Carbon capture and storage (CCS) can be a hot topic on both sides of the political aisle. Politics aside, CCS is an increasingly important topic for ethanol producers in the United States—especially those distributing products in Canada and states like California, Washington, and Oregon.
And, with more than 45% of domestic corn production now going to ethanol (USDA), farmers and anyone involved in agriculture should be paying attention to the discussion. Let's briefly explore the connection between ethanol, CCS, and the economy.
Rising Demand for Ethanol in the United States
The Renewable Fuel Standard is a federal program administered by the Environmental Protection Agency (EPA) that dates back to the Energy Policy Act of 2005. This program mandated the inclusion of “renewable fuels” in transportation fuels, resulting in greater ethanol demand and production. Today, at least 98% of gasoline purchased in the United States contains some amount of ethanol. To fuel this demand, approximately 16 billion gallons of ethanol are produced annually in the United States as of 2024, according to data from the U.S. Energy Information Administration. More than quadrupling domestic production since 2004 has firmly positioned the United States as the world’s top ethanol producer. Each year, the US exports over one billion gallons of ethanol around the globe—especially to Canada, which accounts for about 33% of US ethanol exports (USDA).
Keeping pace with worldwide demand for ethanol requires a lot of corn, and American farmers have risen to the challenge. The USDA’s corn production chart tells an interesting story—domestic corn production continues to flirt with the 15 billion bushel mark, up considerably since the early 2000s. Even better for farmers, the average price per bushel has also spiked in recent years.
It’s important to remember that existing ethanol demand is mostly driven by on-the-ground transportation. Successfully engineering a sustainable aviation fuel could take ethanol demand to an entirely new level.
Tapping into “Low Carbon Intensity" Markets
States like California and countries like Canada have implemented low carbon fuel standards, which essentially require producers—including ethanol producers—to meet standards for “carbon intensity.” Public agencies offer models that are used to assess fuel carbon intensity, such as the CA-GREET4.0 model that is specific to California’s standard.
For ethanol producers, selling products into low carbon intensity markets represents an opportunity and a risk. Taking steps to reduce carbon intensity unlocks a premium price in such markets, especially when distributing to in-state fuel blenders and refiners that have limited options for compliance. Failing to reduce carbon intensity therefore puts an ethanol producer’s products at a competitive disadvantage.
According to a presentation published by the U.S. Department of Energy, capturing and storing carbon dioxide is recognized as an effective way for ethanol producers to lower their carbon intensity scores. Doing so also unlocks federal tax credits in the process.
Moving the Ethanol Industry Forward
To recap, people drive cars that require fuel. Ethanol has become a vital input into the domestic fuel supply. Some of the largest ethanol markets like Canada now require “low carbon intensity” ethanol. For ethanol producers, carbon capture and storage is becoming a key part of meeting that need.
Need help with a CCS project? Contact us for on-the-ground support.