Category: News

CCS and the VCM: Voluntary Carbon Markets Accelerating Climate Action

The following is an article published in Issue 2, 2023 of Carbon Capture Magazine.

CCS and the VCM: Voluntary Carbon Markets Accelerating Climate Action

By David LaGreca, Voluntary Carbon Markets Services Director

While the Inflation Reduction Act (IRA) has paved the way for a dramatic increase in investment in carbon capture and sequestration (CCS) solutions for heavy-emitting industries, the funding from these incentives frequently falls below the total cost to deploy these systems. At the same time, the entire raison d’être for the voluntary carbon markets (VCM) is to make CCS projects financially viable. The marriage of financial incentives from public sector financing and the VCM is an important, if not imperative union in getting many CCS installations off the ground and fully realizing the potential of these technologies in the near term. Often, companies are so focused on the regulated markets and tax incentives, that these funding streams are overlooked and underutilized in the financial stack to get to the final investment decision (FID).

According to the U.S. Department of Energy (DOE), capture costs for industrial-scale CCS projects range from $140/metric ton for ethanol, gas processing, and hydrogen steam methane reforming (SMR), up to $1,700/metric ton for coal power plants.1 Section 45Q of the IRA provides for a maximum of $85/metric ton, leaving an obvious hole in the justification for investors and companies in nearly every sector endeavoring to reduce their emissions through carbon management. Though much less certain in terms of willingness to pay for a metric ton of carbon sequestration, the international marketplace is currently starved of industrially sourced, readily quantifiable carbon credits to be used for environmental, social, and governance (ESG) reporting and carbon footprint reductions. The Carbon Neutral Buyers Alliance, Mitsui, and others have incorporated CO2 credits generated from CCS into claims of “carbon neutral liquified natural gas (LNG)”. Similarly, UK-based energy utility, Drax, inked a memorandum of understanding (MOU) with Respira for the sale of upwards of two million of their bioenergy carbon capture and storage (BECCS) credits to be issued this decade. While under scrutiny, this is a clear signal that there is a demand for such credits generated from CCS, be it biogenic or fossil in origin.

A McKinsey & Company analysis from 2022 states that carbon capture, utilization and storage (CCUS) uptake needs to grow 120 times over by 2050 for countries to achieve their net-zero commitments.2 Whereas their analysis somewhat downplays the relevance of voluntary markets in driving financing to these new projects outside of more niche, carbon dioxide removal (CDR) categories such as BECCS and direct air capture (DAC), they are presently attracting bids for credits (ex-ante in many cases) in the range of $300/metric ton and $1,200/metric ton, respectively. These prices are leading to a rapid entry into this space by registries, project developers and investors alike. Though likely not a mainstay for funding throughout the lifespan of these projects, agreements for the offtake of voluntary carbon credits may be a key factor in going from design to implementation in many cases.

Unlike commodity markets (i.e., crude oil or corn) and regulated credit markets (i.e., Low-Carbon Fuel Standard or EU’s Emissions Trading Scheme), VCMs have wide-ranging prices for credits emanating from similar project types. As many transactions are inherently bilateral, taking place over the counter between a developer and an end-user (think Microsoft offsetting their historical emissions), projects are frequently valued on their nuances as much as their atmospheric benefit. In the case of CCS activities, the most apparent distinction is between carbon avoidance (point source capture) and carbon removal (CCS from biogenic feedstock). Though capturing CO2 from any operation is, in essence, preventing emissions from entering the atmosphere, capturing emissions from combusted organic material has, due to photosynthesis, the indirect impact of reducing net carbon in the atmosphere. This biogenic differentiator propels these projects into a higher echelon of pricing in the current market as they are being treated as “carbon removals.” Other project characteristics come into play as well in the VCM, such as general sentiments towards fossil fuels and whether credits purchased from projects are effectively subsidizing their continued profitability.

In contrast and in addition to CCS projects that register their activities for harvesting 45Q and other tax incentives under the IRA, projects registering in the VCM must go through a rigorous process involving disclosure and proof of project activities to independent assessment bodies. This process requires the development of traceable data systems to be audited by both a third-party verification body and an independent registry for credits to be issued and legitimized. At present, few CCS crediting pathways exist, including under the Puro.earth standard and the California Air Resources Board (CARB), with the former for crediting CO2 removals and the latter for fuel carbon intensity (CI) reductions. On the horizon are comprehensive protocols to be released by the American Carbon Registry, the Verified Carbon Standard, and numerous jurisdictions globally. Because VCM crediting is an incentive mechanism, project proponents must show that they require the funds from credit sales, or that they have overcome other substantial, non-financial hurdles, to qualify. Whereas the U.S. Environmental Protection Agency (USEPA) Class VI well permit places a strong, primary focus on water quality along with other components, VCM protocols also emphasize the notions of additionality, permanence, life cycle emissions, co-benefits and environmental harm. These differences illustrate how federal incentives are complementary to voluntary incentives and allow for many of them to be at times “stackable” rather than exclusive to one another.

Entities involved in renewable fuel production can leverage federal, state, and voluntary incentives to establish a differentiated profile of revenue streams. A U.S. ethanol plant with carbon capture installed may, for example, apply for multiple outlets for their low-carbon intensity (CI) fuels, as well as the carbon attributes. Double counting of attributes is not the intention here, but rather a doubling of available sales outlets for fuel and its climate benefits. In these installations, the fuel may be sold, with or without the CI reduction from CCS, into Canada’s Clean Fuel Regulation (CFR), Clean Fuel Programs into Washington and Oregon, California’s LCFS or to voluntary markets. When the CO2 value is sold separately, it provides for the opportunity to garner the absurdly high CDR credit prices on the VCM as is the case in the market today. This approach of maintaining multiple outlets for revenue, selected by the winds of market prices across all the pathways available, is what we call “optionality.” This is a key and underutilized financial benefits for many companies.

CCS is an environmental imperative, according to the Intergovernmental Panel on Climate Change (IPCC). Between 300-600 gigatons (Gt) (or 1 billion metric tons) of CO2 must be cumulatively captured and stored between now and 2100, in conjunction with a massive drawdown of emissions, to maintain our climate within the 1.5°C threshold for heating established in the Paris Agreement. For this level of activity to transpire across the energy and industrial sectors, both governments and the private sector will need to drive substantial finance using multiple methods of incentives. Where governments fall short in terms of ambition and regulation, it is up to the VCM to step in to fill gaps, as it has done for more than 30 years.

1 US Department of Energy. 2023. Pathways to Commercial Liftoff: Carbon Management.
2 McKinsey & Company. 2022. Scaling the CCUS industry to achieve net-zero emissions. October 28, 2022.

voluntary carbon markets
David LaGreca

 

For more information about our VCM services, contact:

David LaGreca, Voluntary Carbon Markets Services Director | dlagreca@ecoengineers.us

Bridging the Gap: Connecting Carbon Markets From the Farm Gate to Fuel

The following is an article originally published in the September/October 2023 issue of Ethanol Today.

Bridging the Gap: Connecting Carbon Markets From the Farm Gate to Fuel

By Mark Heckman, Strategic Development Director (U.S. Biofuels)

What will it take to connect a carbon market from the farm gate through to food and fuel production and link it to downstream markets? This question strikes a chord with me on a deeply personal level. You see, I’m not just writing about this issue as an observer; I’m living it every day on our farm in eastern Iowa.

For years, I’ve been putting sustainable farming practices into action in the form of cover cropping, no-till farming, and responsible use of hog manure and overseeing our cow-calf operation. In 2014, our operation started cover crops on 40 acres with the encouragement of my son. Since then, the reward of increased yields and improved soil health has grown, and so has the removal of carbon dioxide (CO2) from the atmosphere in the process.

However, while I’m reducing carbon emissions on my farm, those carbon savings haven’t been monetized to their full potential. The methodologies and tools needed to quantify and verify these carbon reduction activities exist, but the broader infrastructure to connect these carbon-saving practices to markets is in its infancy. Agriculture needs to bridge this gap and create a thriving carbon market that recognizes and rewards farmers like me who are actively reducing carbon emissions from the farm gate onwards. 

The GREET model is one of the leading models in this field for calculating carbon intensity (CI). Leveraging its knowledge of the GREET model for assessing the Life-Cycle Analysis (LCA) of agricultural products and biofuels, EcoEngineers has been instrumental in crafting robust, science-driven methodologies for a wide range of new technologies – ranging from corn kernel fiber and CO2 capture to seaweed and renewable biogas. To maintain the integrity of carbon markets, independent third-party verifiers will also play a crucial role in providing reliable, science-based, and transparent methodologies to ensure the credibility of carbon reduction claims and activities that are being made.

To bring this all together for the industry, the support of a sponsoring agency like California’s Air Resources Board (CARB) or associations like the American Coalition for Ethanol (ACE) can be a game-changer. These entities can provide valuable guidance and standards to ensure the success of carbon reduction programs on farms and downstream fuel markets.

Farmers and downstream fuel producers are at the heart of this endeavor. By gathering high-yield crops and engaging in sustainable farming practices, we have a unique opportunity to centralize carbon-saving efforts.

When we leverage technology, develop transparent methodologies, garner multi-stakeholder support, engage ethanol producers, employ third-party verifiers, and expand carbon markets, we can ensure farmers like me are stewards of the land and recognized contributors to carbon reduction efforts. 

bridging the gap carbon markets
Mark Heckman

 

For more information about our Ethanol and Biodiesel services, contact: 

Mark Heckman, Strategic Development Director (U.S. Biofuels) | mheckman@ecoengineers.us 

Forbes: Should You Outsource Your Sustainability Services?

The following is an article originally published July 21, 2023, by Forbes.

Should You Outsource Your Sustainability Services?

By Shashi Menon, EcoEngineers

In today’s business world, many functions are outsourced. For example, at my company, we outsource payroll, IT, legal services and taxes because of the highly specialized knowledge required to do the tasks and the economies of scale achieved by the vendors. It doesn’t make sense for us to hire a full-time, in-house attorney with expertise in contracts, employment law, litigation, etc., when there is a buffet of highly specialized lawyers I can access through one relationship with a law firm—and I can rely on them as needed.

A similar theme is emerging in sustainability services. As an expert in providing outsourced CSO services, my company and others in the space help firms achieve their sustainability goals.

One of the biggest challenges faced by businesses today is finding people to assimilate all the knowledge needed to maneuver the energy transition, which places increasing pressure on businesses to reduce emissions, promote circularity and track sustainability. According to LinkedIn’s Global Green Skills Report 2022, demand for “green skills” is outpacing supply, and the specialization of “green skills” is proliferating—from climate and renewable energy to environmental awareness and corporate social responsibility.

Companies are responding to this need by appointing a chief sustainability officer, or CSO, who is expected to lead the response to the energy transition. The skills required to do this are complex, technical and often beyond the abilities of one person. It requires engineers, legal experts, market analysts, investment bankers and project managers.

Outsourcing CSO services, like outsourcing legal and accounting, allows businesses to access specialized sustainability experts. Outsourced CSOs can provide sustainability, business strategy and operational guidance related to the energy transition.

Making The Decision To Outsource

Whether you are leading a small startup or a large publicly traded firm, here are several instances where outsourcing CSO services can be an effective way to address some of today’s carbon challenges:

  • New climate startups: You have launched a successful business model and are fortunate enough to be juggling multiple balls—hiring and training, sales and business development, investor relations and more. Your leadership team may not have time to keep up with global climate policies, emerging incentive programs, new competing technologies, evolving carbon markets, data standards and carbon accounting rules.

  • Small or midsized privately held businesses: You have loyal customers who like your products or services, and you are growing steadily in a stable environment. Recently, these customers have been asking casual questions about the company’s sustainability efforts. The leadership team doesn’t have the time or the baseline knowledge to analyze the company’s sustainability.

  • CEOs or CFOs: It’s time to update investors and shareholders about profit margins, strategic plans and key performance indicators, and they also want to see an analysis of energy transition risks and climate risks. As a believer in risk-averse governance, you know you should include this in your quarterly report, but you are not clear where to start.

  • One-person sustainability departments: Pressure from the board and upper management has forced one person to research and respond to a variety of questions over the years, and their role has evolved to include “sustainability expert.” But the questions are becoming more complex and overwhelming. A climate scientist, a policy analyst and a process engineer are needed on the team to fully respond to the situation, but the budget doesn’t allow this.

Of course, outsourcing a task core to a business’ strategic direction is not always a good idea. A CSO is a part of the leadership team and has access to confidential information that is key to a company’s success and competitive advantage, which are not things that can be shared with an outside firm before establishing a high level of trust. In these cases, it is better to plan to have an in-house CSO who can incorporate these business secrets into a long-term sustainability strategy.

Getting Started With An Outsourced CSO

The CSO is usually key to building the company’s “green team” that has the passion for facilitating the energy transition and the specialized skills needed to perform the critical analysis needed. If you are outsourcing a CSO, make sure you have established an internal team with diverse skill sets; these include climate scientists, market analysts, process engineers, policy advisors, etc.

The energy transition requires a business to rethink how it’s doing business, and a CSO must frequently interact with purchasing, marketing, legal, accounting and operations, and talk their language.

A key CSO function is communicating complex technical concepts in simple language. Ask your CSO to conduct an analysis of the risks and opportunities your business faces, so when a customer or an investor casually asks what you are doing on the sustainability front, you can give a clear and confident response.

CSOs lead a company’s response to the energy transition: Look for someone who is unbiased, data-driven, aspirational in their approach, has a strong grasp of internal and external stakeholder needs, and a peer network that includes policy analysts, engineers, auditors, carbon life cycle experts, etc.

The biggest challenge in deciding whether to outsource the CSO function is how to integrate someone external into the day-to-day details of your team’s workflow. Should you give them a company email? How much confidential information should you share? Who should be the main point of contact internally for the outsourced service? Each company has to develop its own processes to govern the level of outsourcing it wishes to put in place.

Some companies starting fresh on the energy transition journey need a temporary leader with a full team of external technical resources that they can use as needed. Others, further down the path, may have an internal CSO on the team, but they need to outsource technical expertise and receive policy briefings and technical analyses, as needed.

Outsourcing the CSO function can make it easier for businesses to make sustainability and strategic decisions. An outsourced CSO can analyze the risks and opportunities a business faces due to climate policy, carbon pricing, consumer preferences or even severe weather events, so when a customer or an investor asks what you are doing on the sustainability front, you can give a clear and confident response.

For more information about the EcoEngineers and the services we offer, contact us at clientservices@ecoengineers.us or complete a contact form.

Equatic’s Transformative Technology Allows Seawater to Capture & Store Carbon

The following is an article originally published August 15, 2023, by BusinessWire.

Equatic’s Transformative Technology Allows Seawater to Capture & Store Carbon

Equatic White Paper Outlines Rigorous MRV Framework to Validate Process

DES MOINES, Iowa–(BUSINESS WIRE)–Carbon removal company Equatic has developed a revolutionary process that relies on seawater electrolysis to capture and store carbon dioxide (CO2), while simultaneously producing clean hydrogen. A new white paper written after consultation with EcoEngineers (Eco), a clean energy consulting, auditing, and advisory firm, outlines Equatic’s approach to quantifying and verifying Equatic’s carbon removal process.

“White Paper: Equatic’s Measurement, Reporting, and Verification Methodology,” outlines the Equatic process, which is intentionally designed and engineered to measure carbon dioxide removal (CDR) within a closed system. The system uses on-line and on-stream sensors to measure the chemical composition of the seawater inflow, the processed water flows, the retained solids, and the air, ensuring Equatic has a precise and accurate measurement of CO2 drawdown.

Continuous, unambiguous data about operational performance can be obtained directly from in-plant measurements of CDR rate and extent. This data-driven approach ensures that the carbon removal process is meticulously monitored and recorded.

Concurrent with the preparation of this white paper, Eco is preparing the Equatic MRV methodology, drafted in alignment with ISO 14064-2:2019, that provides rules for eligibility, means of quantification, monitoring instructions, reporting requirements, and verification parameters for projects generating carbon removal credits using the Equatic seawater electrolysis process.

“Equatic’s innovative approach offers hope in the battle against the pressing issue of global warming,” Roxby Hartley, Ph.D., climate risk director for Eco. “As governments, industries, and individuals seek sustainable solutions, the Equatic process shows strong promise.”

The Equatic Process in Carbon Removal

At the heart of the white paper lies the Equatic process, a transformative electrolytic approach for CDR. This process leverages the natural equilibrium between the ocean and the atmosphere to create an efficient means of trapping and storing CO2 within aqueous bicarbonates and solid carbonates. By utilizing the abundant alkaline cations present in seawater, such as magnesium and calcium ions, Equatic has harnessed a continuous process to immobilize CO2 as stable, long-lasting compounds.

“Equatic is the first ocean-based CDR technology to deploy a closed system MRV,” said Dr Erika La Plante, Head of MRV & Environmental Impact Assessment at Equatic. “The carbon removal market is growing, and the highest-value credits are measurable and permanent. By working with Eco to develop a methodology, we are establishing principles for carbon accounting and ISO-standard reporting and verification to provide quality assurance for CDR credits.”

Ensuring Permanent Carbon Storage

One of the key features of the Equatic process is its focus on permanence. The captured CO2 is stored as solid carbonates and aqueous bicarbonate ions, both of which offer long-term storage solutions. Equatic’s calculations reveal that solid carbonates can immobilize carbon dioxide for billions of years, while aqueous bicarbonates can provide storage for more than 10,000 years. This makes Equatic’s carbon removal approach a promising contender for tackling the issue of atmospheric carbon accumulation.

“The Equatic white paper showcases a preliminary pathway to leverage voluntary carbon markets,” said Hartley. “The credibility of carbon credits depends on implementing a comprehensive approach to measuring, reporting, and verification. We believe Equatic is on the right path to do this.”

About EcoEngineers

EcoEngineers is a consulting, auditing, and advisory firm with an exclusive focus on the energy transition. From innovation to impact, Eco helps its clients navigate the disruption caused by carbon emissions and climate change. Eco helps organizations stay informed, measure emissions, make investment decisions, maintain compliance, and manage data through the lens of carbon accounting. Its team of engineers, scientists, auditors, consultants, and researchers live and work at the intersection of low-carbon fuel policy, innovative technologies, and the carbon marketplace. Eco was established in 2009 to steer low-carbon fuel producers through the complexities of emerging energy regulations in the United States. Today, Eco’s global team is shaping the response to climate change by advising businesses across the energy transition.

About Equatic

Equatic is a carbon removal company leading the industry in combined carbon dioxide removal and carbon-negative hydrogen generation. Using a patented seawater electrolysis process, Equatic amplifies the ocean’s inherent ability to absorb and store massive amounts of carbon. Formerly known as Project SeaChange, the technology was created and developed at the UCLA Samueli School of Engineering’s Institute for Carbon Management. Equatic operates two pilots in Los Angeles and Singapore and works with industry pioneers, national agencies, and government leadership to scale climate solutions at unprecedented rates. The company sells high-quality carbon removal credits and is the only ocean-based carbon removal company that measures removal with unprecedented certainty.

For more information about the EcoEngineers and the services we offer, contact us at clientservices@ecoengineers.us or complete a contact form.

Overhauling Carbon Accounting

The following is an article originally published July 7, 2023, by Biomass Magazine.

Overhauling Carbon Accounting

Improved carbon accounting methodology for biogas projects will be a game-changer for the industry.

By Brad Pleima, EcoEngineers President

Currently, the biogas industry lacks a comprehensive accounting methodology that enables a standardized, stable market environment for carbon reduction and removal resulting from biogas projects. This will be especially valuable to market buyers engaged in voluntary carbon reduction activities.

To solve this problem, the American Biogas Council has engaged EcoEngineers to plan, develop and publish an improved carbon accounting methodology. This new methodology will use frameworks from existing methodologies to measure the carbon intensity of all biogas projects and more diverse end uses, by the end of 2023. ABC and Eco hope this methodology will make it easier for biogas projects to quantify and market carbon benefits from renewable natural gas (RNG), biogas electricity and digestate.

Demand for low-carbon and carbon-negative products has never been stronger. Carbon accounting, carbon reporting and verification, and product labeling are emerging as some of the biggest business disruptors of this century. Corporations across the spectrum are looking for ways to decarbonize, incorporate carbon reduction transparency and accountability into product strategies, supply chains and operations across their entire value chain, thus enabling competitive differentiation, growth and value creation.

RNG, electricity from biogas, and digestate are low-carbon substitutes for natural gas, grid electricity and synthetic fertilizers, respectively. End users can claim carbon reductions by substituting fossil-derived fuel, electricity or nutrients with equivalent products derived from biogenic feedstocks. This claim is quantified by a lifecycle carbon analysis (LCA) and its resulting carbon intensity (CI) score, which, when compared to a business-as-usual baseline, quantifies the carbon reduction in metric tons (MT) of CO2 equivalent. These carbon reductions can then be sold on carbon trading platforms and markets, or used for internal carbon reduction goals.

Using existing frameworks as a basis, such as the California Low Carbon Fuel Standard pathway for RNG and the Greenhouse Gas Protocol, this improved methodology will develop a strong, science-based carbon accounting framework. The framework can be used to measure the carbon intensity of biogas projects more completely and more accurately, looking at lifecycle CI improvements from a broader array of feedstock baselines, biogas system designs, and a more diverse array of end uses and products, beyond what the current frameworks contemplate.

Today’s Method
Currently, California’s LCFS and its modified Greenhouse Gases, Regulated Emissions and Energy use in Technologies (GREET) model are the standard used to represent the reduction in carbon footprint where specific feedstock-to-end-use pathways for RNG or biogas electricity for transportation are eligible to earn credits. However, the rules are somewhat arbitrary—for example, the California LCFS currently recognizes methane capture at dairies, but not at beef cattle lots or other types of manures.

Another common framework includes private, voluntary carbon registries, mostly used today by landfill biogas systems. These are, again, for unique feedstock to end-use pathways allowed by specific rules of the registry. Other entities allow the sale of RNG without a CI label, but once again, limit it to an arbitrary list of permitted pathways and assumptions.

LCA and CI scores for biogas are inconsistently valued and applied across regulatory and voluntary markets, opening the sector to unnecessary scrutiny. For example, environmental coalitions and some nongovernmental organizations have challenged the carbon reduction potential of biogas-based systems when combustion occurs at any scale, when agricultural lands are used for production, or when manure storage is involved. An improved lifecycle methodology, as undertaken by the Eco and ABC work, seeks to make the true carbon impact of those pieces of the pathway clear, consistent and transparent. The current patchwork of systems excludes valuable contributions to carbon reduction efforts, and in some cases, leaves biogas systems ineligible to participate in programs and markets.

The Solution
Eco has been hired by ABC to develop a methodology and associated protocols to measure, report and validate the carbon reduction and removal embodied in typical biogas systems, including those producing RNG, electricity and nonenergy products like digestate. To develop the methodology, we are providing multiple opportunities for stakeholders across the industry to engage and provide valuable feedback that will ultimately shape the final product.

By combining a science-based approach with industry concerns and know-how, this improved methodology will cover the most common biogas projects and provide a clear roadmap to quantify and monetize the environmental benefits associated with energy and nutrient production.

With the help of this methodology, biogas owners, developers and customers will be able to determine the CI of their specific biogas project and be more inclusive of feedstocks and project types not currently recognized by the LCFS for methane avoidance credits. In addition, the methodology will attempt to remain within the bounds of common greenhouse gas protocols.

Since RNG, electricity from biogas, and digestate are prime candidates to take advantage of the global surge in demand for decarbonized products, this methodology should make it easier for biogas projects to engage with the growing voluntary carbon marketplace. It will create a more universal language for biogas systems and foster innovation within the sector as new technology, design and sustainable agricultural practices emerge as contributors to carbon reduction opportunities, leading to greater investment across the industry.

Finally, to build confidence in and adoption of the resulting methodology, a strong carbon accounting framework, methodology, monitoring, reporting and verification plan is needed. Beyond biogas, this new methodology can act as a starting point for other sectors that may use biogas as an input to their products, advanced liquid biofuels or hydrogen, and can serve as a framework for developing similar methodologies in other industries. It will be game-changing.

For more information, please contact:

Brad Pleima, President, bpleima@ecoengineers.us

Brad Pleima

SAF Means a Massive Market for Low Cl Ethanol

The following is an article originally published in March 2023, by Ethanol Today.

SAF Means a Massive Market for Low Cl Ethanol

By Jim Ramm, P.E., EcoEngineers VP Client Services

I recently attended the Sustainable Aviation Futures Conference in San Francisco and was impressed by the strong drive by both the airline industry and government agencies toward decarbonization. The airlines I spoke with say they plan to expand sustainable aviation fuel (SAF) to 100 percent of aviation fuel used by 2050 to achieve net zero goals. The Department of Energy goals for SAF are 3 billion gallons by 2030 and 35 billion gallons by 2050 for the U.S. market alone. 

However, according to aviation and renewable fuel industry leaders I spoke with at the conference, not enough vegetable oil feedstock exists to go around, and only ethanol has the scale to achieve the new demand. This is great news for ethanol producers concerned about an electric vehicle (EV) take-over of the 15 billion gallon U.S. ethanol market Since about 1.9 gallons of ethanol is required to make a gallon of SAF, the new SAF market has the potential to eclipse the current U.S. ethanol demand. Not only will SAF be made from distillers’ com oil (DCO) and waste fats at facilities like the 125 MGPY HOBO Clinton, but even more significant volumes of SAF will be produced from ethanol at facilities like LanzaJet Soperton or Gevo Net-Zero 1 Lake Preston. One question is whether the ethanol to produce SAF will come from Brazilian sugarcane or U.S. corn.

For the first time, the incentives and regulations to support the expansion of ethanol to SAF are in place. However, not just any ethanol can be used successfully to replace fossil jet fuel. New regulations from the USEPA include the bio-intermediate rules which allow undenatured ethanol to be registered as a bio-intermediate and then be converted to SAF at a separate facility. This can be seen in the recent pathway determination letter from EPA approving an ethanol-to-jet pathway for LanzaJet. In this case, the bio-intermediate feedstock is sugarcane ethanol and the resulting SAF is D4. Com-based ethanol could also act as a biointermediate feedstock for D4 SAF as long as it is low carbon intensity (Cl). Gevo Net-Zero 1 Lake Preston will use U.S. com ethanol to produce SAF. The national Renewable Fuel Standard (RFS) will require at least a 50 percent reduction in greenhouse gases (GHG) versus petroleum, and 60 percent to achieve a maximum valuation of up to $2.20 per gallon under the RINs credits from that program. 

The Inflation Reduction Act (IRA) has a SAF tax incentive (45Z) that requires at least a Cl of 50 kg per mmBtu but scales up to $1.75 per gallon based on Cl. Most ethanol­to-jet projects are likely to require that the ethanol have a Cl of 35-40 kg C02 e per MM Btu or lower in order to qualify for SAF incentives, including stackable EPA RINs, RFS Tax Credits, and carbon credits.

SAF is a fantastic new and expanding market for low-Cl ethanol. In addition, there will be multiple markets available for low-Cl ethanol, including SAF, RFS, IRA, California, Oregon, Washington, Canada, and future markets. The IRA provides incentives to make investments into carbon capture and storage (CCS), renewable process heat, renewable electricity, and sustainable agriculture that can increase ethanol value by lowering net Cl. The American Coalition for Ethanol (ACE) has established leadership in sustainable agriculture by providing the Corn Ethanol Carbon Intensity Calculator at ethanol.org/calculate-ci. Moreover, sustainable agriculture, CCS, and other improvements will be important steps for U.S. ethanol to meet the ACE and RFA pledge of 70 percent GHG reduction by 2030.

Ethanol producers should act now to get ready for low Cl ethanol markets, and they don’t need to do it alone. There are concrete steps they can take to move this forward. First, establish a baseline of where your plant Cl is today based on the Argonne National Laboratory GREET model for participating in the IRA. Then, make a plan for Cl reduction to get ready for the new markets of the IRA which take effect January 1, 2025. 

Jim Ramm, P.E.

For more information about our client services, contact: Jim Ramm, P.E., VP Client Services | jramm@ecoengineers.us

Forbes: The First Step To Carbon Neutral Is Learning How The System Works

The following is an article originally published May 3, 2023, by Forbes.

The First Step To Carbon Neutral Is Learning How The System Works

By Shashi Menon, EcoEngineers

Recently, I had the opportunity to spend three wonderful days in Anaheim, California. No, I wasn’t visiting Disneyland; I was attending North American Carbon World (NACW), a conference put on by the Climate Action Reserve.

When the Climate Action Reserve was launched in May 2008 with two projects on its platform, the average price of its carbon offset was $10.20 per ton, which was then quoted as the market’s highest tier of pricing; it hasn’t increased much since then.

Although some carbon sequestration projects claim to receive value in multiples of hundreds of dollars for each ton of carbon sequestered permanently, the average value of a generic forestry project or other greenhouse gas (GHG) reduction mechanism continues to be in the single digits or low double digits. To understand why, we need to dive a little deeper into what shapes carbon markets.

What Are Carbon Markets?

Regulated Markets

There are two types of carbon markets: regulated and voluntary. Regulated markets are managed by governments. According to the World Bank, there are around 70 of these programs globally, and they regulate about 12 gigatons of CO2 (about 23% of global emissions). Major markets created by these programs include the European Emissions Trading Scheme (ETS) and the California Carbon Allowances (CCA).

Regulated ETS or cap-and-trade markets typically establish a cap on emissions and lower the cap each year for industries operating within their jurisdiction.

Unused allowances can be sold, motivating companies to reduce their emissions and sell unused allowances. You can think of these as a license to pollute and the license gets a little more expensive each year thus incentivizing the industry to pollute less.

Voluntary Markets

Voluntary carbon markets are supported by entities such as the earlier-mentioned Climate Action Reserve along with others like South Pole, Terrapass Review and many others. They create “offsets” from verified carbon reduction projects that the private sector can purchase. In other words, instead of lowering emissions from their own operations, hard-to-abate industries can finance emissions reductions in off-site projects.

A look through some protocols can give you an example of these projects: Preserving forests, managing grasslands, low-emissions rice cultivation, livestock methane capture, organic waste diversion, etc.

Current Challenges In Carbon Market Regulations And Pricing Mechanisms

According to the European Energy Exchange’s market data, EU allowances touched $100 per ton in 2022, and California Allowances ended 2022 at around $30 per ton. These prices do not spread to other GHG reduction mechanisms listed on private registries, including the Climate Action Reserve, because most of these projects are not eligible to be used to offset emissions regulated by the ETS programs.

The ineligibility is due to the intent of the regulations, which want the industries in their jurisdictions to emit less from their operations rather than finance a forestry project or fuel switching in another part of the world.

Lack Of Motivation And Innovative Solutions For Industries

So far, the costs of allowances regulated markets haven’t gotten high enough to motivate most industries to invest in costly on-site abatement technologies. In other words, it’s cheaper to continue business as usual than to invest in a radical energy source change for most industries.

I don’t see energy providers offering any innovative, cost-effective, low-carbon solutions that will completely shift business practices in hard-to-abate sectors. The solutions available, such as carbon capture and sequestration, green hydrogen production, full electrification and biofuel use, are struggling to scale under these programs.

A key objective of landmark U.S. regulations of 2022, such as the Inflation Reduction Act and the Bipartisan Infrastructure Law, is to accelerate private investment in clean energy solutions since the industry has been unable to scale under existing programs.

Carbon Literacy Is Key

I’ve likely touched on new areas for many business leaders—from climate adaptation and mitigation to emissions trading and scope reporting. That’s a lot to learn in one sitting, and it can be overwhelming. Mastery of climate risks and options for an industry sector involves learning many new things including offset purchase strategies, emerging technologies, policy changes, etc.

Assembling all this and analyzing it within the context of different business units usually takes a highly skilled corporate SWAT team with energy transition expertise that can work across different profit centers, which you may not have.

But if you are just beginning your journey, don’t be overwhelmed. I recommend baby steps. You can start by researching the following areas:

  1. Fundamentals of the carbon cycle.
  2. Changing realities from a regulatory, customer and shareholder perspective.
  3. Carbon markets and how they affect your region and sector.

Developing Voluntary Plans For Net-Zero

At the end of the day, I believe anyone operating in today’s business climate needs to understand the potential cost of emissions abatement. While some of this will be driven by mandated programs, the rest will have to be voluntarily developed.

A classic example is California’s plan to achieve net-zero by 2045. In order for this to be successful, I believe state agencies and regulators will need to sit down with industry leaders and develop voluntary plans for their sector, including measurement, reporting and verification methodologies that align with the overarching net-zero goal for the state.

These plans should take a comprehensive look at the cost of technology, compliance costs and the ability to bridge to net-zero through off-site, offset projects that will subsidize clean development in a less developed region in the world.

By starting small and setting learning goals, you can expand your carbon literacy and help be a part of developing these voluntary plans.

Understanding the fundamentals of the carbon cycle, and the changing realities from a regulatory, customer and shareholder perspective, can help demystify and give context to this complicated topic. By starting now in your understanding of the carbon markets, you can be better prepared for the upcoming years.

Shashi Menon

For more information about the EcoEngineers and the services we offer, contact Shashi at smenon@ecoengineers.us.

Business Wire: Improved Carbon Accounting for Biogas Projects Underway

  The following is an article originally published May 11, 2023, by Business Wire.

Improved Carbon Accounting for Biogas Projects Underway

EcoEngineers hired by American Biogas Council to lead project and BIOGAS AMERICAS workshop

DES MOINES, Iowa–(BUSINESS WIRE)–The American Biogas Council (ABC), a national trade association and voice of the U.S. biogas industry, has engaged EcoEngineers (Eco), a renewable energy and carbon consulting, auditing and advisory firm, to plan, develop and publish a new carbon accounting methodology to measure the carbon intensity of all biogas projects by the end of 2023. Biogas systems recycle organic material into renewable energy and soil products.

“Outside of the transportation sector in California, no accepted standard exists to measure the total carbon impact of biogas projects,” said Patrick Serfass, executive director of the ABC. “Methane and carbon dioxide are already being emitted from the organic waste our society produces. Biogas systems reduce emissions, but their carbon intensity often ranges from a 50 – 700% reduction in carbon emissions compared to fossil fuels. That’s huge. To help meet climate goals, guide policy, and make better decisions on how to use our resources, better math is needed. That’s why we’ve hired EcoEngineers to lead this project for us.”

Using existing frameworks, such as the California Low Carbon Fuel Standard (LCFS) pathway for RNG and the Greenhouse Gas (GHG) Protocol, this new methodology will develop a strong science-based carbon accounting framework that can be used to more accurately measure the carbon intensity of biogas projects, looking at the whole lifecycle from feedstock to end use of all project products.

As part of the methodology development process, Eco will seek wide input into key assumptions related to LCA boundaries, baselines, and emissions factors. The first opportunity will be a workshop, led by Eco, at BIOGAS AMERICAS, May 16, 2023, 2 – 4:30 p.m. at the Sheraton Grand Chicago, to present the preliminary methodology framework and gain input from attendees. BIOGAS AMERICAS is the largest biogas conference and tradeshow in North America.

“The demand for proper accounting in carbon reduction and removals has never been stronger,” said Shashi Menon, CEO, EcoEngineers. “Corporate business entities across the spectrum are looking for ways to incorporate transparent, verified disclosures of carbon reduction and removal into product strategies, supply chains and operations across their whole value chain. The American Biogas Council is helping the US industry, governments, and corporate America prepare for this and provide a clear environmental label for biogas products.”

A lifecycle methodology will create a more rigorous standard and crediting mechanism for all kinds of carbon markets. It allows communication between biogas projects developers and buyers of biogas, RNG, digestate and electricity. More specifically, it will allow disclosures of carbon intensity scores to biogas buyers. A universal carbon accounting methodology for all biogas project types will prevent two customers, who purchase gas from the same project, from reporting it differently.

“And beyond biogas, this new methodology will act as a framework for developing similar methodologies in other industries,” added Menon. “It could be game-changing.”

To find out more about the BIOGAS AMERICAS 2023 workshop, “Measuring the Carbon Impact of Biogas & RNG Projects,” or to register, please visit, https://biogasamericas.com/.

About EcoEngineers

EcoEngineers is a consulting, audit, and advisory firm with an exclusive focus on the energy transition. From innovation to impact, we help our clients navigate the disruption caused by carbon emissions and climate change. We help companies stay informed, measure emissions, make investment decisions, maintain compliance, and manage data through the lens of carbon accounting. Our team consists of engineers, scientists, auditors, consultants, and researchers with deep expertise on global fuels policy, energy and carbon markets, and alternative solutions to meet energy demands. Eco was established in 2009 to steer low-carbon fuel producers through the complexities of emerging energy regulations in the United States. Today, our global team is shaping the response to climate change by advising businesses across the energy transition. Together, we can create a world where clean energy fuels a healthy planet.

About American Biogas Council

The American Biogas Council is the voice of the US biogas industry dedicated to maximizing carbon reduction and economic growth using biogas systems. We represent more than 370 companies in all parts of the biogas supply chain who are leading the way to a better future by maximizing all the positive environmental and economic impacts biogas systems offer when they recycle organic material into renewable energy and soil products. Learn more online at www.AmericanBiogasCouncil.org, Twitter @ambiogascouncil, and LinkedIn.

EcoEngineers Has Established Itself In California To Help Companies Navigate The Carbon Disruption And Energy Transition

  The following is an article originally published March 17, 2023, by the California Business Journal.

EcoEngineers Has Established Itself In California To Help Companies Navigate The Carbon Disruption And Energy Transition

By Susan Belknapp, Senior Writer, California Business Journal
Tanya Peacock

From the Race to Zero by the United Nations Framework Convention on Climate Change (UNFCCC), the Net Zero Government Initiative, and the California Climate Commitment, the challenge is on at the global, federal, and state levels for companies and organizations to achieve carbon neutrality. The UN and the U.S. have deadlines of 2050, but California’s goals are more aggressive, with a deadline of 2045.

There is no denying that it must be done, but how do organizations achieve it? How do you begin to put policies and processes in place to meet these goals and even more importantly, how do you completely redesign, rebuild or retrofit equipment, buildings, and entire factories or fleets, to run with greater environmental efficiency?

Enter EcoEngineers, a consulting and auditing company specializing in energy transition issues, establishing itself in California to help companies navigate the carbon disruption. EcoEngineers started in Des Moines, Iowa, in 2009 and works with clients across the U.S., Brazil, Canada, Europe, Asia, and Australia. The firm is comprised of engineers, scientists, policymakers, auditors, and analysts with expert knowledge in sustainability policies, technology, and the carbon marketplace.

EcoEngineers helps companies achieve their clean-energy and carbon goals in three ways: initial education through EcoUniversity, EcoConsulting, and EcoAuditing. EcoEngineers’ consulting practice is further organized around regulatory engagement, lifecycle analysis (LCA), asset development, and compliance. Its auditing group exclusively audits carbon claims and helps prevent greenwashing. (However, doesn’t provide auditing services to its consulting clients when there is a conflict.)

“We’ve been around for about 13 years and always considered ourselves a California company,” says Shashi Menon, CEO, EcoEngineers. “We’ve been working for the majority of the renewable fuel producers in California since the inception of the low-carbon fuel standards (LCFS), in 2010. We show people how to take control of the ‘E’ in ESG and manifest their own environmental destinies in a good way.”

ESG is Environmental, Social, and Government initiatives that are being embraced by public and private entities worldwide to implement practices and social equity and instill the policies that keep them on track for measurable change.

“We’ve always admired California and its leadership in setting goals for decarbonizing the entire economy,” says Menon. “We’ve been on that journey with the state since our founding. The net zero goal for 2045 requires, I think, at least a quadrupling of renewable and zero-carbon energy resources. When we talk about electrifying everything, that will require an entire makeover for the grid including generating from offshore wind farms and clean hydrogen.”

California, with its sheer size, economy, number of large corporations, and aggressive goals could be considered ground zero for net zero. If California can do it – by deciding to do it – as the world’s fourth-largest economy, then all other states, countries, and municipalities can do too.

To help lead the delivery of its services in the Golden State, EcoEngineers brought on Tanya Peacock as managing director for California to help expand its energy-transition practice. Peacock, who is chairperson of the California Hydrogen Business Council, is considered a hydrogen expert and will also lead the hydrogen sector, companywide.

Expanding hydrogen is central to many of California’s plans to meet emissions goals, as evidenced by its investment of up to $115 million to build 200 hydrogen refueling stations by 2025, which will make the No. 1 fuel cell electric vehicle market in the U.S.

Peacock attended recent United Nations climate conferences and has worked with U.S., French, and Canadian utilities to help with decarbonization efforts focusing on hydrogen and biomethane, in particular. She’s held board and leadership roles at the American Gas Association, Coalition for Renewable Natural Gas, American Biogas Council, and the California Stationary Fuel Cell Collaborative. She’s considered an expert in California’s cap-and-trade program and clean energy policy.

“We’re building an expanded team around Tanya to help our clients navigate the energy transition,” says Menon. “During our history, we’ve helped the industry adapt to the disruption of carbon policies, regulations, and reporting, and now all have become urgent. Industries, whether they agree or disagree, whether they want to or not, are being forced to respond in some way. We sit at the intersection of policy, regulations, technology, and carbon markets. And those have to come together synergistically for this to be successful and we show people how to do that.”

Menon and Peacock are quick to point out that sustainability and profitability are not mutually exclusive. In fact, ’s been shown that once companies have enacted serious environmental overhaul practices, their efficiency increases at such a rate that it not only recoups the investment but adds to it.

“Many people think adapting to climate or carbon regulations is always a high cost and that’s not true,” says Menon. “Many of our clients are profiting from it. Some have tripled their bottom line. They’re doing the right thing and recouping their investments. Teaching them the way to achieve this is also our expertise and then our clients learn how to further take advantage of this as they go on.”

To further illustrate the depth and breadth of what they do, Peacock gets more granular about the types of projects EcoEngineers can do. They work with clients from small companies to massive refineries, anywhere in the world.

“We have deep experience with hydrogen but we can also help with solar and wind, batteries, or other types of energy generation or storage resources, in the short-, medium- and long-term,” says Peacock. “We’ve worked with a wide range of companies – from Central Valley food processors to start-ups; from transit operators and fleets to solar and hydrogen project developers.

All these entities are seeking guidance on transitioning their operations to 0 emissions or low emissions, and we can help them by providing a full assessment of every step in the process they’ll need to achieve their goals. This starts with stakeholder education, then creating an to going live and meeting goals. There needs to be a lot of analysis of current operations and where the decarbonization opportunities lie.”

Menon underscores that Peacock is the right person to help EcoEngineers, its clients, and California meet and exceed their environmental aspirations.

“Throughout her career, Tanya has consistently developed and advanced practical low-carbon fuel policy priorities in the State of California and across the world through advocacy, legislation, and regulation,” said Menon. “Tanya’s experienced leadership and deep knowledge of hydrogen will help bring this safe, clean energy source to maturity.”

If you’re an organization ready to start your carbon conversion journey, the first step is to get educated. EcoEngineers can provide the knowledge to help get you started.

How Businesses Can Take Advantage Of The Carbon Economy

  The following is an article originally published Jan. 6, 2023, by Forbes.

How Businesses Can Take Advantage Of The Carbon Economy

By Shashi Menon, EcoEngineers

What’s your carbon intensity score? I think this will be an important question for businesses as carbon intensity (CI) and carbon neutralization create enormous business opportunities in the very near future spurred by the Inflation Reduction Act (IRA) recently signed into law.

In the landmark legislation, $369 billion will be devoted to climate and energy-related research and development, much of it in the form of high-tech solutions to reduce carbon emissions. Additionally, it expands clean energy tax credits and invests over $200 billion in clean energy manufacturing, energy efficiency and electric vehicle sales.

I see the American economy profoundly affected by the Inflation Reduction Act in the coming decade, and this is backed by the numbers as presented in a Credit Suisse report on the IRA. The report includes that the IRA’s total spending is likely to exceed $800 billion, with so many people and businesses predicted to use the tax credits.

This is where CI scores come in. The tax credits proposed in the IRA align payment amounts to carbon reduction by measuring CI scores of fuels and projects. This could be worth a lot for businesses that are ready to transform risk mitigation into opportunity.

All this won’t happen overnight, though, and there are permitting pain points, aging infrastructure and low agency staffing issues that are likely to slow down the rollout. But no matter where you stand on the global warming debate, the Inflation Reduction Act puts a lot of money on the table; and those who understand the in-and-outs of the ever-evolving clean-energy space and the language of carbon accounting and carbon markets can cash in.

Do you know how to seize the opportunity?

All of us, corporate leaders as well as average Americans and homeowners across the country, should lift our understanding of green policy, carbon offsets and more. It’s something known as carbon literacy. This is a necessary step to convert the financial risk of climate adaptation or risk mitigation into a neutral or even profitable scenario.

So, this begs the next question: where to begin?

Management models need to begin by recognizing the paradigm shift triggered by the IRA and by incorporating some healthy habits crucial to navigating the energy transition. My experience as a consultant in this space has uncovered six critical things you can do immediately to start:

1. Stay informed. With so much reported and written on carbon (oftentimes incorrectly), you will need a reliable source of curated information along with solid advice, interpretation and predictive models to enable you to make informed decisions on time.

2. Measure emissions. Life-cycle analysis (LCA) that measures emissions from operations, supply chains, end-of-life disposal and more is critical to the energy transition because you cannot reduce what you do not measure. You will need to adopt a proper methodology to measure emissions, compare them against a baseline and report it in a way that makes sense to the business, regulators and customers.

3. Engage with policy. The clean energy market is a rapidly evolving sector, yet regulatory requirements are often unclear. When you actively participate in the regulatory process, you better understand regulatory risks and can better determine a project’s viability. Usually, better laws and standards will also be implemented as a result.

4. Plan your future. Create a plan for your business to navigate the energy transition that includes seizing available market opportunities. These plans and project execution are complex and often require sound foundational knowledge across regulations, energy markets, technologies, carbon accounting and project management.

5. Measure and report. Measurement, verification and reporting must be transparent to create confidence in the marketplace. Identify how and why data represents risk, which data will support the move to derisking, and who is responsible for accurately monitoring this data.

6. Verify claims. The sixth and final healthy habit is to secure third-party verification of all your carbon reduction claims. We live in a fragmented and mostly unregulated marketplace for emissions reductions, and organizations that adopt clear and transparent measurement, verification and reporting standards will stand out from the pack.

Adopting these habits can allow your governing boards and executive teams to protect the financial future of the assets under your management as the pendulum swings away from unchecked energy consumption to controlled and sustainable development. Measuring your carbon intensity to get a tax credit might seem strange and new—just like it was strange and new when Netflix started mailing out DVDs or Apple started offering downloadable songs for sale. Today there is a whole generation of people who only know streaming entertainment. Similarly, I think CI scores will become ubiquitous in the near future and part of basic labeling.

So, what’s your CI score? If you don’t know, it may be time to find out.  

Shashi Menon

For more information about the EcoEngineers and the services we offer, contact Shashi at smenon@ecoengineers.us.

Eco Engineers

1300 Walnut St., Suite 100

Des Moines, IA 50309

  +1 515.985.1260

  clientservices@ecoengineers.us

   

About the Company
Expertise
EcoInsights