India maps CO2 costs for green urea, eMethanol production amid supply gaps

Solar Energy Corp. of India Ltd. is mapping carbon dioxide availability for green urea and renewable fuel of non-biological origin-compliant eMethanol production, with potential suppliers reporting widely varying costs and volumes during a pre-bid meeting for an expression-of-interest tender.

"We need the approximate cost of CO₂ [from all possible sources] to estimate the potential cost of green urea and methanol for future tenders," a senior SECI official said during the meeting held Aug. 18, adding that the quoted prices would not be binding and would only serve as a reference.

The Aug. 3 EOI aimed to identify CO₂ sources before SECI finalizes incentive structures for the two renewable hydrogen derivatives. The exercise has highlighted challenges around seasonal supply, purity requirements and the need for multiple CO₂ sources to support commercial-scale production, according to meeting participants and market feedback gathered by Platts, part of S&P Global Energy,

Pricing insights

Market participants contacted by Platts ahead of the meeting indicated CO₂ costs ranging from 3 rupees/kg to 12 rupees/kg ($31-$130/metric ton), depending on the source and processing requirements.

An Indian eMethanol project developer said biogenic CO₂ from ethanol distillation is naturally available and costs 3-4 rupees/kg due to lower processing needs, but volumes are limited. The developer added that biomass-based CO₂ is more expensive, with supplies offered at about 10-12 rupees/kg.

A steelmaking representative said CO₂ captured from steel production costs about 7 rupees/kg after purification. The representative added that ethanol distilleries incur only purification and liquefaction costs, as CO₂ is naturally available through fermentation, eliminating the need for carbon capture and keeping costs at 3-4 rupees/kg.

Another project developer interested in both green urea and methanol said CO₂ costs about 7 rupees/kg, including carbon capture and transportation. The company plans to capture CO₂ by firing biomass blended into thermal power plants.

A third project developer provided a detailed cost breakdown, saying carbon capture capital expenditure is about 3-5 rupees/kg of CO₂, extracting raw CO₂ from the captured CO₂ mixture costs about 1-2 rupees/kg and purification and liquefaction add another 3-4 rupees/kg, bringing total costs to 10-12 rupees/kg, including transportation charges. The developer added that ethanol distilleries avoid capture costs as CO₂ is naturally available.

Supply challenges

SECI asked meeting participants to submit details of the CO₂ sources, including volume, location, modes of supply and other factors like seasonality, as different challenges emerged, such as proximity to a fertilizer plant for urea production or to either the Kandla or Tuticorin port for methanol production.

A Maharashtra-based sugar mill representative said the facility produces 30-40 mt/day of CO₂ in solid and liquid form, but only for four to five months annually, as the plant is shut for the rest of the year.

A representative at a Telangana-based paper and pulp company said the facility, located near Kakinada port, produces 1 million mt/year of biogenic CO₂ year-round. The representative added that supplying the CO₂ to either Kandla or Tuticorin port may prove challenging.

A natural gas company representative said the company produces 500-1,000 mt/day of CO₂ during natural gas processing. The representative added that one CO₂ source is near a fertilizer facility, while another is not, but was keen to understand whether the geological CO₂ would qualify as a biogenic source.

A project developer contacted by Platts said there are different types of CO₂ providers. Some can supply CO₂ to a plant; some provide it at their facility for pickup; some do not have a CO₂ plant; and others do not even know they have CO₂ production.

The developer added that, apart from this challenge, producing 1 mt of methanol requires nearly 1.45 mt of CO₂, making it difficult to rely on a single CO₂ source for a methanol plant, given the required volume.

Transportation presents another challenge, with only 15-mt trucks currently available for CO₂ transport, though a steelmaking representative said more tankers would become available once the market develops.

Regulatory clarity

A steelmaking representative asked whether industrial CO₂ from steel plants could be used for eMethanol production before 2041, citing European regulations that require only RFNBO-compliant biogenic CO₂ for eMethanol starting that year.

SECI responded that Indian carbon credit trading schemes need recognition under the EU Emissions Trading System for that to be possible. Until then, biogenic CO₂ will be required for eMethanol. However, industrial CO₂ can be used for green urea production if located near a fertilizer facility, SECI said.

SECI added in the EOI that biogenic CO₂ from sources such as distilleries, biogas upgrading and sugar and ethanol production is treated as genuinely renewable and not subject to regulatory sunset dates.

CO₂ from fossil-based industrial processes may be used, but only where it originates from an installation covered by the EU ETS or equivalent, with sunset dates of Jan. 1, 2036, for electricity-generating installations and Jan. 1, 2041, for other industrial installations.