Foss & Company and Battelle have joined together to create CarbonLoc - a joint venture that will assess, develop, and finance carbon (CO2) capture and sequestration projects across the United States. CarbonLoc represents an outstanding, game-changing partner opportunity for CO2 emitters as well as a new opportunity for investors interested in the sustainability and ESG investment side of carbon capture and sequestration.
CARBON CAPTURE, UTILIZATION AND SEQUESTRATION (CCUS)
As a primary output of ethanol production facilities in the United States, carbon dioxide, has seen limited monetary success due to the lack of local markets (green houses, bottling plants and other applications). This is expected to change with the advent of a new market: carbon utilization and sequestration (CCUS) based on the tax credits authorized under Section 45Q of the Internal Revenue Code. This federal tax credit is sized at approximately $35 and $50 per metric ton of CO2, respectively, for enhanced oil and gas recovery and sequestration. This tax credit provides a substantial market-based mechanism to drive demand for captured CO2, thus unlocking a new potential long-term revenue stream for ethanol facilities via sale of their CO2.
WHAT IS CCUS?
CCUS is the process of capturing waste carbon dioxide from industrial sources. Geological sequestration of carbon is primarily the process of storing carbon oxides by injecting them into underground geological formations. Together, these technologies can reduce greenhouse gas emissions from industrial sources.
Globally, we are facing a climate crisis that threatens to fundamentally change the world in which we currently live. While there is great debate over the causes of the crisis and where it will lead us, we do know that releasing less carbon dioxide from anthropogenic (human made) sources will greatly slow the damage caused by greenhouse gasses.
CarbonLoc is taking a leading role in the financing and development of carbon capture facilities. Combining Foss & Company’s industry-leading investment history with Battelle’s research and technology development, CarbonLoc will identify the most attractive emission sites to build carbon capture and sequestration facilities in the US. The financing for these projects will be generated, in part, from the monetization of production 45Q tax credits. These tax credits, which offer a dollar-for-dollar reduction of a taxpayer’s federal tax liability, are anticipated to generate over a 12-year period from the date the capture facility is placed into service. The credit is in recognition of the need to subsidize an activity that has tremendous social benefit, but which may not be currently profitable.
Traditionally, carbon dioxide emitters, such as natural gas plants, face a large monetary risk conducting internal research into ventures such as carbon capture. Through CarbonLoc, these manufacturers are able to leverage the funding and underwriting capabilities of Foss & Company as well as the research and knowledge of Battelle to do the leg work, mitigating larger risks and opening doors to a market segment currently not fully utilized.