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Connection between corn price and CO2 capture difficult to determine

The ethanol industry believes that capturing and underground storage of carbon dioxide emissions from ethanol plants is necessary to enable the industry to keep pace with the trend toward cleaner energy.

However, it is unclear what direct benefits will accrue to the farmers who supply corn to the ethanol plant.

David Ripplinger, an associate professor at North Dakota State University, specializes in renewable fuels.

“So everyone always asks me, 'What is the price of carbon?'” Ripplinger said. “The problem is that there is no single price for carbon.”

“It's not like there's a futures market or a spot market, and there's no transparency about prices, let alone what the price might be for a particular farmer or rancher,” he added.

Two ethanol plants in North Dakota are already sequestering carbon. They benefit from their location in the west of the state, where the geology is favorable for underground storage.

There's also the Summit Carbon Solutions pipeline, which the Iowa-based company calls the world's largest carbon capture and storage project. The company hopes to connect 57 ethanol plants to underground storage sites northwest of Bismarck, North Dakota.

The pipeline project is likely to benefit from enormous government incentives in the form of tax breaks.

The tax credits benefit the ethanol plant or pipeline developer.

“Those who invest billions of dollars are the ones who will benefit,” Ripplinger said.

Although the investment is not in the billions, investors in Summit's $8 billion project include Continental Resources, a North Dakota-based oil and gas company, Gary Tharaldson, owner of Tharaldson Ethanol, the only North Dakota ethanol plant signed for the project, and agricultural giant John Deere.

At the Williston Basin Petroleum Conference in Bismarck last week, Bruce Rastetter, co-founder of Summit Carbon Solutions, took the stage with Harold Hamm of Continental Resources to highlight the two companies' agricultural energy partnership.

Michael Achterling

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North Dakota Monitor

Bruce Rastetter, CEO of Summit Agricultural Group, participates in a panel discussion during the Williston Basin Petroleum Conference at the Bismarck Event Center on May 16, 2024.

“Profitability drives investment,” Rastetter said, to attract investors like John Deere.

The three-member North Dakota Public Service Commission (PSC) is in the midst of hearings on the Summit pipeline as it re-examines the company's permit application. The PSC denied Summit a permit last year, but the company has made changes to its route and is appealing that decision.

Lee Blank, CEO of Summit Carbon Solutions, in an interview with North Dakota Monitorsaid the ethanol plant partners will benefit from the project, but how much of a benefit will vary from plant to plant. He said the plants should receive a minimum benefit of 20 cents per gallon of ethanol.

However, Blank declined to provide an estimate of the price premium that could be passed on to farmers for the corn used to produce ethanol.

“The concept that a rising tide lifts all boats still applies,” Blank said.

Amortization of investments

The two North Dakota plants that have developed their own carbon capture and storage systems are Red Trail near Richardton and Blue Flint near Underwood.

Red Trail CEO Jodi Johnson said the carbon capture project is a $35 million investment that will only pay off over time. She said the project doesn't mean corn growers will get a premium price for it, but it could provide a benefit to farmers who partner with Red Trail.

Among those partners is North Dakota Agriculture Secretary Doug Goehring, himself a farmer southeast of Bismarck. He said he doesn't expect carbon storage to provide immediate benefits but hopes it will in the future.

Ripplinger said an ethanol plant like Red Trail that moves forward on its own must bear those upfront costs.

“The biggest advantage for farmers in the region would be a stronger local customer,” said Ripplinger.

Keep up

For Andrew Mauch, president of the North Dakota Corn Growers Association, it is less about the expected increase in corn prices due to carbon capture and more about not being excluded from the low-carbon fuel market.

Two men sit next to each other wearing microphone headsets.

Jeff Strand

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North Dakota Monitor

Ryan Carter of Tharaldson Ethanol (left) and corn farmer Andrew Mauch discuss the impacts of carbon capture on the ethanol industry and agriculture on April 15 in Fargo, North Dakota.

“If this market grows and we are not qualified, our price will drop significantly,” said Mauch, who runs a farm near Mooreton.

Red Trail is currently developing a program with farmers that could result in a higher price for those who can prove they grow low-carbon corn. This would help further reduce the carbon intensity of the ethanol plant, but Johnson said it was too early to estimate how large that premium might be.

Blank also noticed this trend.

“I think over time we'll see farmers and the ethanol industry probably working much more hand in hand,” Blank said.

But Ripplinger says that if these low-carbon processes become widespread, this premium will no longer be a real premium.

“So it's all low-carbon corn, but it's not low-carbon corn anymore. It's just corn,” Ripplinger said. “It's this idea: If everyone is special, no one is special.”

This story was originally published by North Dakota Monitorwhich is part of States Newsroom, a nonprofit news network supported by grants and a coalition of donors as a 501c(3) nonprofit organization. North Dakota Monitor maintains editorial independence. If you have any questions, please contact editor Amy Dalrymple.

Anna Harden

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