Colorado-based Carbon America has signed an agreement for a project to capture and store approximately 175,000 tonnes/yr of carbon dioxide (CO2) from Bridgeport Ethanol LLC’s production facility in Nebraska.
That figure equates to 95% of the facility’s total fermentation process emissions and would have the annual impact of taking 38,043 passenger vehicles off the road, according to Carbon America CEO Brent Lewis.
President Biden’s Inflation Reduction Act (IRA) of 2022, combined with the California Low Carbon Fuel Standard (LCFS) credit, played a crucial role in making the project economically viable, Lewis told NGI.
The IRA has extended the Internal Revenue Service’s 45Q tax credit for permanent carbon dioxide sequestration from $50 to $85/tonne, and now applies to projects starting construction before 2033, up from 2025 previously . The LCFS program, on the other hand, allows producers of decarbonized ethanol to sell the fuel on the Californian market at a premium price.
LCFS credit prices have dropped dramatically over the past year or so. As a result, “the additional value now associated with the 45Q really helped replace a lot of the value that had been lost in our business models associated with the LCFS price,” Lewis said. He explained that Carbon America and the Bridgeport plant have reached an agreement that the revenue streams from the two incentives will be shared.
Carbon America expects the first CO2 injection at the Bridgeport project to occur by the end of 2024.
Carbon America’s pipeline of CCS projects is currently limited to ethanol plants, but the company is targeting other CO2 sources such as natural gas-fired power plants.
“We think the natural gas market, particularly the electricity market, is where a lot of CCS is going to happen,” Lewis said, citing natural gas-fired combined cycle power plants specifically. “We’re working on some of those things right now.”
The challenge, he said, is that the CO2 concentration of the flue gases emitted from power plants is significantly lower than from ethanol production, making the capture process more expensive and complex.
Still, “we think that’s where the big market is going to be,” Lewis said.
He added: “We think ethanol is an important part of our strategy, but it’s really a bridge to the larger, harder-to-scale sectors…So we’re actively working with utilities, fuel producers independent electricity companies, cement factories and some steel mills, work on ways to decarbonise these projects as well.
The 45Q expansion “opens up a very… wide universe of opportunity” for new CCS projects, Lewis said. “It’s a game-changer, and…we certainly hope and expect to see a lot of project announcements and a lot of project activity” as a result.
Proximity to the California market was an important criterion for selecting ethanol plants to associate with CCS, so that producers could take advantage of the LCFS incentive. However, Lewis said, “with the IRA, and with the evolution of voluntary carbon credit markets, there are certainly projects that had otherwise been… LCFS stalled that can now be economically viable” with a credit of $85/ton.
He said that “with new funding for carbon capture and sequestration projects”, including through the IRA, “carbon removal projects will play an even greater role in helping states United to achieve our emission reduction targets.”
Increase in market value
The Bridgeport deal marks Carbon America’s third agreement this year to finance, build, own and operate CCS systems at ethanol facilities, the company said, noting that Nebraska is the second-largest ethanol-producing state in the United States. United States.
“Carbon capture and storage increases the value of Bridgeport ethanol in the marketplace,” said Dave Kramer, president of Bridgeport Ethanol. “Our ethanol and distillers grains are important contributors to the economy of our local agriculture and ranching and we are constantly looking for ways to improve our products and their competitiveness. »
Carbon America plans to install carbon capture equipment that would extract CO2 from the ethanol production process and transfer it by pipeline to a nearby underground geological sequestration site.
The site “is rigorously designed to comply with the permanence requirements of Federal Class VI and the California Air Resource Board Low Carbon Fuel Standard,” according to Carbon America.
Nebraska Department of Agriculture Director Steve Wellman highlighted the potential for decarbonizing ethanol production.
“Biofuels play a vital role in providing a safe and environmentally friendly household energy supply,” Wellman said. “Adding carbon capture and sequestration to the ethanol production process brings value to Nebraska.”
He added that CCS “enhances the environmental benefits of ethanol by reducing the carbon footprint of liquid-fueled vehicles…This project will further ensure that ethanol saves drivers money at the pumps, cleans our environment and creates opportunities for our farmers and ranchers.”
“Carbon America’s Carbon Capture and Sequestration Facility for the Bridgeport Ethanol Plant is the first such project planned in Nebraska that we believe will support the vibrant ethanol and fuel industries. agriculture in our state,” said Dawn Caldwell, executive director of Renewable Fuels Nebraska. “Expanding carbon capture and sequestration in Nebraska will help our farmers and ethanol producers participate in the growing market for low-carbon plant-based fuels, while benefiting the environment. .”
Nebraska produces more than 2.2 billion gallons of ethanol a year, said Anthony Goins, who heads the state Department of Economic Development. Citing a recent study by the University of Nebraska-Lincoln, Goins said producers in the state deliver more than $4.04 billion worth of ethanol and related products each year.