Carbon capture initiative could benefit ethanol producers

Ethanol Producer Magazine
By Kris Bevill February 29, 2012

Leaders of the National Enhanced Oil Recovery Initiative were joined by Sen. Kent Conrad, D-N.D., and Rep. Mike Conaway, R-Texas, on Capitol Hill Feb. 28 to unveil a set of recommendations aimed at encouraging greater use of CO2 from industrial facilities such as power plants and ethanol facilities for enhanced oil recovery (EOR) activities throughout the U.S. Among the group’s recommendations is that Congress modify an existing CO2 sequestration tax credit to make it more workable for applicants, a request to implement a 10-year tax credit provision for industrial CO2 sources, and suggestions for state policies to further incentivize industrial CO2 capture and storage.

Currently, about 6 percent of U.S. oil is produced using EOR, a method by which CO2 is injected into geological formations to draw otherwise inaccessible oil to the surface. This extraction method can prolong the life of aging oil fields, but the expansion of this practice is currently constrained by limited CO2 supplies, according to NEORI. By incentivizing industrial sources to supply oil fields with CO2, NEORI estimates that EOR oil production could increase to 400 million barrels per year while reducing CO2 emissions by 4 billion tons over the next 40 years. Leaders of NEORI said the incentives are also economically sound investments for U.S. taxpayers. Funding has already been allocated for the existing tax credit and would require no further financial investment. The recommended 10-year credit would pay for itself within 10 years through increased federal revenues by boosting domestic oil production, the group said.

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