Let’s ‘Make Hay’ from CO2 In biofuels production, and consider three potential marketing scenarios

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

The long term sustainability of first generation ethanol facilities, through advanced biofuels plants, is realized by making money from all the by-products; and of course, CO2 is one of the leading components of this by-product list. There are many variables associated the feasibility of adding a carbon dioxide plant to a biofuels facility. There are over 40 CO2 plants in North America which source from ethanol; out of a total number nearly 200 ethanol plants, in 24 states. These CO2 plants primarily source the merchant market; that being the food, beverage and industrial markets. There are a few exceptions, such as EOR (enhanced oil recovery) destinations with the CO2; however, these are specific to the region and oil recovery economics. The CO2 industry is highly resilient, and has always been highly tied to the food and beverage industries, for primarily food processing of principally meat products, from poultry, to fish, to beef, pork, and frozen specialties.

There are various possible options for the supply of carbon dioxide to a variety of markets, as direct, or indirect, as a liquid, a dry ice product; and local markets to (rail served) regional markets. Specific to what makes a successful CO2 project, are the correct selection of the elements which best serve the best suited markets, and the mode by which they are served. It is interesting to note at present, there are a very few number of CO2 gas companies, mostly multinationals – then a few independent companies in the business.

OPTIONS FOR REVENUE

It is essential to fully understand the options for obtaining a revenue stream from CO2, which can be best served via professional CO2 evaluations and feasibility work. Toward this end, the questions include the value of the merchant and captive markets locally, regionally; and perhaps for given destinations via over the road trucks, or rail, for example. Then, the understanding as to whether to wholesale the product via a refiner, or reseller; and whether this is a raw gas sold ‘across the fence’, or if liquid, refined product or dry ice is produced, and sold via distributors, resellers; or direct to the markets. As some operators have found, the approaches vary significantly in terms of revenue streams, and the value of the product sold to what markets are chosen. Without fully evaluating and understanding the options as markets in full, furthering a CO2 project, with the best suited and premium revenue stream is being developed in the dark, and a great deal of opportunity can be left on the table, in disfavor of the ethanol principal.

 COST / BENEFIT ANALYSIS

The results can vary widely from a benefit perspective, after major expenses (costs) are paid. Below are examples of three types of projects, from other possible CO2 project scenarios.

1. Selling raw gas over the fence. Depending upon the arrangement, this value can range from $20 – $35/ton – or even more, since so many have to compete with subsidized sequestration schemes. To fully achieve many of the proposed sequestration schemes, is a very long and difficult road; with many twists and turns, and roadblocks.

With respect to the three scenarios outlined, depending upon markets served, a CO2 plant would require a parcel of land; and depending upon the distance to the CO2 plant, perhaps a blower system, and certainly a (multi – skidded) CO2 plant will be required; along with 5 days’ worth of storage.. Then, assuming there are 100,000 tons sold annually, this benefit could be an added $300,000 per year, based upon $30/ton. Then when extending this to a 15 year term with built in price adjustments, it represents a multi-million enterprise..

2. Selling refined liquid, FOB spigot. Depending upon which plant contractor is engaged, prices vary somewhat as design, options, experience, and flexibility. Say the liquid will bring a price between $50 to $100/ton, perhaps, FOB spigot; this represents a multi-million income stream; of high significance. Then, for this approximate 300 TPD plant, assuming the same tonnage, costs could be estimated near $35.00 per ton, with electric power and amortization as the major factors; then overhead, cooling water, labor, and maintenance follow in terms of cost per ton. Then, this approximate margin (based upon a $40/ton gross margin) could be $1.25 million/year; or even more.
3. The third model could be a direct to market approach, assuming an average selling price of over $100/ton. However, markets in many regions of the country are priced up to and beyond the $200 – $300/ton (delivered basis). Given this average model on a price/ton basis; this represents a gross income of near $10 million annually. If the production costs for this project were to be considered, along with an estimated cost of delivery @ $30/T; thus a gross margin, or benefit annually of perhaps $3million(@$100/T), to $9 million(@$300/T).

The above scenarios show what can happen with benefits as income streams v. costs, which can occur when adding CO2 recovery and sales to the ethanol or advanced biofuels projects. Markets vary, as do possible scenarios for making money from the CO2 project. Further, these projects are considered essentially indefinite, as long as the CO2 stream continues to be received from the fermentation process. The proper evaluation of markets, costs and requirements are key to bringing in significant profits and improving the environment from an otherwise vented CO2 product, which is the predominant greenhouse gas. This CO2 could otherwise be put to good use in industry, and even function as a ‘green chemical’ in a wide variety of applications. Let’s make hay, and add CO2 to the ethanol projects throughout North America, and globally.

About the author

Sam A. Rushing is a special author for Biofuels Digest, and is president of Advanced Cryogenics, Ltd. Further, as a chemist by background, and with a strong merchant background along with a long consulting history, consulting expertise including evaluations and development of CO2 options for the client are the nature of the consulting practice developed by Mr. Rushing. In short this company is ‘all about CO2’.  Please contact the company for more information, and to work toward increasing revenues and options from your fermentation project. Phone: 305 852 2597, e-mail: rushing@terranova.net; web: www.carbondioxideconsultants.com