Could Carbon Capture Projects be the Key to Low Grain Prices?

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Over the years, farmers have benefited from the growing ethanol market with the increased domestic demand for their crops. Tom Buis, CEO of the American Carbon Alliance, says the increased demand from ethanol production gave farmers higher market prices, creating greater rural profitability. However, Buis adds growth in demand has stalled, or, in some cases, taken steps in the opposite direction. 

“Every new car you buy today uses less fuel than the one you replaced it with. All the EVs that are purchased, don’t use any fuel, and we’re not getting in that higher marketplace for higher blends as readily as we would have hoped,” says Buis. “The new demand pull is not there like it used to be. American farmers continue to get more productive; the yield potential continues to grow. So, what you have is an imbalance of supply and demand. When you have too much supply, you have low prices.”

Buis adds this can be offset by bringing more demand back into the market, especially with sustainable aviation fuel.

As airlines move forward with trying to reduce their carbon footprint, many have turned to sustainable aviation fuel producers, signing contracts for expected outputs. For fuel to qualify as a feedstock for SAF, ethanol plants need to slash its carbon emissions, which is where carbon capture and sequestration projects come into play. 

“One of the big ones, the big one, is if you capture the carbon at the ethanol plant, process it, and store it underground forever, then those plants qualified to produce sustainable aviation fuel,” says Buis. “Just give you an example, that’s a market that’s 3 billion gallons by 2030, and potentially up to 50 billion gallons worldwide. Huge for profitability, rural America.”

Buis points out that there is a 2.2-billion-bushel surplus of corn that is likely to grow in 2024. 

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