Despite hundreds of millions in tax dollars, ADM’s carbon capture program still hasn’t met promised goals

Source: By Johnathan Hettinger, Northwest Herald • Posted: Monday, November 30, 2020

Yet the company’s largest project is storing substantially less carbon dioxide from its ethanol plant in Decatur, Illinois, than originally promised, according to a Midwest Center for Investigative Reporting review of federal and company documents.

Since starting operations at its largest project, the Illinois Industrial Carbon Capture and Storage Project, in 2017, the company has yet to reach its stated milestone of one million tons. Annual emissions stored are about half of those projected — around 519,000 tons, according to the EPA.

In fact, overall carbon emissions from ADM’s facilities in Decatur increased from 4.2 million tons of carbon dioxide in 2016, the year before the capture and storage project went online, to 4.4 million tons of CO2 in 2019, according to the most recent available EPA data.

Carbon dioxide is one of the main contributors to the greenhouse effect, which causes the earth to warm when gases trap energy from the sun in the atmosphere. The idea behind carbon capture and storage is that, instead of letting carbon dioxide vent into the atmosphere, these projects capture carbon emitted by these processes and store them underground or sequester them for another use.

An increase in carbon capture technology is considered necessary to meet the goals set out in the Paris Climate Agreement to keep a global temperature increase fewer than 2 degrees Celsius, according to the Intergovernmental Panel on Climate Change, the world’s leading source of information on climate change. President Donald Trump withdrew the U.S. from the agreement, but President-elect Joe Biden has committed to rejoining the agreement on his first day in office.

Over the past decade, the U.S. Department of Energy has invested billions in carbon capture and storage projects. ADM’s projects have been touted as one of the few successful such projects in the United States.

The total carbon capture and storage work at ADM is valued at $441 million, of which the $281 million came from the Department of Energy. The project employs 11 people, ADM spokeswoman Jackie Anderson said.

Anderson said the ethanol plant captures 95% of emissions, but it hasn’t been used to full capacity.

“The project is going very well,” Anderson said in an emailed statement. “We have successfully captured and stored millions of tons of CO2 to date, and have not detected any leakage or adverse impacts. This project is providing very useful data and insight into the reservoir and the geology in the area, and we are continually using these insights to refine our processes and the technology.”

Anderson declined to state how much money ADM stands to make from its carbon sequestration projects, including the Illinois Industrial Carbon Capture and Storage project.

ADM will receive tax credits of $20 per ton of carbon stored underground, meaning if it were used as planned, $20 million per year for five years. If everything were to go as planned, it would total $100 million, about $40 million more than ADM’s initial investment.

While Anderson said the company is “continuing to evaluate this technology for possible expansion in Decatur or at other ADM facilities,” internal company documents express skepticism. The company’s carbon reduction plan estimates current sequestration levels at 525,000 tons.

ADM didn’t count on the technology being a long-term solution in cutting its greenhouse gas emissions by 25 percent in a feasibility study for reducing greenhouse gas emissions earlier this year.

“The ability to capture stack emissions and sequester them is likely 10 years out, due to the technology and energy needed to separate and process the stack gas sufficiently to inject CO2 in the sequestration well,” ADM wrote.

Many environmental groups have criticized carbon capture and storage technology as a continuation of fossil fuels, rather than a transition to increasing efficiency and investing in renewable energy.

Bruce Hamilton, national policy director of the Sierra Club, said that it is a worthwhile investment for the Department of Energy to consider carbon capture for necessary industrial processes, like fertilizer plants, but ethanol plants like ADM’s aren’t one of them.

“Ethanol is a bad idea in the first place,” Hamilton said.

Hamilton said the land being used to grow corn that is turned into ethanol should instead be used to grow food. Some investment in bioenergy carbon capture and sequestration would be worthwhile, but only for more efficient biofuels like miscanthus, he said.

David Hawkins, director of climate programs at the Natural Resources Defense Council, said a carbon tax is a much more effective federal policy. So far, most companies haven’t expressed interest in carbon capture and storage largely because of the lack of a strong climate policy to make carbon dioxide emissions illegal or more expensive.

Hawkins said NRDC is more interested in a carbon pricing strategy from the federal government because that’s the best way to get companies interested in carbon capture and storage.

“Carbon pollution is bad, and we shouldn’t have to pay people to do less of a bad thing,” Hawkins said. “We should simply adopt sensible civilized practical rules that say thou shalt do less of a bad thing. It’s your responsibility as an institution in a society that is interested in protecting its people and its environment to behave in a way that pollutes less. That’s a path we need to follow.”

Department of Energy invests $5 billion in CCS projects and most fail

The $208 million Illinois Industrial Carbon Capture and Storage project is just the latest ADM project funded by the Department of Energy. It is designed to annually inject one million tons of carbon dioxide — which is a liquid byproduct of the ethanol production process — more than 7,000 feet down into the Mt. Simon Sandstone saline aquifer in the Illinois Basin.

The U.S. Department of Energy provided about $141.4 million for that project while the remaining $66.5 million was paid for in a cost-sharing agreement between ADM and its corporate partner Schlumberger Carbon Services.

A previous project, called the Illinois Basin Decatur project that resulted in ADM successfully storing 1 million tons of carbon dioxide underground, received about $106 million in federal funding, with ADM and its partners, including the University of Illinois, putting up a little over $21 million. The tax credits could have been equal to about $20 million. That was a five-year project.

Since 2010, the U.S. Department of Energy has given out more than $5 billion to carbon capture and storage projects. ADM’s projects are among the few that have not been canceled.

Similar clean coal projects like the $1 billion FutureGen planned for central Illinois, the $2.2 billion Kemper power plant in Mississippi and the Summit Texas Clean Energy project all were canceled after costs were higher than anticipated.

Even the $1 billion Petra Nova plant in Houston, owned by NRG Energy and often touted by carbon capture advocates as an example of a successful project, was plagued by mechanical issues and missed its targets before being mothballed earlier this year because of low oil prices.

Marc Willis, a spokesman for the Department of Energy, praised ADM’s projects in an email, saying they have demonstrated these technologies can be successfully used for industrial facilities like ethanol plants, work with the EPA’s regulatory framework and served as a proving grounds for the technology for future projects.

“It often goes unrealized that the United States is the only country with major investments in the technologies needed to reduce CO2 emissions from the world’s coal-fueled and natural gas-fueled electricity fleet and industrial sources,” Willis said. “These investments will enable coal and natural gas power plants as well as industrial facilities to one day operate at, or near, carbon-neutral levels.”

Willis said DOE isn’t concerned about ADM not reaching its stated goals. The project has the capacity to store one million tons a year, which was all the agreement with DOE required.

“ADM has also demonstrated it can sustain injection at this rate. Therefore DOE is fully confident that the investments made at ADM are worthwhile and reaping benefits for the public in terms of validating CCS as a viable options in the nation’s overall efforts to reduce CO2 emissions,” Willis said.

The main beneficiaries of the federal dollars have been companies like Archer Daniels Midland, which has annual profits of more than $4 billion. As one of the world’s large traders and processors of agricultural goods, ADM has an annual carbon footprint of 16.8 million tons of carbon dioxide, the equivalent of 4.3 average coal-fired power plants. ADM has pledged to decrease its overall greenhouse gas emissions by 25% by 2035.

Ethanol instead of coal

While the technology was originally touted as a way to keep coal-fired power plants running, much attention has shifted to industrial sources like ethanol and fertilizer, which are among the low-hanging fruit for carbon capture and storage. Both processes have liquid carbon dioxide as a byproduct, which makes capture and storage easier.

The Institute for Energy Economics and Financial Analysis found in an August paper that projects at coal plants like Petra Nova are too expensive to add to already economically unsustainable coal plants.

“We think it’s a good idea to pursue carbon capture from industrial facilities and to do demonstration from natural-gas-fired power plants. But carbon capture from coal plants is not economic, and it won’t be economic,” said David Schlissel, director of resource planning analysis at the institute.

Carbon storage is different from other carbon-reducing industries in that the only benefit is to combat climate change.

Funding like that for carbon projects from the Department of Energy helps an experimental technology get through “the valley of death” where new technologies often run into trouble because it isn’t yet reliable or there isn’t yet a market for it, said Greg Nemet, a professor of public affairs at the University of Wisconsin who studies how policy and innovation work together to address climate change.

“Society and the government needs to subsidize some number of early plants,” Nemet said. “The company is taking a risk. It might pay off. It might not. They can stand to get a windfall from money they otherwise would have had to pay.”

But now that the ADM project has been shown to work, other policies, like the 45Q tax credit or carbon pricing, will help make the technology viable, Nemet said.

In Feb. 2018, Congress approved an expansion of the 45Q tax credit that would pay $50 a ton for stored carbon or $35 a ton for used carbon dioxide. The Renewable Fuels Association, of which ADM is a member, lobbied for the expansion. Overall, the ethanol industry produces as much as 50 million tons of carbon dioxide per year.

“If you have the tax credit, you shouldn’t need as much cost sharing,” Nemet said.

Projects said to be safe

Despite some research raising concerns about carbon storage having the potential to cause increased earthquakes, including in the New Madrid fault in Southern Illinois, the two projects have, so far, proven to be safe, said Sallie Greenberg, principal investigator for the Midwest Geological Sequestration Consortium who worked on the Illinois Basin Decatur Project. The Midwest Geological Sequestration Consortium is a regional group that oversees carbon capture projects in the Illinois basin in Illinois, Kentucky and Indiana.

“There’s been a lot of accomplishments. The most important thing is we’ve demonstrated you can capture and store carbon dioxide safely and effectively and protect the environment and human health in a deep saline reservoir,” Greenberg said.

Greenberg explained that the type of rock the carbon is being stored in is similar to a crate of oranges, where there is open space between the oranges, and those pore spaces is where the carbon is being stored. The EPA monitors all underground injection with different classes of permits for each different type of well. Carbon sequestration projects require a US EPA Class 6 permit.

“It’s very similar to oil well drilling, but instead of producing something from the earth, we’re storing something,” she said. “We’re doing it in a way that is similar to the way the earth has stored oil for hundreds of millions of years.”

David Larrick, director of sequestration at Richland Community College, pointed out that there are three levels of impermeable shale rock between where the carbon is stored more than 7,000 feet underground and the surface.

Illinois is a world leader in carbon capture and storage technology. The ADM projects are among the largest in the world, and have helped show the technology can be successful, Greenberg said.

The projects will also serve as a model for more bio energy carbon capture and storage projects across the world, Greenberg said.

“We have done an exceptional amount of really great science. We understand a lot about how to pull together a team, how to put together a project, what our modeling we’ve done has grown in sophistication over time,” she said.

Continued investment?

Because of the success of the ADM projects, the Department of Energy decided to invest more than $10 million in researching the possibility of larger scale projects in Central Illinois, including the potential for a 50 million ton storage site north of Decatur. In October, CarbonSAFE Illinois began phase 3, which is a three-year initiative to complete detailed site characterizations and assessments and get proper permitting approvals, said Steve Whittaker, principal investigator for the CarbonSAFE Illinois Hub.

“We’re helping to identify these resources,” Whittaker said.

A 2019 University of Illinois report identified several other key sources of carbon dioxide emissions in the region that could potentially be used for carbon capture technology.

The companies will then use that knowledge to make decisions about whether to invest in the technology. The 45Q tax credit has increased interest in the technology from sources like fertilizer and ethanol plants, he said.

Greenberg said that there is potential for hundreds of years worth of storage in the Illinois Basin. Industrial sources in the United States currently produce about 290 million tons of carbon dioxide a year, and there is a potential storage capacity of between 11 billion and 150 billion tons of carbon dioxide in the region alone.

Jen Walling, executive director of the Illinois Environmental Council, said nonprofit environmental groups in Illinois haven’t spent much time on the issue because it is more “academic” at this point.

“There would be more attention paid to it if it felt more real,” Walling said.

But Hawkins, of NRDC, said without more progressive federal policies on carbon pricing, the entire $5 billion investment in carbon capture has been a waste.

The most likely way for carbon capture and storage to make sense is if the government puts a price or ban on polluting carbon, he said. Without that, investment and widespread adoption is less likely.

“Have we wasted money so far? Yes, we’ve wasted money,” Hawkins said. “But we’re going to waste even more money, even if not another dollar is paid out, if we don’t adopt stronger policies that make it sensible to do things like carbon capture and storage.”