What if Carbon Pipelines Fail?

The U.S. ethanol industry has identified carbon capture and sequestration (CCS) pipelines as a solution to achieve lower carbon intensity (CI), but not everyone impacted by the pipelines, such as landowners, is sold. In this installment of our CCS pipeline coverage, we explore why ethanol producers are pursuing pipelines and which other options are available if the pipelines fail. 

CCS Pipelines: Silver Bullet or Misfire?  

In 2022, former President Joe Biden signed the Inflation Reduction Act, which created the 45Z Clean Fuel Production Credit and upped the benefit for the 45Q tax credit for carbon sequestration. 

The year before, the federal government announced the Sustainable Aviation Fuel (SAF) Grand Challenge to escalate SAF’s market share in fueling American aircraft. SAF can be made from ethanol and is seen as a potentially immense new market for that cornstarch-based fuel. However, in order for a SAF producer to claim the 45Z credit, they must use ethanol with a carbon intensity (CI) score much lower than the current Midwest average of 55.2. 

These factors, combined with growing societal interest in lowering carbon emissions and the looming existential threat of electric vehicles, signaled to the ethanol industry it needed to find a way to lower CI. CCS pipeline projects emerged as a favored solution. 

Capturing CO2 from the fermentation process of ethanol production is estimated to reduce ethanol’s CI by roughly 30 points, according to a study commissioned by Growth Energy, a national ethanol trade association.

Growth Energy’s study looked into the various ways ethanol producers and corn farmers could help lower ethanol CI. Among the many steps a plant could take, the study showed CCS had the best balance between CI reduction and cost of implementation. 

Monte Shaw, executive director of the Iowa Renewable Fuels Association (IRFA), put the benefits of CCS this way: “There’s lots of things you can do to reduce your carbon score. If you don’t do CCS, you almost have to do everything else, and you still may not get there, depending on your facility, and it would be infinitely more expensive. 

“If you’re a standard Iowa plant at a 55 CI score and you do CCS alone, you’re probably attractive for SAF. If you do a couple of the other things, you’re going to be really attractive for SAF. So that is why we are focused on CCS. It’s the affordable thing that literally unlocks the market.”

However, from environmental groups to landowners, CCS pipeline projects have faced opposition that jeopardizes their success. It begs the question: What viable alternatives are there? 

On-Site Sequestration

Some plants, such as Red Tail Energy in Richardton, North Dakota, may be able to sequester their own CO2. However, CO2 cannot be sequestered just anywhere; the proper geology must exist underground to hold the CO2 in place. Successful Farming compared ethanol plant locations in the middle of the country, where most plants are located, with areas identified by the U.S. Geological Survey (USGS) to have large-scale CO2 storage potential. Many plants do not overlap with the areas USGS identified. (See map.) 

Shaw also noted that even if a plant were advantageously located for CCS, it may still need to pipe the CO2 to an appropriate location off the plant’s property. 

Alternative Uses for CO2

Ethanol producers may choose to find an alternative use for CO2. That’s exactly what Adkins Energy, an ethanol plant in Lena, Illinois, is seeking to do. 

Bill Howell, chief operating officer of the plant in northwest Illinois, said Adkins Energy is working with another company, Real Carbon Technology, to convert captured CO2 into green methanol. 

“I want to make something out of a raw material that I’ve been given, and frankly, I don’t look at CO2 as a waste; I look at it as a raw material,” he said. “And I think in the future, it’s going to become a very valuable raw material, particularly if we can figure out how to convert it to clean fuels.” According to the Methanol Institute, a methanol industry trade association, methanol can be used as a fuel and to make hundreds of products, including plastics, paints, and car parts. 

The company expects to have a demonstration production process running by late summer and be fully operational by late 2027. Howell said he expects the project to reduce the CI of Adkins Energy’s ethanol by 25 points. 

CO2 can also be captured and sold for a variety of uses, including livestock processing and water treatment. But IRFA’s Shaw argues this is not a realistic alternative to sequestration. 

“The industrial CO2 market includes using carbon dioxide to preserve food safely such as frozen food products,” he said. “That market has been longstanding for many years now, and a handful of ethanol plants supply it. So that’s not a viable market opportunity for plants not already doing it. It’s saturated.”

Plant Energy and Farmer Practices 

Joe Kakesh, general counsel at Growth Energy, said if CCS pipeline projects don’t pan out, the industry would look to strategies that fall into one of two major categories: plant energy use and on-farm practices. 

Growth Energy’s study found ethanol plants that use combined heat and power (CHP) systems can reduce CI by nearly 20 points if the systems are fueled with biomass such as corn stover. 

“Currently, about 20% of the existing 187 U.S. ethanol plants already have CHP systems,” the study said. “Although most of the systems use natural gas, biomass can be mixed with natural gas in many CHP boiler systems at biorefineries.”

Kakesh said corn grown on farms that plant cover crops will be attractive; the association’s study attributed a nearly 24-point CI reduction to cover crops. However, Kakesh pointed out they cannot be planted in every environment. There is also a cost to the farmer. 

Concerning the cost barrier to some ethanol plant innovations and farm practices, Kakesh said: “The cost issue only highlights the importance of continuing the incentives for the development of these technologies, in particular through the section 45Z tax incentive that was passed as part of the Inflation Reduction Act…. That tax incentive can be a powerful means to invest in a diverse portfolio of technologies, both from the perspective of the biorefinery, and from the perspective of the farmer, because the way the farmer gains value is that they … are able to sell their corn at a premium.”