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The effects of confinement in carbon nanotubes on Fischer-Tropsch (FT) activity, selectivity and lifetime of Carbon NanoTubes (CNTs) supported iron catalysts are reported. A method was developed to control the position of the catalytic sites on either inner or outer surface of carbon nanotubes. TEM analyses revealed that more than 80% of iron oxide particles can be controlled to be positioned at inner or outer surface of the nanotubes. Deposition of iron oxide inside the nanotube pores decreased the average size of the iron oxide particles from 14 to 7 nm and shifted the reduction peak temperature of iron oxide species to lower temperatures (from 389 to 371oC , 428 to 413oC and 580 to 530oC) and improved the reducibility of the catalyst by 25%. Catalytic performances of the catalysts in terms of FT experiment were tested in a fixed-bed micro reactor; the catalyst with catalytic sites inside the pores showed 23% higher initial activity than the catalyst with catalytic sites outside the pores. Also, the catalyst with catalytic sites inside the pores exhibited higher selectivity to heavier hydrocarbons (40.5% vs. 32.9% C‌5+ selectivity). In addition, deposition of catalytic sites on interior surface of the nanotubes resulted in a more stable catalyst, while its counterpart experienced 46.4% deactivation within a period of 720 h due to catalytic sites sintering. It is concluded that encapsulation of the catalytic nanoparticles inside the nanotubes prevents the catalytic site agglomeration.