Leah Douglas

(Reuters) – U.S. ethanol companies are betting heavily upon carbon capture and storage technology (CCS), to lower greenhouse gas emissions, and ensure a spot for corn-based fuels in a future that is climate friendly. This according to industry executives and groups.

However, the plan comes with risks: CCS’s infancy has seen high costs and poor performance, federal incentives are being stalled by Congress for carbon capture, while public opposition is growing to pipeline infrastructure to transport gas captured.

“There will definitely be challenges,” said Dr. Isaac Emery, a sustainability consultant for the biofuel industry, referring to the implementation of CCS. “It’s not that it’s easy, (but) it is easier than doing it any other way.”

U.S. oil refiners are required to blend some 15 billion gallons of ethanol into the nation’s gasoline pool each year, a policy meant to help corn farmers, reduce import dependence, and lower emissions. The Biden administration will be reviewing this policy in order to make sure it is compatible with its long-term environmental and economic goals.

Joe Biden, U.S. President has promised to make the economy net-zero in greenhouse gas emissions by 2050. He is pushing for industry to improve. This has led to increased scrutiny for ethanol’s emissions and competition from electric cars in the transportation market.

According to government figures, ethanol is 20%-40% less carbon-intensive than gasoline. A recent report in the Proceedings of the National Academy of Sciences revealed that ethanol may be at least 24% less carbon-intensive than gasoline. This is largely because of the large amounts of corn grown.

The ethanol industry’s main trade group, the Renewable Fuels Association, said in a report last month, authored by Emery, that CCS is a “key technology” and “one of the largest and most effective actions” producers can take to decarbonize.

According to the report, 90% of the ethanol plants should implement this technology by 2050 in order to reach the zero net target.

Dozens Midwest ethanol plant owners have now signed up for three proposed pipelines to transport carbon captured from underground storage.

Matt Vining, the chief executive officer of Navigator CO2 Ventures, which is behind one of the pipeline projects, said at the National Conference in February that companies using CCS will be able to “reserve () spot in line in a decarbonizing world.”

A major economic tool for the industry’s deployment of CCS is a federal tax credit known as 45Q that gives producers $50 per ton of captured and stored carbon.

A proposal to expand the credit to $85 per ton was included in the Biden administration’s Build Back Better reconciliation bill, which has stalled in Congress. CCS is considered an essential tool in combating climate change by the administration and it will likely be expanded through future legislation.

“We’re very hopeful that those enhancements do move forward at some point, but even if they don’t, we’ve still got a powerful incentive in the existing 45Q,” said RFA’s chief executive officer Geoff Cooper.

According to the Global CCS Institute, 12 US CCS projects are currently in progress. The technology, however, has not met expectations.

For example, the Department of Energy spent over $1 billion in nine CCS-related projects between 2010 & 2017, however, just two of these are currently operational, according to a December report by a government watchdog.

CCS project failures have also been high-profile in recent years, including the Texas suspension in 2020 of $1 billion Petra Nova’s Texas carbon capture goal.

The industry must transport the carbon from the Midwest, and landowners in the Midwest are opposed to the construction of pipelines. They fear for their safety as well as the damage they could cause to their land. [L2N2VA1R6]

Industry watchers are concerned about questions regarding the production of carbon dioxide in the ethanol sector.

If emissions are higher than some government estimates, then CCS alone may not be enough to reduce the industry’s emissions to zero, said Jonathan Lewis, senior counsel and director of transportation decarbonization at the Clean Air Task Force (CATF), a climate-focused non-profit group.

Still, he said, CCS has a chance to reduce ethanol’s climate impact. “It only helps.”