Doug Sombke: Carbon Sequestration Remains a Pipe Dream. Ethanol Fuel Already Has Value

June 07, 2023

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by Doug Sombke (South Dakota Farmers Union/Farm Forum) ... The recent study by South Dakota ethanol producers estimating a value to the state of nearly $6 billion needs to be carefully examined. Argus Leader’s recent article delving into the study does a good job of explaining it and pointing out both the pros and cons.

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The further underlying assumption that is without this initiative, ethanol is doomed and cannot compete in a carbon reduction world.

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Low carbon fuels are more than just the latest bright shiny object so without question ethanol needs to be able to compete in a low carbon world. But today’s ethanol already is a low carbon fuel. The Department of Energy credits corn ethanol with a 56% carbon reduction and believes continuing efficiencies can get it to 70% and eventually net zero.

However, to put too much emphasis on carbon ignores the fact that ethanol’s value is the sum of its parts. As a domestic, renewable, job creating, low cost and high-octane fuel that reduces imports and replaces toxic carcinogens in our gasoline, ethanol is a key component of today’s fuel. Even if the pipeline goes ahead, it will be years before it is completed. The promised financial windfall is speculative and in part based on tax incentives, which the study acknowledges. Tax incentives come and go and in an era of budget cutting and focus on deficits, there is no assurance at all they will remain in place.

Furthermore, the study acknowledges a loss in farmland yield where pipes are located at a cost in the tens of millions of dollars. Then consider the fees paid to the pipeline companies and that $6 billion figure loses some of its sheen.

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Our greatest value is to continue to clean up gasoline and save lives, and to maximize that we must get to higher volumes.

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One promising pathway is the bipartisan Next Generation Fuels Act introduced by Senator Charles Grassley and fellow Senators from both parties that could set the stage for market growth not dependent on tax incentives and political whiplash.

With a companion version in the House, The Next Generation Fuels Act embraces this key point of our current carbon benefits by reducing carbon intensive compounds refiners use to increase octane, and ensuring a role for ethanol’s clean low carbon octane. It would require automakers to honor warranties for these higher ethanol blends and remove several regulatory barriers while correcting faulty EPA testing and emission programs. The result will be cleaner, lower cost, high performing fuel in today’s cars without the massive disruption of converting the fleet to electric vehicles.

A recent article in Ethanol Producer Magazine (Gazing Higher: The Quest for E30) illustrates the great strides being made using high octane E30 blends in South Dakota and Nebraska. What should create a glide path for the Next Generation Fuels Act is that most of the provisions in the bill are already required, if the corn and ethanol industry gets EPA to do its job. And what is that job?

The Clean Air Act requires EPA to remove all barriers to the nationwide use of E30’s “clean octane” and to reduce carcinogenic mobile source air toxics (MSATs) by “the greatest degree of emission reduction achievable through the application of technology which will be available.”

E30 in existing vehicles offers that “available technology”. The transition to E30 from E10 could even help petroleum refiners. Using the same blend stocks as they do now, gasoline blenders can easily—and at lower cost and with far less emissions—produce HOLC blends requested by automakers simply by splash-blending 20% more ethanol on top of E10.

The CO2 pipeline may get tied up in the courts for years. We have an opportunity now to move forward.

Ethanol plant netbacks would increase substantially—in part by avoiding the need to pay shipping costs to Brazil, China and other countries because we are essentially capped here at home. READ MORE

Study reveals new data on how Summit Carbon, Navigator pipelines would impact SD's economy (Farm Forum)

Economic Impacts of CO2 Pipelines in South Dakota (Dakota Institute)

Gazing Higher: The Quest for E30 (Ethanol Producer Magazine)

SUMMIT CARBON SOLUTIONS CONTINUES TO BUILD SUPPORT ACROSS SOUTH DAKOTA (Summit Carbon Solutions)

South Dakota lawmakers push for special session against carbon capture pipeline (Associated Press)

Navigator not spared from pipeline opposition despite company's lighter-handed strategy: South Dakota Public Utilities Commission to make ruling following weeks of testimony from proponents, opponents (Dakota Scout)

Excerpt from Associated Press: A group of South Dakota lawmakers has begun circulating a petition in hopes of forcing a special session to protect private property rights against the developers of a proposed carbon dioxide pipeline.

But the petition drive faces an uphill climb, needing the signatures of at least two-thirds of the membership of both the South Dakota House and Senate to succeed. While Republican Gov. Kristi Noem could also call a special session on her own, she said last week that it would be “fruitless” unless lawmakers reach a consensus.

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Cosponsors of the petition drive said in a statement Monday that they object to the use of eminent domain to strip property rights from landowners for the benefit of an out-of-state private company with foreign investors. Others have objected on safety grounds, and environmental groups are skeptical. READ MORE

Excerpt from Dakota Scout: The fate of a pipeline set to run through South Dakota lies solely in the hands of Public Utilities Commissioners after a marathon of debate came to a close Tuesday.

The Navigator Heartland Greenway project slated to haul carbon from ethanol plants in eastern South Dakota to Illinois brought two and a half weeks of testimony from advocates and opponents for the 112-miles of line the carbon sequestration company, Navigator CO2, intends to build. The project calls for lines across five South Dakota counties, and is among two active pipelines in the state drawing opposition from landowner groups and lawmakers alike.

“This is the longest hearing I have been involved in ever,” Commissioner Chris Nelson told The Dakota Scout Tuesday, the eleventh day of hearings on Navigator’s pipeline permit since July 25.

Nelson’s been on the three-member board since 2011. And while the proceedings have been robust with arguments of both property rights violations and the future viability of the ethanol industry, Navigator’s application consideration is only a precursor to upcoming hearings on the Summit Carbon Solutions pipeline also slated for September, only days after a final decision on Navigator will be handed down by the PUC.

And that’s because Summit Carbon Solutions has exerted its eminent domain powers to conduct preliminary surveying on some of the parcels along its route. That’s in contrast to Navigator, which has not used eminent domain to obtain the easements it has secured along its route to date, said Elizabeth Burns-Thompson, vice president of government and public affairs with Navigator. READ MORE