunlight. Luna: Wait — no oil or natural gas as feedstock? Just CO2 and sunlight? Lucas: Exactly. The company is called SunChem, and they've been running a pilot plant since early 2025. They take CO2 captured from a brewery next door — the fermentation tanks release almost pure CO2 — and they pipe it into their reactor. On the roof, they've got concentrated solar collectors that provide both heat and light. Inside, they use a proprietary catalyst that mimics photosynthesis, but instead of making sugars, it makes ethylene. Luna: So it's artificial photosynthesis, but for industrial chemicals. What kind of scale are we talking about? Lucas: Right now, the plant produces about 500 tonnes of ethylene per year. To put that in context, a typical world-scale petrochemical cracker produces around 1.5 million tonnes annually. So SunChem is about 0.03 percent of that. But here's the twist — their technology is modular. They can build these units in shipping container sized blocks and deploy them right next to any industrial CO2 source: a brewery, a steel mill, a cement plant. That eliminates the need to transport the CO2 or the ethylene. Luna: Modularity makes sense for distributed production — but how does the economics work? Even with free CO2 from the brewery, the capital cost must be huge per tonne at that scale. Lucas: SunChem is not trying to compete with the big petrochemical plants on price per tonne — at least not yet. Their strategy is targeting markets where customers are willing to pay a green premium. For instance, some luxury car brands want carbon-neutral interior plastics. And the European Union's Carbon Border Adjustment Mechanism is starting to put a price on embedded carbon in imported chemicals. Analysts estimate that by 2028, the effective carbon cost could add 200 to 400 euros per tonne of ethylene. SunChem's process avoids that entirely. Luna: Right, because their feedstock is waste CO2 and sunlight — no fossil carbon embedded in the product. So the green premium plus avoided carbon costs could make the math work. Lucas: Exactly. And SunChem isn't alone — there are startups in the US and China working on similar electro-chemical routes. But SunChem might be the first to have a commercial-scale plant actually running, not just a lab demo. They've been shipping ethylene to a specialty plastics manufacturer in southern Germany since November. Luna: That's a real milestone. But I'm curious about the energy balance — how much solar energy does it take to produce one tonne of ethylene? I imagine it's a lot. Lucas: It is. SunChem says their process requires about 60 megawatt-hours of solar energy per tonne of ethylene. A conventional cracker uses about 15 to 20 megawatt-hours of fossil fuel energy per tonne. So their energy input is three to four times higher. But the key difference is the carbon vector — their energy is renewable, and the feedstock carbon is already in the atmosphere. The conventional plant is digging up new carbon. Luna: So it's a trade-off: more land and more solar panels, but zero net carbon. In Germany, where land is expensive and winters are cloudy, does that limit where this can work? Lucas: That's a fair point. SunChem's first plant is in Darmstadt because it's one of the sunnier parts of Germany — still not Arizona, but they get about 1,600 hours of sunshine a year. They've had to supplement with some grid electricity during the winter months. But their long-term plan is to move to Southern Europe or North Africa, where solar irradiance is much higher. They've already signed a memorandum of understanding with a Spanish utility to build a larger plant near Seville. Luna: That would solve the sunshine problem. But what about the CO2 source? Breweries work well because the CO2 is pure and concentrated. Steel mills and cement plants have much dirtier flue gas — how do they handle that? Lucas: SunChem's catalyst is sensitive to impurities like sulfur and nitrogen oxides. For now, they're sticking with clean CO2 sources — breweries, ethanol plants, maybe biogas upgrading facilities. But they're developing a pre-treatment module that can scrub the impurities from steel mill exhaust. They expect to have a pilot running with a steel partner in 2027. Luna: So the carbon capture and utilisation piece is still a work in progress. But the core innovation — the artificial photosynthesis catalyst — that seems to be working. What's the catalyst made of? Lucas: They're being cagey about the exact composition, but they've disclosed it's a copper-based material with a proprietary nanostructured coating. Copper is known to catalyse the carbon dioxide reduction reaction to ethylene, but the efficiency is usually too low. SunChem claims their coating boosts the selectivity to over 80 percent, meaning 80 percent of the CO2 that goes in comes out as ethylene, not unwanted byproducts like methane or carbon monoxide. Luna: Eighty percent selectivity is impressive. Most lab-scale catalysts I've seen are around 50 to 60 percent. If they can sustain that at commercial scale, that's a real breakthrough. Lucas: It is. And they published a paper in Nature Catalysis last year showing they achieved 82 percent selectivity in a continuous reactor over 1,000 hours. That's the kind of durability you need for industrial operation. Luna: I want to shift gears a little. This show is listener-supported, and we keep it ad-free because of that. If conversations like this have made you think differently about manufacturing or given you a useful example to share, you can support us at buy me a coffee dot com slash fexingo. It's a small way to keep these deep dives coming. Lucas: Absolutely. We really appreciate everyone who chips in — it lets us spend time on stories like this one without worrying about sponsors. And now, back to SunChem. Luna: So, let's talk about the business model beyond the green premium. SunChem is a startup — how are they funded? Lucas: They raised a Series B of 45 million euros last year, led by a German climate tech VC and backed by the European Innovation Council. They've also received about 12 million euros in grants from the German Federal Ministry for Economic Affairs. The government sees this as a strategic technology to reduce the chemicals industry's dependence on natural gas, especially after the energy price shock of 2022. Luna: That makes sense. Germany's chemical industry is the largest in Europe, and it's been hammered by high gas prices. If SunChem's technology can be scaled, it's not just an environmental play — it's an energy security play. Lucas: Exactly. And the chemical industry is starting to pay attention. BASF, the world's largest chemical company, has been a silent observer — they haven't invested, but they've visited the Darmstadt plant several times. I think they're waiting to see if the technology can reach 10,000 tonnes per year before they commit. Luna: That's a typical 'valley of death' for industrial startups — getting from pilot to commercial scale. SunChem's next step is the Seville plant, which is supposed to be 10 times larger, at 5,000 tonnes per year. That's still tiny, but it would be a big proof point. Lucas: Right. And they're planning to finance that partly through a green bond, partly through project finance. They've already pre-sold the output to a Spanish packaging company at a 30 percent premium over conventional ethylene. So there is demand. Luna: Let's talk about the competition. You mentioned startups in the US and China. Who are they, and how do they compare? Lucas: In the US, there's a company called Twelve, based in Berkeley, California. They use a different electrochemical process — they split CO2 and water into synthesis gas, then use conventional catalysis to make ethylene and other chemicals. Their approach is more flexible, but they need a lot of electricity. SunChem's process is more elegant in the sense that it directly produces ethylene in one step, but it's less flexible — it only makes ethylene. Luna: So SunChem is a pure-play on ethylene, while Twelve can pivot to other products. That could be a strategic disadvantage for SunChem if the ethylene market shifts. Lucas: It could be. But SunChem argues that the ethylene market is huge — global production is about 200 million tonnes per year, worth over 200 billion dollars. Even capturing a tiny fraction of that market would be a massive business. Luna: Fair point. And in China? Lucas: There's a startup called CarbonBlue, based in Shenzhen, that's using a photochemical process similar to SunChem's. They're backed by Tencent and have a pilot plant in Guangdong. But they're less transparent about their performance data. SunChem has the advantage of published, peer-reviewed results. Luna: That transparency builds trust. So, looking ahead: if SunChem's Seville plant works, and they can get the cost down to compete with fossil ethylene even without a carbon price, what does that mean for the chemical industry? Lucas: It would be a huge step toward decarbonizing a sector that's responsible for about 5 percent of global CO2 emissions. But even if SunChem succeeds, we're still talking about a niche. The chemical industry is enormous and capital-intensive. It took a century to build the petrochemical infrastructure. Replacing it will take decades, no matter how good the technology. Luna: So the real story here might not be that SunChem will replace ExxonMobil, but that they've shown a viable pathway for making chemicals without fossil feedstocks. That's a proof of concept that other companies can build on. Lucas: Exactly. And that's why I think this factory in Darmstadt matters. It's not the size of a petrochemical plant, but it's a working example that the chemistry is real. And that's the first step toward making it ordinary. Luna: It is. Thanks for walking us through it, Lucas. Lucas: Thanks, Luna. That's our show for today.