Large-scale carbon capture and storage (CCS) projects could cut back the amount of CO2 available for commercial use in the US, with as much as one-third of supply potentially being put at risk.
Speaking during a gasworld webinar, Bruce Woerner of Woerner CO2 Consulting said the threat was real and should not be ignored, given the way the supply and demand picture is shaping.
He said the impact of the Inflation Reduction Act, with its 45Q tax credit, which offers $85 per tonne for CO2 sequestration and $60 per tonne for utilisation, was about to be felt, as projects begin to come onstream.
He said incentives have encouraged ethanol producers, in particular, to redirect CO2 away from the merchant market in favour of applications such as sustainable aviation fuel or for storage to secure carbon credits.
“We [have already seen] companies cancelling contracts or letting them expire, holding back CO2 that would previously have gone to the industrial gas sector,” Woerner said.
Scott Vanderberg, President of Reliant Gases, which is a major supplier of CO2 in the US previously warned similarly at a gasworld event that a third of US CO2 capacity, around 10,000 tonnes per day, could disappear over time from the merchant market.
Woerner today said that the industry may have gained some breathing room following delays to major sequestration infrastructure, including the $9bn Summit Carbon Solutions pipeline, but there was no room for complacency, he argued.
Beyond sequestration, many traditional CO2 sources are also in long-term decline. Ethanol facilities, which account for around 40% of US supply, were heavily affected during the Covid-19 pandemic, when fuel demand dropped. Five US ethanol plants producing CO2 were permanently shut down as a result. Others reduced capacity, while new sources have remained limited.
Compounding this, industrial gas producers have faced supply interruptions due to ageing infrastructure and unexpected shutdowns. In 2022, a purity issue at the Jackson Dome CO2 source in Mississippi, which accounts for 18% of the country’s supply, was followed by overlapping outages at major ammonia plants in Augusta and Hopewell.
After an extended period of volatility, last year was relatively stable in terms of CO2 supply but Woerner said that risks remain.
“The easy sources were tapped years ago,” he said. “Today’s options tend to be smaller or lower in purity, which means higher costs.”
Woerner said investment in new sources was essential, but the current economics are challenging. The best near-term opportunity lies in renewable natural gas, known as biomethane in Europe, which typically produces high-purity CO2, but at smaller scale. Many landfill and wastewater sources also require advanced monitoring and treatment due to variability in input materials.
All the same, Woerner said progress was being made and it needed to ramp up.
“It is not clear how stable 45Q will be, and companies are cautious,” he said. “But there is still appetite for action, particularly from larger players with sustainability targets.”
