CCS Movement Ahead

June 1, 2023
Ethanol Today - May/June 2023

The ethanol world has shifted to revolve around low-carbon fuels where carbon capture and sequestration (CCS) will likely become a prerequisite, says Walt Wendland, CEO of Ringneck Energy, Onida, South Dakota. “You’ll either sequester or your company has to find alternatives so you can compete with companies that can sequester.”

Located on the edge of suitable geologic formations, Ringneck Energy explored developing its own sequestering project, but soon learned its underlying geology wouldn’t qualify and the closest suitable site would be 114 miles away. Instead, they signed up with Summit Carbon Solutions, which will lay 100 miles of pipe from Ringneck to the main line.

Having considered both routes to CCS, Wendland sees the value of participating in Summit’s project. “There’s a lot of work that goes into securing pore space, drilling a well and putting in a pipeline—water disposal, electricity, compression stations, booster stations. And probably the biggest thing of all, permitting and land right of ways.”

Wendland views CCS as essential for participation in the upcoming clean fuels tax credit in section 45Z of the Inflation Reduction Act. To qualify, fuels have to meet the threshold of a carbon intensity of 50 kg CO2e/MMBtu (48 gCO2e/MJ). The base credit is 20 cents per gallon with bonus credits based on GHG reductions for a maximum of $1 per gallon. That amounts to about 2 cents per gallon for each point of CI reduction, Wendland says.

No other technology comes close to the 30-point carbon intensity (CI) reduction delivered by carbon capture and sequestration, Wendland points out. “The carbon pipeline gets us below 50, so everything better than that is an economic benefit,” he says—a benefit Ringneck hopes to share with corn growers. “We’re in conversations with farmers to get a CI score for their practices so they can benefit from low-carbon ethanol as well.”

Ringneck will also be evaluating the 45Q tax credits for CCS worth $85 per ton to see which will make more sense, since facilities can’t do both. The details in the final rules will determine which route is better. Either way, Ringneck and Summit will share the benefits, Wendland says. “We wouldn’t get the 30-point CI reduction without [Summit’s] participation and they wouldn’t get the 45Q incentive without our participation.”

Incentives in the Inflation Reduction Act passed last fall lit a fire under investor interest, but CCS development was already accelerating with 45Q enhancements passed in the previous administration. The $50 per ton 45Q incentive passed in 2018 was enough to get pipeline projects like Summit and Navigator launched, explains Vault 40.41 CEO Scott Rennie. “The IRA makes some projects more profitable and makes others that weren’t profitable at $50 start to be profitable. And it brings other industries potentially into the profit column. ”

Ethanol CO2 is the low-hanging fruit of CCS with its 99percent purity and well-known, widely used technologies. Every ethanol plant already captures its fermentation CO2,though the vast majority of plants simply pipe it over to the thermal oxidizer. Close to a quarter of the industry,45 plants, pipe a portion of their CO2 to colocated gas companies who dry, purify and liquefy the gas for the merchant and industrial markets.

Sequestering is not new either, having been done in the form of enhanced oil recovery for over a decade by Conestoga Energy’s two Kansas plants. Archer Daniels Midland has a decade’s experience working with the U.S. DOE and Illinois Geological Survey to develop CCS at its Decatur, Illinois, facility. In North Dakota, Red Trail Energy worked with the N.D. Energy and Environmental Research Center to develop its project that began operations last summer. Both Illinois and North Dakota have suitable underground geology.

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By Susanne Retka Schill

Ethanol Today - May/June 2023

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