Tim O’Mara and Kameryn Furman recently provided insights on the market outlook and developments within the ethanol industry during a podcast at the 2024 Fuel Ethanol Workshop in Minneapolis. Tim is process technology manager for the Oil, Gas & Chemical Group at Burns & McDonnell; Kam is the group’s business development manager. Here are excerpted comments from their session.
Tim: I would say the big theme with plant operators is getting more life out of their facilities. Many of these plants are over 20 years old and essential process equipment and components are starting to wear out. We’re seeing a number of requests for assistance with maintenance and repair projects, along with larger capital projects.
Ethanol plants are adapting to a changing marketplace. Corn oil recovery is a good example of that. We’ve seen a lot of interest in the build-out of renewable diesel capacity, and renewable diesel refiners love distillers corn oil. The ethanol industry is emerging as a great provider of feedstock. Producers are making good use of that feedstock in renewable diesel production to satisfy the LCFS (low carbon fuel standard) market in California. The opportunities for low-carbon feedstock will only grow as we see more carbon capture facilities being added, along with reduction of carbon intensity of ethanol production through the use of cogeneration, electrification and renewable gas.
Kam: That’s right. Carbon capture and sequestration is attracting a lot of interest from the ethanol industry, primarily because of opportunities to secure tax credits under Section 45Q of the Inflation Reduction Act (IRA). This goes beyond the renewable diesel market. Reducing carbon intensity (CI) scores is beneficial for the SAF (sustainable aviation fuel) market as well.
Tim: There really is great interest in SAF and many are realizing it only takes a slight tweak for plants to utilize existing kit and begin producing lower CI ethanol. There are also real opportunities to use alcohol as a feedstock for other products. We’ve done a number of projects that required us to evaluate technologies and we’ve found the technology is fabulous for dehydration of ethanol into ethylene. This opens up an entire market of ethylene-derived products, including ethylene glycol, ethylene acetate, polyethylene and polypropylene. However, the main target right now is SAF and we’re seeing strong signals of government support for that market. The 45Z credits under the IRA should create a strong pathway of opportunity, although there are many challenges that have to be resolved in order to take advantage of that opportunity.
Kam: It’s exciting to see momentum begin to build for a number of pipeline projects. With the Navigator pipeline project being canceled (in 2023), we saw a small blip, but other projects are moving forward. With the Trailblazer and Summit projects, we’re seeing folks like Valero and POET step up and add to this momentum.
That has contributed to a real boost in the carbon capture market. A lot of people are looking at all the pieces of the CCUS (carbon capture, utilization and sequestration) puzzle. This includes looking at point source capture as well as dehydration and compression, injection for sequestration in geological formations, and the permitting required for transport via pipeline.
Kam: This is a trend that we’re paying attention to. Louisiana now joins Wyoming and North Dakota in having primacy over Class VI well approvals and it looks like Texas and Arizona will follow as soon as those states complete the application process. We believe this will help feasible projects move forward much more quickly.
This is a real positive for the states that have primacy. Unfortunately, there are not large numbers of ethanol facilities in those states. With ethanol facilities typically located in the Midwest, states’ primacy has not moved the needle in the ethanol space as much as we would like to see.
However, we’re seeing another development that could be a positive, with the EPA recently introducing a new dashboard that allows applicants to track progress a little bit easier. It allows the applicant to keep tabs on where others are in the permitting process as well as progress on their own application.
Kam: It is essentially delegating some of the approval process for Class VI injection wells from the federal government to the state level. This allows the process to be streamlined so it moves forward a little bit quicker.
Tim: In granting primacy, the EPA has the opportunity to delegate some of its regulatory responsibilities to the states under the idea that decisions are made closer to where the project will happen. That certainly adds a lot of capability for the permit reviews to be completed and approved much faster. We think this is really a good thing. It would be a benefit if every ethanol plant was located in a state where primacy has been granted, but that’s not the case. We think there are other solutions, and pipelines are a key part of that.
Kam: It’s basically a design concept that works quite well with ethanol facilities that are similar in size and configuration. The carbon capture unit can be cloned, or almost cloned, for replication from one facility to the next because designs are already done. This leads to consistency, efficiency and economies of scale with procurement. Construction quality also is greater because only small adjustments are required from facility to facility.
It delivers speed to market as well as budget cost savings. Equipment like large compressors can be standardized and with consistent sizing and placement you create a great deal of efficiency. Cloned design is something that can work well for a single site, or for larger players that have a fleet of ethanol facilities.
Tim: Another real opportunity with this approach is that it enables early information sharing with utility suppliers. The electrical load for CO2 compression is quite significant, doubling consumption at an ethanol plant in many cases. If we are able to provide accurate information to the utility as soon as possible, it enables the utility to adjust its resource forecasting, which is another factor that can often accelerate the project.
Tim: For many years, we have measured product and process efficiencies in terms of dollars. Now dollars are a great measurement, but that isn’t capturing the whole story today with the development of the biofuels market. The recognition that carbon is an important consideration is relatively new. We are still trying to understand the true value of carbon in terms of emissions and overall impact on the environment.
In the SAF market, for example, one way to deal with that is through consideration of carbon emissions associated with each step along the value chain. It starts in the field with determining carbon intensity of corn production. Then we measure carbon intensity of processes in the ethanol plants, transportation to the SAF producer, and SAF energy consumption. You would then measure carbon requirements to transfer the fuel to a blender, and finally, transport and logistics required to get fuel to the airport.
All along this chain, there are opportunities for coordination and collaboration to minimize the carbon impact. Identifying those opportunities for optimizing the process at each step could really foster a new way of accounting for costs and value created by biofuel projects.
Kam: We’re seeing movement in other markets for SAF and for renewable diesel. It’s been great to see the integration of all these different markets. All this is the key to continued gains in market share for renewable fuels.
Tim: We’re seeing real momentum and collaboration among many in our industry who have been talking for years about getting to net zero carbon emissions. We get closer to it every year, and that is exciting to see. All of us at Burns & McDonnell feel privileged to contribute to this progress at every step.
Cloned design of carbon capture facilities can be applied to a wide range of process industries from liquid natural gas plants to compressor stations to hydrogen production facilities.