A few years ago, a primary source of refined carbon dioxide (CO2) was as a byproduct produced during the manufacture of anhydrous ammonia. In fact, only a handful of primary sources of raw CO2 were refined and liquefied from ethanol for the merchant CO2 industry. While a majority of anhydrous ammonia is traditionally dedicated 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 anhydrous ammonia manufacturing has been a shift in the locations of CO2 facilities, forcing the relocation of merchant CO2 production in the United States.
 
 Another factor affecting the domestic market is that it's not economically feasible to produce unsubsidized merchant CO2 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 CO2 feedstock. Just a few years ago the percentage of CO2 derived from anhydrous ammonia plants was up to 40 percent of the total CO2 from all forms of manufacturing processes. At the same time, the percentage of CO2 derived from ethanol production was in the teens.
 
 Some ethanol-sourced CO2 has replaced ammonia-sourced CO2, particularly in regions of the Midwest. In fact, many Midwest areas are flooded with CO2 from ethanol projects, creating a regional oversupply. Moreover, CO2 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 beneficial rail rates for many commodities in part due to overloaded rail capacities from ethanol feedstocks, product and coproducts.
 
 Coproduct revenues are essential to the long-term success of any ethanol project. Developing the CO2 aspect of a project "later on" is a dire mistake since making CO2 ventures work on a first-served basis is essential, especially with so many new projects on the drawing board.
 

 CO2 Source Targets
 The North American CO2 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 Corn Belt and select regions of the greater Midwest. However, it's possible to develop specific, over-the-fence, captive or sequestration CO2 targets even in the well-supplied Corn Belt. Examples include enhanced oil recovery, chemical feedstock usage and enhanced coal-bed methane projects. Such projects are found adjacent to viable oilfields, or chemical manufacturing and coal production projects, and require distribution infrastructure. The food processing industry is also a possible market. Markets having large concentrated poultry projects use cryogenic freezing that utilizes fluids such as CO2 to replace mechanical refrigeration.
 
 Selling CO2 to gas companies via direct, over-the-fence raw marketing, a joint venture, or possible equity position for refinement and liquefaction, would supply the merchant markets such as food processors. This is the wholesale version of supply to the merchant markets.
 
 For under-supplied regions that import CO2, 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 version of CO2 sales.
 
 A proper evaluation should be conducted to devise such captive marketing to the oil or chemical sector. The same goes for selecting the best gas company to purchase and refine CO2 on a wholesale level.
 
 The possibility also exists for refining and liquefying CO2 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 other laws that utilize collection or sequestration of CO2 from fermentation, there is no immediate mandate to do so. However, all indications are that sequestration or consumption of CO2 from high emitting sources, such as power projects and large fermentation projects, will inevitably take place. The question is when and how will this occur. 
 
 Trading carbon credits isn't applicable to the ethanol industry today and isn't a true solution to a net reduction of CO2 emissions. One of the only domestic formats which represents CO2 trading is the Chicago Climate Exchange (CCX), which doesn't yet deal with industrial chemical or ethanol projects. However, the CCX has used a CO2 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 CO2 emissions. If such a case mandates a net reduction of emissions from an ethanol plant, a project would utilize true sequestration or find specific CO2 markets. In the case of markets, a chemical manufacturer or oilfield project could receive the product and then be considered a means of reducing CO2 via combining or consuming it in a product or project. CO2 in the service of enhanced oil recovery projects may not be considered true sequestration since some of the CO2 is brought back to the surface during oil recovery.
 
 With respect to serving the merchant CO2 markets, some of the CO2 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 CO2 reduction remains extensive, extremely challenging and somewhat unknown. Recovering CO2 from new or existing ethanol projects, as the industry grows and political and environmental sectors close in on requirements to reduce emissions, will become increasingly important.
 
 An understanding of CO2 markets, possible sequestration targets and the costs associated with transporting CO2 should be in the hip pocket of the ethanol developer. Further data will be required beyond the immediate knowledge of the most profitable and beneficial means of CO2 marketing from the ethanol project.
 
 Conclusions
 The United States holds perhaps 40 percent of the approximate total of 20 million metric tons of global merchant CO2. The balance of North America is approximately another 2 million tons per year in consumption. Western Europe and Japan are the other significant merchant markets, while developing economies are largely solely beverage carbonation markets. Developed economies are highly diversified in terms of the broad application of CO2, 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 CO2 usage continue tochange, as would the source types found in some regions, such as that described with the fertilizer ammonia production sector now replaced in part by CO2 off the fermentation sector.
 
 CO2 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 requirements for production of CO2 in order to factor it into a clear understanding of the value of CO2 when sold over the fence to the gas refiner, or when selling directly to the markets at large.
 
 There remain many target opportunities for CO2 in numerous regions of North America and internationally. However, to understand the impact, competition, costs, requirements and essential market values, a proper evaluation of these elements is necessary to yield the greatest 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 CO2 emissions from all emitters, whether a single family car, an ethanol project, or the mega-sized coal-fired power plant. In the long term, CO2 recovery, sequestration, or another form of CO2 management will directly affect the growing ethanol industry.
 
 More information is available at <a href="http://www.carbondioxideconsultans.com" target="_blank">www.carbondioxideconsultants.com</a>.
 
 Sam Rushing is president of Advanced Cryogenics Ltd., a carbon dioxide consulting firm based in Tavernier, Fla. Reach him at <a href="mailto:rushing@terranova.net">rushing@terranova.net</a> or (305) 852-2597.
 
 The claims and statements made in this article belong exclusively to the author(s) and do not necessarily reflect the views of Ethanol Producer Magazine or its advertisers. All questions pertaining to this article should be directed to the author(s).

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