Carbon management: accounting, capture and carbon pricing

Every hour the Sarnia fermenters release about 18 t of carbon dioxide, almost exactly as much as the ethanol they make. After the expansion that will be more than 21 t/h, or about 180 kt a year: pure, wet carbon dioxide at atmospheric pressure, already separated from everything else by the biology. In most industries capturing carbon dioxide means separating it from a dilute flue gas, which is expensive. At an ethanol plant the separation is free, and only drying, compression and somewhere to put it are needed. That is why ethanol plants have been among the first industrial sources of carbon dioxide for capture and storage. Malik asks Wren to put the plant's carbon accounts on one page and to tell the board what capture would mean for the plant.

Greenhouse gas accounting

Corporate greenhouse gas accounting follows the Greenhouse Gas Protocol, which divides emissions into three scopes. Scope 1 is direct emissions from sources the company owns or controls: at the plant, combustion of natural gas in the boilers, dryers and RTO, plus small amounts from vehicles, refrigerants and the flare. Scope 2 is indirect emissions from purchased electricity, steam and heat. Scope 3 is everything else in the value chain: purchased goods such as corn, fertilizer and chemicals, transport, the use of the products and their end of life. The scopes prevent double counting within one company's inventory: the power plant's scope 1 is its customers' scope 2.

Facility reporting to governments is narrower and more prescriptive than corporate accounting. Each program has its own rules for which sources count, which emission factors and calculation methods to use, and what to do about biogenic carbon. The plant reports to the federal Greenhouse Gas Reporting Program, which applies to facilities that emit 10 kt CO₂e or more a year. In facility reporting, carbon dioxide from burning or fermenting biomass is usually reported separately as biogenic and is not counted toward the facility's total, because it does not add carbon to the atmosphere over the crop cycle.

# Carbon accounts for the expanded plant (240 million L/yr) and the value of capturing fermentation CO2
L = 240e6; LHV = 21.2; GRID = 40.0                  # L/yr, MJ/L, g CO2e/kWh (illustrative)
gas_PJ = 7.5 * L / 1e9                               # natural gas, PJ/yr
scope1 = gas_PJ * 1e9 * 56.0 / 1e9                   # kt CO2 from combustion (56 g/MJ)
kwh = 0.20 * L                                       # kWh/yr
scope2 = kwh * GRID / 1e9                            # kt
corn_t = L / 393.0
scope3 = corn_t * 291 / 1e6                         # kt, corn farming only
ferm = L * 0.789 / 1000 * 0.957 / 1000               # kt biogenic CO2 (0.957 t per t ethanol)
print(f"scope 1 {scope1:.0f} kt, scope 2 {scope2:.1f} kt, scope 3 (corn) {scope3:.0f} kt")
print(f"biogenic fermentation CO2 {ferm:.0f} kt (reported separately)")
cap = 0.95 * ferm; comp_kwh = cap * 1000 * 110       # 110 kWh per tonne to dry and compress
energy_MJ = L * LHV
dci = (cap * 1e9 - comp_kwh * GRID) / energy_MJ - 1.5   # minus 1.5 g/MJ for transport and storage
print(f"captured {cap:.0f} kt/yr; compression {comp_kwh/1e6:.1f} GWh/yr; CI falls by {dci:.1f} g/MJ")
# Ontario EPS: emissions above the facility's allocation are paid at the carbon price
alloc = 0.80 * scope1                               # benchmark allocation (illustrative 80 %)
for yr, price in ((2026, 110), (2030, 170)):
    print(f"EPS {yr}: excess {scope1-alloc:.1f} kt x {price}/t = {(scope1-alloc)*price/1000:.2f} million per year")
# Clean Fuel Regulations credits from the CI reduction (one credit = one tonne CO2e)
credits = dci * energy_MJ / 1e12 * 1000              # kt
print(f"extra CFR credits {credits:.0f} thousand per year; at 150 per credit {credits*150/1000:.1f} million")

scope 1 101 kt, scope 2 1.9 kt, scope 3 (corn) 178 kt
biogenic fermentation CO2 181 kt (reported separately)
captured 172 kt/yr; compression 18.9 GWh/yr; CI falls by 32.2 g/MJ
EPS 2026: excess 20.2 kt x 110/t = 2.22 million per year
EPS 2030: excess 20.2 kt x 170/t = 3.43 million per year
extra CFR credits 164 thousand per year; at 150 per credit 24.6 million

The page Wren gives Malik has four numbers. Scope 1 is about 100 kt of fossil carbon dioxide a year, almost all from natural gas. Scope 2 depends on the grid. Scope 3 from corn farming alone is about 180 kt, the largest of the fossil numbers and the hardest to change. And the biogenic fermentation carbon dioxide is about 180 kt, not counted in any scope total, but the largest single stream the plant could do something about.

Why capturing biogenic carbon counts

If the plant releases its fermentation carbon dioxide, the carbon simply returns to the air it came from, and the life-cycle assessment counts it as zero. If the plant captures it and stores it permanently underground, that carbon has been removed from the atmosphere: the corn took it out, and it does not go back. In the life-cycle accounting of Lesson 10, the stored carbon dioxide is credited against the ethanol. Capturing 95 % of the fermentation carbon dioxide lowers the carbon intensity of the plant's ethanol by about 30 g/MJ, after charging for the electricity to compress it and the energy to transport and inject it. That is more than all the other options combined, and it takes the plant's ethanol from about 40 % below gasoline to about 70 % below.

The capture train

The fermentation gas leaves the scrubber nearly pure carbon dioxide, saturated with water at about 30 °C and slightly above atmospheric pressure. The capture train compresses it in stages with intercooling, removing the condensed water after each stage, dehydrates it further with a glycol contactor or a solid desiccant so that no liquid water can form in the pipeline, removes traces of oxygen if the pipeline specification requires, and compresses it to a dense phase above about 7.4 MPa and 31 °C, its critical point, for transport. The compression takes about 100 to 120 kWh per tonne, which the code charges to the carbon intensity. The equipment is well proven: it is the same as the equipment that has supplied food-grade carbon dioxide from ethanol plants for decades, except for the final pressure.

Nadia's process safety review starts here. Dense-phase carbon dioxide is not flammable but is an asphyxiant at high concentrations, heavier than air, and released from a pipeline or compressor it forms a cold, dense cloud that can flow into low ground and buildings. A release from a large pipeline is a major hazard, and the routing, valve spacing, leak detection and emergency planning of carbon dioxide pipelines have become a matter of public concern since a pipeline rupture in Mississippi in 2020 sent dozens of people to hospital. Priya adds fixed carbon dioxide detection in the compressor building.

Storage

Captured carbon dioxide can be used, for example in beverages, greenhouses, dry ice or chemical synthesis, or stored. Most uses return the carbon dioxide to the air within days or months and so do not count as permanent removal. Permanent storage means injection into deep geological formations, usually saline aquifers at depths of more than about 800 m, where the carbon dioxide is dense, sealed beneath impermeable cap rock, and trapped over time by dissolution and mineralization. Storage sites are characterized, permitted, monitored during injection and for years after, and closed under regulatory oversight.

For Sarnia, the storage question is new. The province passed Ontario's Geologic Carbon Storage Act, 2025, which opened the province's deep saline formations to licensed commercial storage projects, and in early 2026 the government invited expressions of interest for licences. The deep sandstones beneath southwestern Ontario are the nearest candidate formations, and industrial emitters in the region have been looking at shared transport and storage. Kingfisher's capture project would depend on one of those hubs reaching a licence and a final investment decision; on its own the plant is too small to develop a storage site.

Carbon pricing and credits

In Ontario, the plant is covered by Ontario's Emissions Performance Standards (EPS) program, which prices a large emitter's emissions above a sector benchmark at the federal carbon price. The EPS sets an emissions limit for each covered facility from a sector benchmark and its production; the facility pays the carbon price on emissions above the limit, or earns performance units if it is below. The benchmark is applied to covered fossil emissions; the biogenic fermentation carbon dioxide is not covered. The code takes an illustrative allocation of 80 % of the expanded plant's scope 1 emissions and the federal benchmark price of 110 dollars per tonne in 2026, scheduled to rise to 170 by 2030 though the federal pricing benchmark is under review. That gives a carbon cost of about 2 to 3.5 million dollars a year on the plant's natural gas.

The larger incentive for capture comes from the federal Clean Fuel Regulations. Under them, primary suppliers of gasoline and diesel must lower the life-cycle carbon intensity of their fuels each year, and they can meet their obligation with credits created by supplying low-carbon fuels such as the plant's ethanol. Each credit represents one tonne of CO₂e of life-cycle reduction against a reference carbon intensity. The plant's customers buy its ethanol partly for the credits it carries, and a lower carbon intensity means more credits per litre. Capturing the fermentation carbon dioxide would create about 160,000 extra credits a year; at an illustrative 150 dollars per credit, that is more than 20 million dollars a year. Credit prices in the system have varied widely, which is the main risk in that number. A federal investment tax credit for carbon capture, utilization and storage equipment can also reduce the capital cost, subject to its conditions on the storage jurisdiction and the use of the carbon dioxide.

The Ontario numbers make capture look attractive if storage becomes available. The capital is large, perhaps 60 million dollars for capture, compression and a connection to a hub, and the plant would pay a transport and storage fee. Lesson 12 puts those costs beside the credits.

Other levers

Capture is the largest lever but not the only one, and the others are cheaper per tonne. The plant's scope 1 can be cut by heat integration and vapour recompression on the evaporators and stills, which replace steam with electricity, by restoring the RTO's thermal efficiency, by burning biogas from the anaerobic reactor, and in the longer term by electrifying steam with heat pumps or electric boilers, which makes sense only where the grid is low-carbon. Scope 2 depends on the grid: in Ontario it is about 40 g/kWh, which decides whether electrification lowers or raises emissions. Scope 3 can be cut by buying corn grown with lower-emission practices, such as reduced tillage, cover crops and precise nitrogen use, which both fuel programs have been working to recognise in carbon intensity scores.

Risks and integrity

Carbon management has its own risks. Credit values depend on policy that can change with an election. Storage depends on infrastructure the plant does not control. Claims about low-carbon products must be backed by data that survives verification; carbon intensity filings are audited, and overstated reductions can lead to the loss of credits and to penalties. Wren's rule for the plan is that every reduction must be measurable at the plant, with a meter or a mass balance, and every number in the board paper must trace to a source. Theo adds one of his own, learned at the refinery: plan for the version of the policy that exists, not the one the industry is lobbying for.