The Carbon Dioxide Industry: A Merchant & Sequestration Perspective Today

By Sam A. Rushing, President, Advanced Cryogenics, Ltd
Special to The Digest

The global merchant CO2 industry represents around 22 million metric tons of consumption annually; of which the US is in excess of 40% of this grand total. To follow in tonnage, would be Europe, then Japan. Let’s say the merchant CO2 industry in the US is slightly over 9 million tons annually. The ethanol industry accounts for the highest percentage of merchant CO2 supply to adjacent refining plants, than any other sectors; approximately 45% of the approximate 110 merchant CO2 sources which have CO2 liquefaction/purification plants alongside these ethanol facilities. Virtually all the CO2 from the merchant CO2 plants is liquefied and purified to a beverage grade standard; where the assumption is that all grades of product would be well covered when producing beverage grade. These plants generally do not include facilities which recover for EOR (enhanced oil recovery), nearby feedstock requirements via pipeline; or more modern day sequestration operations which are also delivered via pipeline – however on sequestration, this is now evolving. Today, pipeline sequestration companies are looking to take CO2 from ethanol and other large (concentrated) CO2 emitters, such as anhydrous ammonia plant, and sequester into geological formations; which when successful will take some of the CO2 off the otherwise emitted total. They further will have the pipelines sometimes directed to oilfields for enhanced oil recovery (EOR). Such projects are largely taking product in the Midwest where most of the CO2 sources from ethanol and ammonia are located. The traditional CO2 which recovers low pressure CO2 off the ethanol, ammonia, and reformer operations is largely compression, water removal, refrigeration, and purification to achieve various grades of CO2, from pipeline – grade specs, to food and beverage grade. These are an old technologies, which have been around for many decades. Please see figure 1 showing a CO2 liquefaction / purification plant.

Figure 1. CO2 liquefaction / purification plant

The large recent trend in the CO2 industry at large has been largely dedicated to various forms of sequestration; the first being EOR, where a number of new projects are under evaluation and development at this time, subsidized by the enhanced tax credits precipitated by both 45Q and the Inflation Reduction Act. This represents a great opportunity to reduce airborne CO2 emissions; and gain significant tax credits by doing so. However, there is the capital expense and project development costs borne by the project principal.  A number of other types of sequestration destinations are under consideration and development; where one logical destination is the production of methanol, where this can represent a fuel or an organic solvent. Further, methanol can act as a precursor to the manufacture of formaldehyde, acetic acid, and tert  – butyl – ether; all are useful chemicals. Further, very small scale sequestration destinations have been to enhance the carbonate structure in concrete, thus strengthening concrete. Of course applications such as using the thermal value of CO2 off an ethanol plant, along with the high content CO2, generally over 99% (v) off the fermenters, as a partial solution for CO2 usage adjacent to greenhouses is an excellent form of sequestration.

On the other hand, some 75% of all merchant CO2 from primarily ethanol plants (which represent about 45% of all merchant CO2 source capabilities), are dedicated to the food and beverage sector. From this greater percentage of CO2. About 50% is dedicated to food chilling, freezing and preservation. Applications are broad in the food sector alone, where IQF (individually quick frozen) product from the nation’s largest to smallest processors use CO2, including manufacturers such as Tyson Foods and Hormel. Figure 2 illustrates frozen product exiting a CO2 cryogenic freezer. Other food applications include using dry ice snow or dry ice pellets in mixing and grinding meat products for temperature reduction, and as a gas flush application to remove oxygen from packages of meat, poultry and cheese, for example. Soft drinks are straight forward, where the use in craft beers and seltzer drinks has been on the rise.

Figure 2. CO2 freezer in operation

During the pandemic there were widespread plant outages and operating reductions throughout the source plants which serve the merchant CO2 market. With a return to a more normalized economy and production of commodities, ethanol among them, the CO2 merchant supply is in much better shape today.

Many non-food uses for CO2 range from metallurgy to health care; plus many uses in the industrial sectors continue to grow and appear all the time. Ethanol is the most important source type for a quality, highly concentrated form of CO2 feedstock for liquefaction/purification of the product which serves an impressively large and diverse marketplace.

The majority of merchant CO2 plants from ethanol are in the Midwest, as would be expected; which is consistent with the location of many of the food processors which consume the product. The CO2 industry transports most of the product via over the road transports; and about 25% via rail. The cost of distribution is often the largest factor in the price of a delivered product. As to regions which have shortages of supply for the merchant sector, this would be the US northwest, Middle Atlantic, and Northeast. Today, challenges exist in these regions of the country for adequate supplies.

Within the CO2 industry there is a level of concern that merchant supplies from the large sources in places such as the Midwest, Mid-South, and Southwest may be challenged by the Federal tax incentives as 45Q; and the IRA, in particular. Ultimately, the tax credits are hard to compete with when considering selling CO2 to the merchant gas companies; however, the investment in the sequestration – related CO2 liquefaction/purification plant; plus compression, and pipeline investments are very significant, particularly today with high steel and labor costs all of this must be considered – plus the lingering question of sustainability.

I know prices to the merchant sector have been below $10/ton for old contracts, up to around $30/ton for raw feedstocks to the traditional refiners in the industry, the industrial gas companies. Further, even though extraordinary investments are required for CO2 pipelines and class 6 wells for pure sequestration of CO2; the payback with these federal incentives can be impressive. However, out of around 200 ethanol plants domestically, around 45 have CO2 recovery, mostly for the merchant trade; and with potential plans to recover into pipeline networks being planned and developed; there remains a large number of ethanol plants which would probably continue to exhaust the CO2 off the fermenters to the atmosphere. Therefore, maybe there is not such a threat to the merchant sector with respect to available CO2 for the markets, due to subsidized sequestration by the government. This is the ultimate question to the CO2 refiners, sellers, and consumers as manufacturers of food and industrial products.

Sam A. Rushing is a chemist, and president of Advanced Cryogenics, Ltd., a CO2 consulting firm. Tel. 305 852 2597, email: [email protected] , web: www.carbondioxideconsultants.com