Ethanol's Carbon Underground

by Luke Geiver (Ethanol Producer Magazine) Positioning into the low-carbon biofuels marketplace, ethanol producers are moving forward with sequestration strategies. A more lucrative federal tax credit, along with a reduced minimum production requirement, is making the economics attractive.

After more than 20 years of research, sponsored largely by the U.S. Department of Energy, the practice of carbon capture and storage (CCS) is poised to become a self-sustaining commercial industry. “The CCS industry in the U.S. is at a turning point,” says Andrew Duguid, senior engineer and CCS expert at Battelle Memorial Institute, a national research and development laboratory that has been a leading player in developing CCS options for two decades.

Since the 90’s, Battelle researchers have explored the potential of deep geologic formations—more than one mile below the surface—for storing CO2 produced from power plants, petrochemical facilities, biofuel production plants and other industrial sources. Deep saline or saltwater formations, depleted oilfields, coal seams or other geologic layers below the surface with voids are all “very promising,” and offer a realistic long-term option for carbon management, Battelle’s team believes.

The new 45Q tax credit provides a credit of $60 per ton of CO2 captured and stored. The previous version of the credit only provided $20, or less, per metric ton. The new tax credit also reduces the amount of CO2 that must be produced and captured from a facility in order to receive the credits. The new version sets the minimum at 100,000 metric tons instead of 500,000 metric tons.

The promise of CCS as an industry is not just linked to new tax credits or better technology. CO2 volumes across the ethanol industry paint a clear picture of the potential for major CO2 capture, storage and usage.

CCS Ethanol Projects
Near Decatur, Illinois, Archer Daniels Midland has provided an example of a successful CCS project linked to ethanol production. ADM is currently injecting roughly 1 million metric tons of CO2 per year. The project has a U.S. Environmental Protection Agency approved Class VI CO2 injection permit—the main regulatory requirement for all CCS projects—and serves as an example of what other plants may expect to do as they implement their own systems.

In North Dakota, Red Trail Energy LLC announced in March that it was commencing with its own CCS project.

Duguid and his team have developed a full suite of CCS-related services that can help ethanol producers take on a project from start to finish.

CCS projects looking to claim 45Q tax credits have a Dec. 31, 2023 construction deadline. READ MORE