Doug Sombke: Carbon sequestration remains a pipe dream. Ethanol fuel already has value

Source: By Doug Sombke, Far, Forum • Posted: Wednesday, June 7, 2023

There can be little disagreement that the proposed pipeline capturing CO2 from our ethanol plants has become a bitter, divisive issue. The recent study by South Dakota ethanol producers estimating a value to the state of nearly $6 billion needs to be carefully examined. Argus Leader’s recent article delving into the study does a good job of explaining it and pointing out both the pros and cons.

The underlying assumption that has propelled the idea of a pipeline is the promise of huge financial benefits to ethanol producers and corn growers. The further underlying assumption that is without this initiative, ethanol is doomed and cannot compete in a carbon reduction world.  This was particularly apparent in Iowa as we watched many in the ethanol industry itself paint a picture of doom and gloom and claim without the pipeline the industry would become extinct.

As a farmer and landowner, I have great concerns over the pipeline.  I should preface this by pointing out we at the South Dakota Farmers Union have done as much as anyone to support the ethanol industry both at the state and national level. But this is a curious tactic to cry woe is me and limit our value to a single initiative.  Low carbon fuels are more than just the latest bright shiny object so without question ethanol needs to be able to compete in a low carbon world.  But today’s ethanol already is a low carbon fuel. The Department of Energy credits corn ethanol with a 56% carbon reduction and believes continuing efficiencies can get it to 70% and eventually net zero.

However, to put too much emphasis on carbon ignores the fact that ethanol’s value is the sum of its parts. As a domestic, renewable, job creating, low cost and high-octane fuel that reduces imports and replaces toxic carcinogens in our gasoline, ethanol is a key component of today’s fuel.  Even if the pipeline goes ahead, it will be years before it is completed. The promised financial windfall is speculative and in part based on tax incentives, which the study acknowledges. Tax incentives come and go and in an era of budget cutting and focus on deficits, there is no assurance at all they will remain in place.

Furthermore, the study acknowledges a loss in farmland yield where pipes are located at a cost in the tens of millions of dollars. Then consider the fees paid to the pipeline companies and that $6 billion figure loses some of its sheen. Our current ethanol demand is already being eroded by the threat of electric vehicles, market-skewing credits in the RFS, Congressional gridlock, and constant attacks by the oil industry.

Our greatest value is to continue to clean up gasoline and save lives, and to maximize that we must get to higher volumes.  And it’s not just us here in South Dakota—the entire nation has a lot riding on the success of the corn ethanol industry.  One promising pathway is the bipartisan Next Generation Fuels Act introduced by Senator Charles Grassley and fellow Senators from both parties that could set the stage for market growth not dependent on tax incentives and political whiplash.

With a companion version in the House, The Next Generation Fuels Act embraces this key point of our current carbon benefits by reducing carbon intensive compounds refiners use to increase octane, and ensuring a role for ethanol’s clean low carbon octane. It would require automakers to honor warranties for these higher ethanol blends and remove several regulatory barriers while correcting faulty EPA testing and emission programs.  The result will be cleaner, lower cost, high performing fuel in today’s cars without the massive disruption of converting the fleet to electric vehicles.

A recent article in Ethanol Producer Magazine (Gazing Higher: The Quest for E30) illustrates the great strides being made using high octane E30 blends in South Dakota and Nebraska. What should create a glide path for the Next Generation Fuels Act is that most of the provisions in the bill are already required, if the corn and ethanol industry gets EPA to do its job. And what is that job?

The Clean Air Act requires EPA to remove all barriers to the nationwide use of E30’s “clean octane” and to reduce carcinogenic mobile source air toxics (MSATs) by “the greatest degree of emission reduction achievable through the application of technology which will be available.”

E30 in existing vehicles offers that “available technology”.  The transition to E30 from E10 could even help petroleum refiners.  Using the same blend stocks as they do now, gasoline blenders can easily—and at lower cost and with far less emissions—produce HOLC blends requested by automakers simply by splash-blending 20% more ethanol on top of E10.

The CO2 pipeline may get tied up in the courts for years.  We have an opportunity now to move forward.

Ethanol plant netbacks would increase substantially—in part by avoiding the need to pay shipping costs to Brazil, China and other countries because we are essentially capped here at home.   Farm income would improve and be insulated from geopolitical upsets.  Our children will be healthier, happier, and more productive.

Doug Sombke is president of South Dakota Farmers Union.