The document discusses carbon dioxide (CO2) as a coproduct of ethanol production. It notes that previously, a major source of CO2 was ammonia production, but many ammonia plants have closed. Now, ethanol facilities provide a significant portion of CO2 supply, especially in the Midwest where there is a regional oversupply. The author argues that ethanol producers should evaluate CO2 markets and consider capturing and selling CO2 to maximize revenues and prepare for potential future regulations around emissions.

1. COPRODUCT
FindingOpportunitiesforCarbonDioxide
Revenues
By Sam Rushing
A few years ago. a primary source of refined camon
dioxide (C02) was as a byproduct produced during
the manufacture of anhydrous ammonia. In fact.
only a handful of primary sources of raw C02 were refined
and liquefied from ethanol for the merchant CO2 industry.
While a majority of anhydrous ammonia is traditionally ded-icated
to the agriculture sector, many plants are closed or
going through restructuring and bankruptcy largely due to
ramped-up production from mega-sized facilities in Latin
America. the Caribbean. China and Russia. These countries
and regions have cheaper labor and extremely cheap natural
gas feedstocks.
The result of the drastic reduction of domestic anhy-drous
ammonia manufacturing has been a shift in the loca-tions
of C02 facilities. forcing the relocation of merchant
C02 production in the United States.
Another factor affecting the domestic market is that it's
not economically feasible to produce unsubsidized merchant
C02 from flue gas derived from power plants. CO2 volume in
the raw flue gas is often 3 percent to 15 percent versus up to
99 percent in ethanol and ammonia plant coproducts.
Table 1 represents the primary sources of today's raw
C02 feedstock. Just a few years ago the percentage of C02
derived from anhydrous ammonia plants was up to 40 per-cent
of the total C02 from all forms of manufacturing
processes. At the same time. the percentage of C02 derived
from ethanol production was in the teens.
Some ethanol-sourced C02 has replaced ammonia-sourced
C02. particularly in regions of the Midwest. In fact.
many Midwest areas are flooded with C02 from ethanol proj-ects.
creating a regional oversupply. Moreover, C02 is usually
transported via truck. limiting the distribution radius to about
200 miles from the source. The balance is often shipped via
rail. However. it's becoming more difficult to negotiate bene-
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ficial rail rates for many commodities in part due to over-loaded
rail capacities from ethanol feedstocks. product and
coproducts.
Coproduct revenues are essential to the long-term suc-cess
of any ethanol project. Developing the C02 aspect of a
project "later on" is a dire mistake since making C02 ventures
work on a first-served basis is essential. especially with so
many new projects on the drawing board.
C02 Source Targets
The North American C02 merchant market is estimated
to be about 10 million short tons per year and growing at an
average annual rate of 3 percent. Existing ethanol projects
largely fulfill the raw feedstock requirements of the Com
Belt and select regions of the greater Midwest. However. it's
possible to develop specific. over-the-fence. captive or
sequestration C02 targets even in the well-supplied Com
Belt. Examples include enhanced oil recovery. chemical feed-stock
usage and enhanced coal-bed methane projects. Such
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projects are found adjacent to
viable oilfields, or cbemical manu-facturing
and coal production proj-ects,
and require distribution infra-structure.
The food processing
industry is also a possible market.
Markets having large concentrated
poultry projects use cryogenic
freezing that utilizes fluids sucb as
C02 to replace mecbanical refriger-ation.
Selling C02 to gas companies
via direct, over-the-fence raw mar-keting,
a joint venture, or possible
equity position for refinement and
liquefaction, would supply the mer-cbant
markets sucb as food proces-sors.
This is the wholesale version
of supply to the mercbant markets.
For under-supplied regions
that import C02, ethanol projects
can benefit the local CO2 industry.
Those regions include markets in
the West, Southwest, Middle
South, Middle Atlantic, Florida and
New England. Some Canadian
markets, including the Pacific and
Atlantic regions, as well as specific
areas of populated provinces, are
better targets for the wholesale ver-sion
of C02 sales.
A proper evaluation should be
conducted to devise sucb captive
marketing to the oil or chemical
sector. The same goes for selecting
the best gas company to purchase
and refine C02 on a wholesale
level.
The possibility also exists for
refining and liquefying C02 for sale
to the direct consumer market,
something some ethanol firms
have achieved. Of course, this
form of marketing involves the
greatest amount of risk. However,
it also holds the greatest profit
potential.
An Environmental
Perspective
Since the United States isn't
party to the Kyoto Protocol or
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..
The CO2 storage bullet is on the rig~ side of the phoro of Quad County Com Processors in Galva,
Iowa. The CO2 plant is the low-Iying building.
other laws that urilize collection or
sequestration of CO2 from fermenta-tion.
there is no immediate mandate
to do so. However. all indications are
that sequestration or consumption of
C02 from high emitting sources. such
as power projects and la.:ge fermenta-tion
projects. will inevitably take
place. The question is when and how
will this occur.
Trading carbon credits isn't appli-cable
to the ethanol industry today
and isn't a true solution to a net
reduction of C02 emissions. One of
the only domestic formats which rep-resents
C02 trading is the Chicago
Climate Exchange (CCX). which
doesn't yet deal with industrial chem-ical
or ethanol projects. However. the
CCX has used a C02 trade value of
about $4 per ton. a mechanism that
may be established broadly some day.
Let's say a state. such as
California. wishes to reduce C02
emissions. If such a case mandates a
net reduction of emissions from an
ethanol plant. a project would utilize
true sequestration or find specific
C02 markets. In the case of markets.
a chemical manufacturer or oilfield
project could receive the product and
then be considered a means of reduc-ing
C02 via combining or consuming
it in a product or project. C02 in the
service of enhanced oil recovery proj-ects
may not be considered true
sequestration since some of the C02
is brought back to the surface during
oil recovery.
With respect to serving the mer-chant
C02 markets. some of the C02
sold via a gas company or directly to
a consumer is only displaced, not
sequestered As a result. the question
of an exclusive answer for C02 reduc-tion
remains extensive. extremely
challenging and somewhat unknown.
Recovering C02 from new or existing
ethanol projects. as the industry
grows and political and environmen-tal
sectors close in on requirements to
reduce emissions. will become
increasingly important.
An understanding of C02 mar-kets.
possible sequestration targets
and the costs associated with trans-porting
C02 should be in the hip
pocket of the ethanol developer.
ETHANOL PRODUCER MAGAZINE AUGUST 2007

4. Further data will be required beyond
the immediate knowledge of the
most profitable and beneficial means
of C02 marketing from the ethanol
project.
Conclusions
The United States holds per-haps
40 percent of the approximate
total of 20 million metric tons of
global merchant C02. The balance
of North America is approximately
another 2 million tons per year in
consumption. Western Europe and
Japan are the other significant mer-chant
markets, while developing
economies are largely solely bever-age
carbonation markets. Developed
economies are highly diversified in
terms of the broad application of
C02, including agricultural, solvent
technologies, cryogenic freezing,
food preservation, metallurgical
applications, oil and gas applications,
plus many usages in the chemical
and water treatment industries.
The dynamics for C02 usage
continues to change, as would the
source types found in some regions,
such as that described with the fertil-izer
ammonia production sector now
replaced in part by C02 off the fer-mentation
sector.
C02 continues to be a relatively
routine and simple process for
purification when derived from dry-grind,
continuous fermentation
ethanol operations. It is essential to
understand the costs and require-ments
for production of C02 in
order to factor it into a clear under-standing
of the value of C02 when
sold over the fence to the gas refin-er,
or when selling direcdy to the
markets at large.
There remain many target
opportunities for C02 in numerous
regions of North America and inter-nationally.
However, to understand
the impact, competition, costs,
requirements and essential market
values, a proper evaluation of these
ETHANOL PRODUCER MAGAZINE AUGUST 2007
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elements is necessary to yield the great-est
dollar value to the ethanol project.
Even $1 or $2 per ton variation over
many years represents a great deal of
money.
There will continue to be a growing
push to control and reduce C02 emis-sions
from all emitters, whether a single
family car, an ethanol project, or the
mega-sized coal-fired power plant. In the
long term, C02 recovery, sequestration,
or another form of C02 management
will direcdy affect the growing ethanol
industry.
More information is available at
www.carbondioxideconsultants.com.
Sam Rushing is president of Advanced
Cryogenics Ltd" a carbon dioxide con-sulting
firm based in Tavernier, Fla.
Reach him at rushing@terranova.net or
(305) 852-2597.
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