Adding Up CCS Revenue Streams

by Luke Geiver (Ethanol Producer Magazine) The dual financial motive behind ethanol’s move into CCS helps explain how and why producers intend to monetize their vital new role in the carbon sequestration movement.

The affiliate of Summit Agricultural Group is working towards building a multi-state, multi-ethanol plant pipeline system that could help ethanol producers realize a future enhanced by carbon capture.

Ethanol Producer Magazine spoke with Boshart (Chris Boshart, general manager of ethanol plant) and Pirolli (Jim Pirolli, chief commercial officer of Summit Carbon Solutions) moments after they completed their tour, discovering how it went, what questions the general public had about fermentation or carbon, and why. More specifically, why has CCS taken the ethanol sector by storm, and why do producers in and out of ethanol country put such great value on CCS? Their answers were largely about two things: the big picture for ethanol’s future and the immediate financial impact CCS could have on a biorefinery’s bottom line.

Bryen Alperin, director of renewable energy and sustainable technologies at Foss & Co., is an expert in the tax credit space. Alperin and his team have a long track-record of navigating and capturing the value of tax credits for entities that either earn the credits or have an appetite for using them. A tax credit reduces a company’s tax liability dollar-for-dollar. But according to Alperin, not every tax credit generator has a desire to use the credit or the account value to do so. Foss & Co. helps companies find a way to benefit from the credit, or helps them work with another company that can.

Alperin and his team are particularly skilled at connecting large corporations with companies that can generate 45Q credits.

It's not just ethanol producers interested in how to navigate the 45Q. Investors and corporations are voicing their interest as well. “We were sitting down with one of our investors recently and they were encouraging us to get involved earlier on to bring more projects to market faster.” In some cases, those investors are willing to deploy their own capital to get a project going so they can get the 45Q credits in return for their tax strategy.

“I think about it from the corps perspective. They can wire money into the IRS for taxes, and they have no control on how it gets used. But by investing in these projects they are still paying into the social good, and they have control over the types of projects that they are able to promote with those dollars,” Alperin says, adding that, “they have an opportunity to earn a return on their investments.”

In 2022, the value of the 45Q credit for CCS is roughly $37 per metric ton. The minimum volume of metric tons that a carbon producer has to emit annually in order to qualify for the credit is 100,000 mt. At the minimum, the 45Q credits would be worth $3.7 million to any entity that can use them.

Jon Cartildge, commercial sales director for Battelle, says Battelle’s Carbon Services are set up to find and evaluate the feasibility of carbon storage and onsite sequestration of any given site while projecting operational and capital expenses for the project.

All ethanol plants have high-purity carbon, making them great options for CCS. Most produce well over 100,000 metric tons per year, according to Cartildge. READ MORE