U.S. Pushes Farmers to Develop A New Crop: Energy

by Keith Schneider (Circle of Blue) ... Despite pushback from environmental groups concerned about increased water pollution from a new tide of farm wastes, developers across the country see opportunities to build ambitious renewable energy projects to convert crops and agricultural wastes to low-carbon energy. In effect, the Biden administration and Congress are pushing farmers to the center of U.S. industrial policy for energy and transportation.

One of the places where the new era is emerging is a 245-acre field just outside tiny Lake Preston, S.D. Last September Gevo, a Colorado developer, broke ground for Net-Zero 1, a $875 million, 6.5 million square-foot refinery to turn corn into low-carbon jet fuel.

Gevo asserts its “farm-to-flight” project will release 80 percent less carbon dioxide to the atmosphere than ethanol produced by a conventional plant. It does so by integrating 35 million bushels from roughly 100 contracted South Dakota growers, a wind farm to power the plant, a “green” production facility that generates hydrogen from water, equipment to capture and permanently dispose carbon dioxide from air emissions, and capacity to produce 65 million gallons a year. Patrick R. Gruber, the company’s chief executive, said the carbon reduction from producing the fuel is so substantial that it will completely offset the carbon released in jet engine exhaust.

“This will be the cleanest ethanol plant in the world with the lowest carbon footprint,” he said.

None of it would be possible without government support. Virtually every phase of Net-Zero 1 production, and a good portion of its revenue, benefits from tax incentives, grants, and direct payments for low-carbon renewable energy, and the nearly $20 billion that Congress approved since 2021 for permanently disposing carbon dioxide. When the plant begins production, scheduled for 2025, it qualifies for a $1.75 per gallon clean fuel tax credit, plus an $85 tax credit for every ton of carbon dioxide it permanently disposes in deep subsurface caverns.

That’s not all. Congress also directed $40 billion to the Department of Energy for loan guarantees to finance innovative carbon-reducing projects. Gevo is expecting the department to approve a $620 million loan guarantee to pay for 70 percent of the Net-Zero 1 construction costs.

And in September the U.S. Department of Agriculture awarded Gevo a $30 million grant to pay its contracted corn growers a 25 to 50 cents per bushel bonus if they apply “climate smart” growing practices to produce the crop. Such practices involve not plowing, planting cover crops, reducing commercial fertilizer use, and taking other measures meant to keep carbon in the ground, and limit nitrogen and phosphorus fertilizer from running into streams. The Gevo project is one of 141 climate smart demonstration projects that the USDA announced last year at a cost of $3.1 billion.

“I can tell you there is not a single renewable energy producer in the country that is not looking at or already taking steps to install new technology, expand their facilities, or thinking about building new plants in response to the federal tax incentives passed last year,” said Geoff Cooper, the president and chief executive of the Renewable Fuels Association, an industry trade group.

In January, Avapco LLC, a biofuel company that operates an ethanol refinery in Thomaston, Ga. about 60 miles west of Macon, was awarded a $80 million grant by the Department of Energy to build a demonstration plant capable of producing 1.2 million gallons of jet fuel per year from wood chips.

Marquise Energy is collaborating with LanzaJet, which makes low carbon fuel, to build an ethanol and biodiesel plant on a 2,500-acre site near Hennepin, Ill. to produce aviation fuel for jets taking off from Chicago’s two major airports. The plant will capture and sequester carbon emissions and be powered with renewable energy.

Greenfield Nitrogen, an Iowa company, is developing a $400 million plant near Garner to produce 96,000 tons of zero-carbon fertilizer from ammonia — an inorganic compound of nitrogen and hydrogen. The electricity to separate hydrogen from oxygen in water molecules is generated by nearby wind farms. The 2022 Inflation Reduction Act authorized a $3 production tax credit for every kilogram of so-called “green hydrogen.”

Linda Thrasher, the company’s co-founder and president, explained that 176 kilograms of hydrogen is needed to produce a metric ton of ammonia. “That’s $528 per ton of production, which is very lucrative and is a game changer for the green ammonia industry,” she said.

Roeslein Alternative Energy, a Missouri company, is building six biodigesters at big cattle and swine operations in Iowa and Missouri to produce methane for transportation fuel and electricity.

Gevo executives assert that farms focused on producing energy will be a factor in reducing carbon from agriculture, which now account for 10 percent of U.S. greenhouse gas emissions. The contracts Gevo are developing with corn growers in South Dakota are intended to keep carbon in the ground by curtailing commercial fertilizer use, increasing soil fertility, and reducing erosion.

“We’re going to cause people to evolve,” said Gruber. “Some are already doing a great job. We want them to do better. How? By rewarding them for doing better.” READ MORE