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Biorefinery Industry Leads the Way in Large-Scale US CCS Rollout

Serkan Birgel
Nov 30, 2021

GHI Blog

Two large-scale carbon capture storage (CCS) pipeline networks are in development in the US Midwest that will collect, transport, and permanently store CO2 sources from a series of biorefineries across the bioethanol industry’s heartland. These projects mark a milestone in the large-scale commercial deployment of CCS technology. CCUS/CCS technologies are often discussed in relation to hard-to-abate sectors; the examples above demonstrate how CCS technology can be used commercially at scale upon a more readily accessible industrial sector. These sectors produce as much as 50 million tons of CO2 per year in the US. 

The first project is the Midwest Carbon Express system headed by Summit Carbon Solutions (owned by Summit Agricultural Group), which will have a transport and storage capacity of 12 Mtpa. The second is the Heartland Greenway system (a collaboration between Navigator CO2 Ventures, Valero, and BlackRock), with a capacity of 15 Mtpa once fully expanded. Both projects propose to aggregate CO2 emissions from partner biorefineries to then be transported via pipeline to onshore dedicated geological storage in North Dakota and Illinois, respectively. 

A Combination of Financial and Production Advantages Have Been Key

The rollout in large-scale CCS networks in the US has been attributed to several of timely drivers: 

  • The IRS’ now-enhanced Tax Credit for Carbon Sequestration (Section 45Q) allows industrial emitters to earn up to $50 per metric ton of CO2 permanently sequestered, and up to $35 if the CO2 is utilized, such as it has often been for enhanced oil recovery operations. There are proposals to increase the credit up to $85 per metric ton.
  • An advantage of the production process through fermentation in biorefinery plants is that high purity (99%) gaseous CO2 streams are created that contain only CO2, H2O, and negligible amounts of impurities. The stream can be conditioned (purified, dried, and compressed) and then transported via pipeline to dedicated geological storage facilities. Concentrated CO2 streams are generally more cost-effective to process than instances where low concentration CO2 is produced. Sufficient volumes of CO2 can unlock economies of scale and the benefits of pipeline networking, and makes long-distance pipeline transport commercially feasible. Most midwestern biorefineries are not co-located with suitable dedicated geological sequestration sites. 
  • Low carbon or decarbonized ethanol can be sold at a premium and companies can benefit from the generation of tradable carbon credits (for example, in the California market). 
A Market Ready for Low Carbon Fuels

California’s Low Carbon Fuel Standard (LCFS) program encourages the reduction of the carbon intensity of transportation fuels. Established in 2009, the credit system focuses on the transportation sector, where fuel supplies are obliged to reduce the carbon intensity of transportation fuels (based on a complete lifecycle analysis), from an annual baseline. Fuels with carbon intensity values below the annual baseline generate credits, so low carbon transportation fuel suppliers earn credits that other companies purchase to reach annual LCFS targets. 

Ethanol, biodiesel, and renewable diesel combined make up most transportation fuel types from which credits have been generated. For ethanol, the reference fuel it is compared against is gasoline. In 2018, LCFS was revised to allow the generation of credits from CCS projects and direct air capture (DAC) projects that reduce emissions for transport fuels subsequently sold in the California market. Refineries must receive approval from the California Air Resources Board (CARB) to sell their ethanol as a renewable fuel in the LCFS program. In November 2020, approximately 42% of US ethanol production had developed pathways for LCFS participation. Essentially, if refineries can reduce their GHG emission profiles using CCUS/CCS technologies, then they improve their eligibility to participate in the LCFS program and benefit from the 45Q tax credit.