Coal may become much cleaner by mid-century. Source: Wikimedia Commons. 

When President Obama and the U.S. Environmental Protection Agency unveiled new rules aimed at corralling carbon dioxide emissions from power plants, critics were quick to respond with the following headlines:

"EPA carbon dioxide rules a job killer."

"Will EPA carbon standards hurt the economy?"

"Double Whammy: EPA Carbon Regulations Will Mean Higher Electricity Costs, Fewer Jobs."

While the new rules don't bode well for the coal industry in the near-term and fail to address methane emissions from natural gas production, they are a step in the right direction to minimizing our contributions to climate change. However, any discussion focused on the gloom and doom of carbon-cutting policies fails to account for a market they create for one often-ignored technology -- and it's about to go mainstream. It could save the future of coal power plants at Duke Energy (DUK 0.77%) and boost margins for industrial manufacturers such as oil refiner BP (BP 0.13%), car manufacturer Ford Motor Company (F 0.08%), and renewable fuel company Green Plains (GPRE -2.33%) -- all of which are investing in or considering the technology. NASA even thinks it could support future manned-missions and bases on the moon and Mars.

Most notably, the often-ignored technology could add over $1.3 trillion to American GDP and reduce the nation's total CO2 emissions by 52% from 2012 levels in just a couple of decades. What, exactly, is going on behind the scenes to make carbon policy the economy's best friend? It's a carbon sequestration technology like no other. Imagine converting waste CO2 into chemicals, fuels, animal feed, and even flavors and fragrances at a cost petroleum and sugar feedstocks could only dream of. Electricity generators (responsible for 38% of the nation's total carbon emissions) and industrial manufacturers (responsible for 14%) will be able to slash carbon emissions and monetize CO2 instead of dumping it into the atmosphere or paying a tax. Will companies really be able to create money out of thin air?  

It's time to rethink carbon dioxide
There are several ways to convert waste CO2 into valuable products, but they can generally be groups into two categories: catalytic processes (enzymes) and biocatalytic processes (algae, yeast, and the like). Platforms using either approach could be built into or next to any existing manufacturing facility (co-located), scaled to meet the manufacturer's needs, and utilize a feedstock that is cheaper than petroleum or sugar. To see this future, you'll have to change the way you think about CO2, which instantly evokes negative connotations. Consider that the carbon atoms in a molecule of CO2 (output) are the same carbon atoms powering (input) combustion or manufacturing processes, whether in the form of coal, natural gas, petrochemicals, or sugars. Companies paid for that carbon atom, why should they let it float away into the atmosphere?

Don't take the background in this advertisement for the new 2015 Ford F-150 for granted. Source: Ford.

Such platforms will turn conventional thinking on its head. Ford could convert CO2 emissions from the Ford F-150 manufacturing process into the fuel the trucks would one day run on. BP could wield oil refineries with zero (or near zero) emissions. Even Duke Energy's coal power plants -- powering 35.7% of its generation portfolio -- could be transformed into clean and valuable sources of energy. Carbon-free is championed as the end goal for energy production, but doesn't carbon-efficient make more sense? If CO2 can be efficiently sequestered and monetized the industry would be forced to think about cheap, "dirty" coal much differently.  

Meet the industry
Who's building this carbon efficient future? I recently spoke with Kyle Teamey, CEO and Co-Founder of the electrochemical start-up Liquid Light, which lists BP Ventures as an investor. The team is building a platform that uses a catalytic approach to convert waste CO2 into valuable products such as ethylene glycol, which is the company's first target molecule and represents a $27 billion annual market.

Source: Liquid Light.

Innovation doesn't stop there, however. An additional 35 molecules containing up to six carbon atoms have been produced to date and are supported by over 100 patents and applications, while a total of 60 unique molecules are possible (initially). That includes commodity chemicals, sugars, flavors, and fragrances. In other words, industrial CO2 could soon be the parent of the flavor in your ice cream.

Here's the world's first scaled up electrocatalytic reaction cell for conversion of CO2 to ethylene glycol. Source: Used with permission from Liquid Light.

If you think that's cool, consider that Dr. Andy Bocarsly of Princeton University is currently developing a system powered by solar panels. One day in the not-too-distant future fuels and chemicals could be manufactured directly from sunlight and waste CO2. That could provide a much needed solution for a renewable energy industry struggling to store solar energy in off-peak hours.

There are several companies approaching waste CO2 with biological approaches, too. Green Plains is the fourth largest ethanol producer in the nation, but it also owns a majority stake in BioProcess Algae. The company's platform utilizes photosynthetic algae and waste heat to produce valuable chemicals, commodity chemicals, fuels, protein-rich animal feed, and more. Both companies are currently evaluating and enhancing the performance of a 5-acre facility at the Shenandoah, Iowa ethanol facility owned by Green Plains. If successful, the project could be expanded to 400 acres.

Can this 5-acre project change the world? Source: BioProcess Algae YouTube video.

There's also Proterro, which is developing a platform that utilizes photosynthetic bacteria to convert waste CO2 into low-cost sugars. How low is low? The company believes it can achieve $0.05 per pound, compared to $0.17 per pound at current market prices. Today, corn and sugarcane are grown, harvested, and processed into sugars for foods, beverages, and industrial feedstock inputs. If we didn't need corn to produce renewable fuels, biobased chemicals, animal feed, or fish feed; then farmers could instead focus on supplying humanity's food (you know, that stuff agriculture was invented for?). In fact, the renewable chemical refineries gobbling up sugar could produce some of their own needs onsite from their own emissions. It's the ultimate closed-loop process.

Source: U.S. EPA.

How it all adds up
This is great and all, but how will it contribute over $1.3 trillion to American GDP in a couple of decades? It involves some math, but the calculations can be completed on a napkin. First, we'll have to take all of the CO2 emitted from the United States in a single year, which amounted to roughly 5.4 billion metric tons in 2012. Second, we'll have to multiple that by the percentage of CO2 that can potentially be replaced, which is 52%. That means the nation's total addressable waste CO2 volume is about 2.8 billion metric tons per year.

Next, we'll have to determine what the average net selling price of chemicals will be. While high value chemicals will be added to the mix, the massive volumes of low value, commodity chemicals will make their prices more representative of the average. So let's assume the average chemical produced from such platforms sells for $700 per metric ton, which is the low price fetched for ethylene glycol. However, the carbon dioxide needed to create that two-carbon molecule will cost Liquid Light $125 with its current technology. That means the average net value of chemicals produced will be about $575 per metric ton.

The final step should include a mass balance to account for each carbon atom (which differs for each chemical), but we'll simplify the calculation by sticking with ethylene glycol as our representative molecule. Just know that it takes about 1.42 metric tons of CO2 to produce one metric ton of ethylene glycol at a perfect yield. In other words, the nation's 2.8 billion metric tons of waste carbon dioxide could be converted into almost 2 billion metric tons of chemicals with a net value of $1.38 trillion.

This is not meant to be an exhaustive analysis and makes plenty of assumptions, such as 100% conversion and equal costs for catalytic and biocatalytic platforms. However, it could also be a drastic underestimation of the value of waste CO2 manufacturing. Making an almost endless supply of building block molecules such as ethylene glycol -- which is then converted into even higher value chemicals -- promises to shake up global supply chains for numerous industries. Either way, my intention is merely to change the way you think about CO2 and demonstrate the power of carbon efficiency.

Foolish bottom line
President Obama's carbon policy directly affects inefficient and uneconomical coal energy, but its indirect consequences could be the most profound. It could catalyze technologies looking to monetize waste CO2 streams from energy production and industrial manufacturing. Far from wrecking our economy and killing jobs, the latest carbon policy could actually boost American GDP by over $1 trillion and create an entirely new industry full of jobs.

While the big picture is great, zooming in for more detail paints an equally optimistic scenario. We could replace the hopes for a carbon-free economy with an easier to achieve carbon-efficient one. Ford Motor Company, BP, and Duke Energy could all reduce their environmental footprint while simultaneously boosting margins from monetizing more of the overall carbon they pay for. Your grandfather may have traveled to work to mine coal, but your grandchild (or child) may travel to work to "mine" the carbon dioxide it produces when burned. Imagine that.