Investment in carbon capture and storage is expected to favor the domestic ethanol industry in coming decades, combined with anticipated production of sustainable aviation fuel, the offset of federal tax liability and the sale of carbon abatement credits.
But the payoff is contingent on a global shortage of waste oils, animal fats and vegetable oils. A lack of these cheap feedstocks, known as hydroprocessed esters and fatty acids (HEFA), should spur production of SAF in an ethanol-to-jet fuel process.
Ethanol can be converted to SAF through further processing to create longer hydrocarbons and a stable jet fuel, producing carbon dioxide (CO2) as a byproduct.
Europe wants 70% of its aviation fuel to be SAF by 2050, while U.S. airlines have a variety of voluntary targets. “Based on the feedstock and what is economically feasible, most of that SAF demand can be met by the HEFA production pathway until 2035,” said Marina Domingues, vice president at consultancy Rystad Energy.
Tom Buis (File photo)“The SAF market is potentially gigantic, and the benefits are second to none,” said Tom Buis, CEO of the American Carbon Alliance, a coalition of ethanol producers and related companies. “Only with the Renewable Fuel Standard 20 years ago have we seen this opportunity for farmers and ranchers.”
LanzaJet’s Freedom Pines Fuels plant in Georgia is scheduled to come on line this year, with an SAF output of 10 million gallons annually. Gevo’s Net-Zero 1 plant in Lake Preston, South Dakota, is scheduled to come on line in 2025, with an output of 55 million gallons of SAF a year.
An $85/ton credit for carbon sequestration under Section 45Q in the federal tax code supports the trend. The Section 45Z production tax credit for SAF was set at $1/gallon in HR 1 (the One Big Beautiful Bill Act), signed by President Donald Trump July 4. The credit for ethanol starts at 20¢/gallon.
Paul Niznik, director of clean energy consulting at Capstone, explained that SAF and renewable diesel both receive 1.6 Renewable Identification Numbers/gal under the RFS. But the ethanol-to-jet pathway for SAF remains more expensive, and producers would sacrifice their $1/gallon 45Z production tax credit if they took the $85/ton 45Q credit to sequester CO2.
"If the whole business model is to sequester carbon, you can get $85/ton if you make SAF or not," he said. "What is required is a special buyer for SAF that is willing to pay more than producers can get in RINs and tax credits."
Sequestration is ongoing, under construction or being studied among ethanol producers.
Harvestone Low Carbon Partners has sequestered CO2 for two years at its Blue Flint plant and plans to add the technology at Spiritwood. Both are in North Dakota.
ADM's Decatur, Illinois, ethanol plant has carbon sequestration on-site, but stopped injecting last year after finding leaks of both CO2 and brine. Sources suggested the practice may have resumed, and ADM did not respond to repeated inquiries.
Green Plains is building facilities to inject CO2 from its York, Wood River and Central City plants in Nebraska, and has plans to deliver SAF to United Airlines by 2028.
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Marquis Energy is building a 120-million-gal/year ethanol plant that includes sequestration in Hennepin, Illinois, to produce SAF and renewable diesel using LanzaJet's ethanol-to-jet process.
Jeffrey Jen, analyst at consultancy Enverus, said that about a quarter of the 90 carbon sequestration projects waiting for approval by states and the Environmental Protection Agency are related to ethanol plants.
More than 60 project applications are filed at EPA, while the others are in a handful of states that have obtained the right to regulate injection facilities, known as Class VI wells.
But only a few corners of the farm belt are geologically suited for these wells, which are mostly in saline aquifers at depths of 4,000 to 6,000 feet. The CO2 would be sealed in by thick shale caprock.
Pipelines are needed to ship the gas for much of the industry and proposals have roiled parts of the region in recent years, with some landowners citing outside influence, potential eminent domain declarations, safety concerns and threats to water supplies.
South Dakota adopted a law in March that bans the use of eminent domain for carbon dioxide pipelines. State regulators concluded in April that Summit Carbon Solutions, which has proposed an ambitious five-state project, had not demonstrated a viable route without eminent domain.
Summit does not plan on using eminent domain, said Sabrina Zenor, the company's director of public affairs. “We currently have no active condemnation cases, and our goal remains 100% voluntary participation,” she said.
Summit’s route is approved in North Dakota, the ultimate sink for the CO2, while the route is pending in Minnesota and proceeds county-by-county in Nebraska.
Iowa regulators want other states to sign off on Summit before approving it. Governor Kim Reynolds (R) vetoed a bill in June that would have limited the ability of carbon pipelines to use eminent domain. Zenor said Summit has secured voluntary easement agreements with landowners along 75% of its base route in Iowa.
Asked if the pipeline project might be reconfigured, she said “we anticipate providing several company updates in the coming months.” She added that Summit already has made more than 10,000 route adjustments, many in direct response to landowner feedback.
Trailblazer Pipeline, a converted natural gas line owned by Tallgrass, a company held by private equity, is expected to start shipping CO2 from Nebraska ethanol plants this year. Trailblazer will inject the CO2 in southeastern Wyoming. POET’s Fairmont, Nebraska, facility has signed up.
Southwest Iowa Renewable Energy will be served by Trailblazer after the Nebraska plants, said Nathan Hohnstein, policy director at the Iowa Renewable Fuels Association. “Plants in Iowa will be expanding their capacity when hooked up to a CO2 pipeline,” he said. “There is increased demand for low-carbon ethanol.”
Another sequestration firm, Canada-based Vault 44.01, is working with several ethanol producers and has four projects in development in Indiana.
Rail is a shipment option for frozen, liquefied CO2. Frontier Carbon Solutions is developing a storage hub with 100,000 contiguous acres of pore space in southwest Wyoming, where CO2 will be injected after delivery by the Union Pacific Railroad from ethanol plants within a five-day loaded radius.
The company has three Class VI permits, has filed for seven more, and was drilling its second well last month. Operations are scheduled to start before the end of the year.
Steve Lowenthal (Photo: Frontier)Frontier has five- to seven-year agreements with a “handful” of ethanol producers, Co-President Steve Lowenthal said. He admits that rail will be more expensive than pipeline shipments, but Frontier’s time to market will be shorter.
Lowenthal explained that CO2 removal can be converted into bioenergy carbon capture and sequestration credits, sold on both the voluntary international markets and used to comply with the California Low Carbon Fuels Standard.
“SAF creates more pie to share,” he said.
Gevo announced last month that it is selling CO2 removal certificates into the market for the first time, produced by operations at its North Dakota ethanol facility.
Domingues of Rystad Energy said CO2 is being commercialized worldwide. “It is not only the credit that is going into play, but the source of the CO2,” she said. “For developers to participate in international markets, CO2 has to be biogenic or come from a direct air capture unit.”
Direct air capture is a more energy-intensive and expensive way to produce SAF from ethanol, with a cleaner output. The captured CO2 in the ethanol-to-jet pathway can be combined with green hydrogen in a Fischer-Tropsch process called power-to-liquids to produce SAF.
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