Target opportunities for valuable CO2 revenues from today’s ethanol and allied CO2-emitting projects

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

At one time, from a few primary sources of raw by-product CO2 which are refined and liquefied for the merchant CO2 industry, the primary source of commodity chemical manufactured with a CO2 by-product was anhydrous ammonia. The lion’s share of this commodity ammonia product has traditionally been dedicated to the agricultural sector. Over the last couple of decades, the fuel grade ethanol industry grew from a very few plants, in part serving the beverage grade ethanol sector, to a primarily fuel additive mandated and used heavily today; and in some states seeking to mandate E-15 added to gasoline. During these days, there was a period of correction, in terms of plant consolidations and a few closings; along with the lack of a very anticipated success of cellulosic ethanol – so unfortunate. However, there are new projects, processes, and technologies which give new hope for such projects which are not the traditional corn based fermentation methods, which in turn, yield a quality CO2 by-product.

Additionally, today, it is not economically feasible to produce merchant CO2 from flue gas (without subsidies) derived from power plants, for example, due to the cost of concentrating a lean CO2 in the raw gas content, often from 3 – 15% CO2 volume v. approximately 98 – 99% raw CO2 content found in ethanol and ammonia plant by-product. However, with 45Q and the IRA, some of this is subsidized; but the projects from flue gas are very expensive, when using the proven techniques such as MEA solvent recovery; and some of the attempts with semi-permeable membranes; and the potential for cryogenic separation via cooling and liquefying the flue gas and separating the CO2. The latter is only in pilot demos at this time. the whole discussion surrounding such methods from flue gas, is these processes are generally capital intensive, and /or high in energy consumption. I believe in the not too distant future, we will made more advances in solvents & technologies, such that we can feasibly recover from power plants on a grand scale, and the costs will not kill the projects. Of course where does the CO2 go, after recovery, is the ultimate question. That can be in part be solved by various forms of sequestration; hoping for advancement of bio plastics, advanced solvents, fuels, building materials, and other advanced products beyond searching for the right class VI well, or something similar – hoping for this on a truly grand scale someday.

This table represents today’s raw CO2 feedstock sourcing today. The percentage of CO2 off anhydrous ammonia plants, some years ago was up to 40% of the total CO2 from all forms of manufacturing processes, from such as list as shown here. At the same time, some years ago, the CO2 from ethanol sources was in the teens, as a percentage of the total US CO2 production for the merchant markets.

Sources of CO2 Raw Feedstock in North America

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Source type                                         Plants/approx..

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Anhydrous Ammonia                20

Oil refineries/Reformer                   18

Ethylene Oxide/ TiO2                       2

Natural Wells/Gas Separation        20

Ethanol                                           46

Flue Gas                                             0-1        Source: Advanced Cryogenics, Ltd.

Coincidentally, or perhaps due to production of both ammonia and ethanol predominately found  in the farm belt or the so-called ‘corn belt’, some ethanol sourced merchant CO2 has replaced certain ammonia sourced CO2, particularly in many regions of the Midwest.

Today, many regions of the Midwest are very well sourced from ethanol projects. Moreover, CO2 is usually transported via truck, up to 70% of the time, and limited by a radius of up to 250 one way miles; and the balance can be shipped via rail.

Prior to starting a new CO2 project from ethanol, or for that matter, any other source type; it is critically important to understand the dynamics associated with the entire investment; including markets of all types; capital and operating costs; plus infrastructure requirements behind the commodity, to include CO2 quality issues. This specifically is my work, offering you solutions for your CO2 product.

By-product revenues are essential to the long – term success of the ethanol project, and quite simply put, the ethanol project should bargain for every additional dollar available from the CO2 source and every other by-product available to the project, that being the most financially responsible view possible.

North American CO2 source targets for the corn based ethanol and cellulosic projects

New cellulosic ethanol plants are in the drawing boards using different production methods and feedstocks, such as corn kernel fiber, and targeting different markets, such as SAF. Some of this includes cellulose to sugar technology with Blue Biofuels, New Energy Blue, Ryam/GranBio, and Evolgene; for example.

As the earlier table indicates, the anhydrous ammonia sources are much less in number than the ethanol sources, more than double that amount.  The whole North American CO2 merchant market is estimated to be over 10 million metric tons per year in consumption, growing at a rate of perhaps 3% annually, on average. Existing ethanol projects largely fulfill the raw feedstock requirements of the Corn Belt, and select regions beyond the predominant US Midwest. On the other hand, it remains possible to still develop specific, over the fence, captive (merchant), or sequestration CO2 targets even the well – supplied Corn Belt today. Such opportunities could include a large target for the 50 – 100million gallon per year (and larger) ethanol project for enhanced oil recovery, chemical feedstock usage, enhanced coal bed methane projects, etc. Such projects obviously would be found adjacent or nearby viable oilfield, chemical manufacturing and coal production projects; or would require applicable pipelines or transportation for supply of product.

Of course we have the pipeline projects underway in the US; the largest of which is of course the Summit Energy pipeline, hoping to recover over 40 CO2 streams from ethanol plants; however they are stuck currently where South Dakota is not allowing passage of the pipeline; however Summit it fighting to gain passage through the state. There is the much smaller Tallgrass pipeline, some 392 miles in length, taking CO2 from 11 ethanol plants in NE, CO, IA; and heading to WY for sequestration. Summit has ambitions to take CO2 from 57 pipelines within ND, IA, SD, MN, and NE – with intentions to sequester in ND. All of this is subsidized by tax credits, such as 45Q, and the IRA.

In terms of a captive market, even the food processing industry could be a possible targets, as driven by the right location and process type, such as frozen or processed poultry operations. In markets which have a very large, concentrated poultry projects, for example, cryogenic freezing, and/or use of cryogenic fluids such as CO2 are currently being used, or could readily replace mechanical refrigeration. This is assuming viable economics and physical properties of the process, and strategic placement of the ethanol project v. the consuming locations. Such a means to an end, in terms of marketing CO2 could greatly exceed the dollar value of CO2 sold as raw gas ‘over the fence’ to a CO2 marketing and refining organizations.

Many other marketing scenarios could be examined and developed within a reasonable radius of the ethanol or other viable CO2 emitting process. There are many other uses for CO2 beyond food & beverage, to include the industrial sector; where the applications are ever-growing, many of which are green in nature.

The sale of CO2 to the gas companies, via direct over the fence raw marketing, a joint venture, or possible equity position for refinement and liquefaction, would in turn supply the merchant markets, such as the food processors, etc. This is the wholesale version of supply to the merchant markets. With respect to some regions which are in need of CO2 sourcing, and which are either import markets (or states) for CO2 or are under – supplied  & overpriced, the sale of CO2 from the new ethanol project could benefit the CO2 industry locally, plus add premium dollars to the overall ethanol project. These regions include certain markets within the US West,& Northwest, Intermountain Region, Southwest, Middle South, Middle Atlantic, Florida, and New England. Regions of the Canadian markets are also some of the better targets for the wholesale version of CO2 sales to gas concerns, and such could include the Pacific and Atlantic regions of Canada, plus specific regions of the more populated provinces.

In order to proper devise such captive marketing to the oil or chemical sector, for example, a proper evaluation should take place; the same goes for selecting the best gas company to purchase and refine CO2 on a wholesale level.

There remains the possibility of refining and liquefying CO2 for sale to the direct consumer market, where some ethanol firms have successfully achieved this form of structure. Of course, this form of marketing the CO2 could involve the greatest amount of risk; however, the potential for the greatest profits is entirely achievable, given the right approach.

An Environmental perspective surrounding CO2 from ethanol projects

Today, via all of my investigations in North America, and since the United States is not party to the Kyoto Protocol, Paris agreement, or other platforms which utilize collection or sequestration CO2 off gas from fermentation, there is no immediate mandate, at least applicable to most regions in the United States. On the other hand, all indications are that sequestration or consumption of CO2 from high emitting sources, such as power projects, large fermentation projects, and the like, will inevitably take place. The question is when and how will this occur. As to carbon credit schemes, there are voluntary carbon markets, to include Red Trail Energy, Gevo, and NextGen CDR. Further, as mentioned before, we have 45Q and the IRA, for example as tax credit mechanisms; plus the LCFS in places such as CA, OR, and WA.

As to a reduction of emissions, say that a US state is wishing to reduce emissions of CO2, such as the West Coast, then if such a case would mandate a net reduction of emissions from an ethanol plant, this could utilize perhaps a mix or specific case for certain CO2 markets, or true sequestration. In the case of markets, perhaps a chemical manufacturer or oilfield project could receive the product, and then be considered a means of reducing CO2 via combining or consuming CO2 in a product or project; even though one school of thought indicates that CO2 in the service of many enhanced oil recovery (EOR) projects is not true sequestration, since in part, some of the CO2 is brought back to the surface during oil recovery, and recycled. On the other hand, as I have written before, there is true displacement of (otherwise) emitted CO2 into EOR projects; despite recycling of the commodity during the EOR process. Then, of course there is the longer term plan to sequester more CO2 into Class VI wells; regulated by the EPA – this is further in question today due to government changes. Longer term, there should be sequestration of CO2 into advanced chemicals, fuels, and building materials – plus true Class VI Wells.

Image 1: EOR project with recycling of CO2 in process

With respect to serving the merchant CO2 markets, some of the CO2 sold via a gas company, or directly to the traditional customer, such as a food freezing company, or a soft drink company; in reality the CO2 is in part displaced, not sequestered. In the form of select CO2 sales to the chemical industry, some CO2 is combined, such in the manufacture of certain carbonate products or by-products, such as for household baking soda, or producing methanol for industry. In the end, the question of an extensive answer for CO2 reduction from the atmosphere, and from high levels of oceanic carbonation, resulting in ‘oceanic acidification’; the answers are extensive, extremely challenging, and somewhat unknown – an absolute challenge with some tools today; but much to do. In terms of recovering CO2 from new or existing ethanol projects, if the industry continues to grow, with advanced/cellulosic projects, and as both the political and environmental sectors close in on requirements to reduce emissions; this question will become increasingly important, at least in term ahead, if not the near term.

Image 2: Flow diagram for sodium bicarbonate production with CO2 as a feedstock agent

In the end, an understanding of CO2 markets and possible targets for sequestration, plus the costs associated with production, quality, and transporting CO2 to these destinations, should be in the hip pocket of the ethanol developer, as further data which will be required beyond the immediate knowledge for the most profitable and beneficial means of marketing the CO2 from the ethanol project.

I recommend alternate options beyond the planned, or stuck CO2 pipeline projects to be examined, to create revenue streams, and help reduce emissions. All of this provides full solutions for CO2 monetization and enhancing the value of the ethanol projects.

The Bottom Line

From the approximate grand total of 22-24 million metric tons of merchant CO2 globally, the US holds perhaps 40% of this grand total, and the balance of North America is another approximate 2million tons per year in consumption. Western Europe & Japan would be the other significant merchant markets; while the developing economies are largely beverage carbonation markets alone. The developed economies are highly diversified in terms of the broad application of CO2 in industry, including agricultural, solvent technologies, cryogenic freezing, food preservation, metallurgical applications, oil & gas applications, plus many usages in the chemical, water treatment; and usage as a moderate and safe acid in industry.

The dynamics for CO2 usage continues to change, as would the source types found in some regions, such as that described with the fertilizer ammonia production sector now replaced in part by CO2 off the fermentation sector; and new projects from other source typed under development like biogas, and biomass.

CO2 by-product continues to be a relatively routine and simple process for purification when derived from dry mill, continuous fermentation ethanol operations; as it has been from the usual reformer or anhydrous ammonia plant; reformer operations, natural sources, ethylene oxide, and natural gas processing. It is essential to understand the costs and requirements for production of CO2 in order to factor this into a clear understanding of the value of CO2 when sold over the fence to the gas refiner, or when selling directly to the markets at large.

There remain many target opportunities for CO2 in numerous regions of North America, as outlined above, as well as internationally; however, to understand the impact, competition, costs & requirements; plus the essential market values, a proper evaluation of these elements is necessary to yield the greatest dollar value to the ethanol project. A few dollars per ton more, or for that matter, even a dollar or two, over the many tons sold, and the many years ahead represents millions of dollars gained or lost when engaging with the right or wrong party or CO2 markets. The gain or loss of revenues from a good or bad deal on the CO2 end of the ethanol project represents, simply put, a lot of money.

With respect to environmental issues, as time marches on, the CO2 off gas from the ethanol industry will become increasingly noticeable by the political and environmental sectors; despite moving backward as of late. Therefore, a strong examination of marketing and sequestration alternatives is vital to capitalizing on your ethanol ventures.

CO2 is an excellent, long term and reliable revenue stream from the ethanol project, and should be maximized, and developed. However, a full understanding of markets, costs, and requirements is first needed as ammunition, before engaging with any form of CO2 market, that being the gas concern or the direct markets.

About the author

Sam A. Rushing is president of Advanced Cryogenics, Ltd., a professional CO2 consulting practice, which has decades of background and history in the service of the ethanol, chemical, energy, and allied industries. Mr. Rushing is a chemist, with vast merchant CO2 company managerial expertise, and consulting experience in all areas of the CO2 industry and individual project. He can be reached via e-mail: rushing@terranova.net, or via phone 305 852 2597, fax 305 852 2598.

www.CO2consultant.us / www.carbondioxideconsultants.com