Advocates are eyeing the prospect of carbon dioxide removals (CDR) stemming from fermentation industries to contribute to EU climate targets, with one large biorefinery noting its potential to generate 500,000 CDR credits annually.   

Pannonia Bio located in Dunafoldvar, Hungary is the largest single-site bioethanol plant in Europe, and the company said that its fermentation processes currently result in half a million tonnes of CO2 emissions that could instead be permanently stored in depleted natural gas fields.

The EU is targeting 5 million tonnes of CDR by 2030, with biomethane, beer, ethanol, and other fermentation industries promoting their considerable collective potential to contribute to that target if provided adequate incentives.

“Fermentation removals in Europe represents an opportunity for the EU to move from essentially zero carbon capture and storage volumes today to many tens of millions of tonnes in just a few short years,” said Eric Sievers, investment director at Clonbio Group, the holding company of Pannonia Bio.

“Fermentation carbon capture is among the lowest cost forms of carbon capture available today,” he added.

NEGATIVE EMISSIONS

Corn, barley, and other biomass can be processed into products such as vegetable oil, ethanol, fertilisers, and biomethane, where the material had already captured CO2 from the atmosphere through photosynthesis.

Fermentation and then upgrading results in CO2 separation, and if that gas is permanently stored in underground sites, the sequestered CO2 does not return to the atmosphere for thousands of years, resulting in durable CDR outcomes.

“It’s carbon dioxide that was in the atmosphere a few weeks ago or a few months ago, captured by the biomass in photosynthesis and then re-released by a process of fermentation,” said James Cogan, policy advisor at Ethanol Europe and Pannonia Bio.

“Rather than just letting it vent into the atmosphere – as we’re doing now – we would like to capture it and put it in permanent storage,” he added.

There is an opportunity to store that captured CO2 at depleted gas fields in the region, with Pannonia saying that it is already in active discussions with potential partners.

***Read Carbon Pulse’s report on European CO2 storage options***

One advantage to CDRs arising from Pannonia’s fermentation facilities is that the process is already highly regulated to ensure low-carbon fuels and gas – facilitating measuring, reporting, and verification (MRV) of CO2 removal outcomes.

Life cycle analysis is performed to ensure the sustainability of the fuels, which is then audited and certified under EU and national climate and environment regulation.

“Removals volumes can be readily verified, by recording actual gas throughput at the injection points, complemented by periodic process audits,” according to Pannonia.

Cogan said that CO2 from biomethane and ethanol facilities is already routinely separated and transported by truck for industrial uses. Underground injection would add only one additional phase to this process.

“We have always been looking for usage for that carbon dioxide,” he said, noting that industrial uses have less potential to scale in the EU due to an absence of large-scale commercial demand, as well as the availability of competing low-cost geological CO2.

“The emergence of voluntary markets for carbon removals credits is expected to change this,” he added.

POTENTIAL TO SCALE

The International Energy Agency published a report on biomethane production with carbon capture and storage almost ten years ago, finding the approach has the potential to remove up to 3.5 billion tonnes of GHG emissions from the atmosphere per year by 2050, and much more if biomethane production ramps up globally.

The EU has set a target to produce 35 billion cubic metres of biomethane by 2030, which, according to Cogan, equates to almost 30 million tonnes of CDR potential.

“Add in the easily separated carbon dioxide from ethanol production and the figure jumps to around 40 million tonnes, with European wine and beer production adding another 4 million,” he wrote.

Meanwhile, the cost of CDR from fermentation industries has been estimated to be considerably lower than most other types of technology-based carbon removals.

A study performed by consultancy Carbon Limits last year put this additional cost of CO2 capture and storage on a biogas facility at between €108-€121 per tonne of CO2 removed, using a Norwegian case study.

This is a fraction of the cost of direct air capture (DAC), for example, although work is rapidly accelerating with the aim of bringing down those costs.

INCENTIVES NEEDED

But there is currently no incentive to capture and store CO2 from these processes, something that experts say is holding back the potential for the industries to contribute to the EU’s climate targets.

The bloc is currently in very early days of developing a use-case under a proposed CDR certification framework, but it remains unclear if a regulated market will develop or whether CDR units will eventually be integrated into the emissions trading scheme.

“Right now, in Europe, there is no business case to match that cost,” said Cogan, noting that this results in a lost opportunity of “colossal proportions.”

This compares the US Inflation Reduction Act (IRA), which includes a fixed production tax credit for carbon capture, aiming to propel private investment.

In the absence of a CDR market or production incentive, companies like Pannonia Bio are looking at opportunities in the voluntary carbon market (VCM).

Durable CDR credits currently sell at a considerable premium compared to other types of credits on the market, fetching per tonne prices in the hundreds of euros and beyond.

Several large corporates have announced significant CDR procurement plans, with Apple aiming to purchase 9.6 mln removals in 2030 alone. Microsoft disclosed last year that 1.5 mln removals were purchased to help fulfil FY 2022 climate commitments.

JPMorgan Chase, as another example, announced last month a commitment to purchase $200 mln in durable CDR credits – or about 800,000 tonnes – in the next nine years.

“We’re not just a buyer. we’re a bank. and so as JP Morgan, we can also underwrite these companies. we can finance them we can project financial equity raises, we can do a lot of different things,” Brian DiMarino, head of operational sustainability at JP Morgan, told a conference organised by DAC firm Climeworks on Tuesday.

CDR projects need investment clarity to come to fruition, and proponents often require pre-purchase agreements for resulting credits, rather than taking on the unknown volatility of the VCM.

The Pannonia removals implementation phase will take 18-24 months from the time of investment decision, subject to permitting, the company said in a statement.

By Katherine Monahan – katherine@carbon-pulse.com