Navigator CO2, POET sign deal for carbon capture storage, offset marketplace

Navigator CO2 Ventures will provide POET, the world's largest producer of biofuel, carbon capture, utilization, and storage on its Heartland Greenway system, according to a joint statement the companies released June 7.

The project will also pave the way for the development of a central carbon offset marketplace and distribution network, creating a removal-based credit space in the voluntary carbon market, which will be able to offset carbon emissions in addition to regulated carbon emission programs.

"The agreement outlines Navigator's integrated CCUS services for approximately 5 million mt of POET's biogenic CO2 annually and establishes a collaborative path for the development of a central carbon offset marketplace and carbon use logistics platform," said the statement.

The system will phase in 18 of POET's bioprocessing facilities across Iowa, Nebraska, and South Dakota, and is on schedule to start operations in 2025.

"With the addition of POET to its platform, Navigator's Heartland Greenway system will provide CCUS services for more than 30 industrial processors across the agriculture and food production value chains, representing over 10 million [mt] of annual CO2 emissions, including the two largest bioethanol producers in the United States, in addition to highly efficient single-site production facilities," the statement said.

Voluntary carbon market demand rising

Navigator in March 2021 partnered with Valero, a major US refiner and ethanol producer, and BlackRock Global Power & Infrastructure Fund to build an industrial-scale carbon capture and storage pipeline linking Valero ethanol plants to a storage site in Illinois.

The 1,200-mile pipeline is expected to come online in late 2024 with gathering capabilities across five Midwestern states—Nebraska, Iowa, South Dakota, Minnesota, and Illinois.

With the addition of POET, Navigator will be "mobilized to deliver up to 15 million [mt] annually of CCUS services through new pipeline laterals and the parallel development of multiple storage sites," according to the statement.

Demand for voluntary tech-based carbon capture credits continues to rise, alongside regulated markets like California's Low Carbon Fuel Standard and other monetization offsets like the US Treasury's 45Q tax credit. Platts assessments show that prices of tech carbon capture are averaging $139.94/mtCO2 so far in 2022, up from the 2021 average of $105.14/mtCO2, according to a recent S&P Global Commodity Insights podcast.

Conversely, prices of some regulated market credits have begun to soften as more projects come online, according to Tudor Pickering Holt analyst Matthew Blair.

Blair said California's LCFS credit prices "continue to sell off in June" and are now down 35% from the first quarter, averaging $91/mt so far in Q2, after starting the quarter at $121/mt.

"The supply wave is substantial thanks to the 460 [million gallon] [Valero-Darling Ingredients] Norco expansion that commenced operations in Q4-21," he wrote, adding that new plants coming online from CVR and HF Sinclair have yet to be factored into the LCFS.