An emerging bonanza in ethanol-focused carbon capture?

By Jim Kendrick
Special to The Digest

The US carbon capture market has grown, experts say, to $13 billion in 2023 and according to ExxonMobil is on the way to $4 trillion. That could mean that a bonanza for infrastructure in the form of carbon dioxide pipelines is on the way in ethanol country.  

Is “gold rush” putting it too forcefully? Perhaps not. Already in Nebraska and Iowa alone there are four different CO₂ pipeline projects in varying stages of development.  Planned underground storage sites for just these pipelines are located in three different US states. One of them comes with a $5B price tag.

Projects in the offing, and the markets to serve

At the International Fuel Ethanol Workshop & Expo’s Carbon Capture & Storage (CCS) Summit in Omaha, Nebraska capturing, transporting, and storing CO₂ to improve the lifecycle emissions profile of ethanol was among the top discussion topics at the three day conference, held June 12-14.  Fermentation in ethanol plants produces a concentrated stream of process CO₂. Erin Billeri, Senior Client Engagement Lead at the Global Carbon Capture and Storage Institute said, “CCS is a mature suite of emission abatement technologies that has been used for over 50 years.  However until recently the policy framework and economic drivers did not exist for large scale deployment.”  This policy framework goes beyond government tax incentives in the Inflation Reduction Act (IRA), and the basket of carbon capture tax credits under the Act known as 45Q.

Todd Bush, Managing Director at Decarbonfuse, a low carbon advisory and information company referenced Exxon Mobil’s estimate of a $4 trillion carbon capture market by 2050.  At present the scope is still huge.  Bush said, “We have an idea and a forecast around the adoption of carbon capture and it will give you an idea for the Capex and Opex for this market for North America.  We are estimating that carbon capture market right now, in 2023 to be about $13 billion.” 

Two recently announced deals from pipeline developers, Navigator’s CO₂’s memorandum of understanding with Infinium for utilization of CO₂, and Summit Carbon Solutions’ agreement to sell Carbon Dioxide Removal credits to NextGen “become bankable cash flows,” said Ben Nelson, Director of Carbon Programs for Summit, “and those are accretive to your ability to finance the project and pull those cash flows forward from debt financing.”

Why ethanol, why now?

Ethanol plants, cement, and ammonia production are among the top point source CO₂ emitters, making these facilities attractive suppliers of captured CO₂.  Billeri said, “Everything that is required to build the carbon management infrastructure will lay the groundwork for Nebraska as the second largest ethanol producing state in the nation to decarbonize its ethanol industry.  And once the carbon management infrastructure is developed to serve the ethanol industry, there is a future in which it can be expanded to support decarbonization of the region’s other industries.”

Bush explained that 70% of US storage is along the Gulf Coast with almost 1,800 gigatons of storage capacity.  Bush said, “In the Midwest you have a couple different options; 150 gigatons of storage to the east, kind of in the Illinois basin, and as you go north to North Dakota or might be referred to as Bakken or the Williston basin, almost 150 gigatons of storage there as well.”

North of $5 billion is the estimated cost for Summit Carbon’s pipeline, with a project footprint in five states and storage in North Dakota. Although IRA tax credits play a very important role in being able to get projects funded, Ben Nelson, Director of Carbon Programs for Summit Carbon Solutions said, “It will take the environmental attribute to maximize the amount of financing that these projects can get from banks and from the capital markets. But if they’re not contracted ahead of time, the banks will give you zero credit for that. They’re looking for contracted pre-commitments on this stuff.”

The opportunity to slash carbon intensity

For corn ethanol to play in future markets such as a biointermediate for sustainable aviation fuel, or receive IRA production tax credits, its lifecycle carbon intensity (CI) needs to be slashed.  The US Department of Energy Bioenergy Technologies Office (BETO) identified factors that can reduce ethanol’s CI, and found carbon capture and storage to be one of the sharpest knives in the drawer.  Many market opportunities open up when ethanol’s CI is reduced.  Brian Jennings, CEO at American Coalition for Ethanol said, “The most important way to reduce, quickly reduce, and meaningfully reduce ethanol’s carbon intensity is carbon capture and sequestration.  No doubt, #1.”

Navigator CO₂’s Vice President of Government Affairs Elizabeth Burns-Thompson shared Navigator’s multi-phase development plan. Navigator is targeting 2025 as the phase one service date for their Heartland Greenway CO₂ pipeline, also spanning five states with storage in Illinois, and currently 11 million metric tons of annual committed capacity.  30 ethanol plants and one ammonia facility make up the partner CO₂ suppliers.  “We do anticipate that we will begin to have permits in hand on the pipeline side of it as of the latter part of this year and moving into the early part of next year.”  Burns-Thompson continued, “we give [utilization] an equal amount of attention.  “All too often you hear it talked about, CCS, I think at the end of the day what we are developing is something that allows for CCUS.  Our role is ensuring that our shippers have equal access and opportunity to take best advantage of any and all of those markets based on their preferences.  Part of that means making sure that there’s offtake hubs.”

The infrastructure needed for transporting this captured biogenic CO₂ to store or use, the complex permit requirements involved, tax credits and financing considerations, and the sheer size of the market were key focus areas at the Summit.  Although review of a class VI CO₂ injection permit application can take three years from submission to permit issuance, in the interim, expect pipeline developers to forge ahead in obtaining pipeline construction permits to transport captured point source carbon dioxide, as well as continue to source CO₂ supply from emitters.