Biogenic CO₂ is reshaping carbon markets, shifting focus to plant-based carbon capture, scaling fast due to lower costs and its role in removal and fossil substitution.
Jaenschwalde, GERMANY: Daffodils which have blossomed can be seen in front of a brown coal power station in Jaenschwalde, eastern Germany 05 April 2007. Swedish energy company Vattenfall have started operation of an oxy-fuel test facility for a "CO2-free" power station on the Jaenschwalde compound.
The CO2 resulting from the burning coal will be separated and sent underground where it will be stored. AFP PHOTO DDP/MICHAEL URBAN GERMANY OUT The next carbon market won’t be built on emissions reduction alone – it will be built on sourcing carbon differently. In Decatur, Illinois, an ethanol plant captures carbon dioxide released during fermentation and stores it deep underground. The facility injects around one million tons of CO₂ per year, making it one of the largest commercial-scale bioenergy with carbon capture and storage projects currently in operation.Projects like this are not new. Over 75 projects with a combined capture capacity of around 65 million tons of CO₂ are currently operational worldwide.What is changing is the role these systems are beginning to play – moving from niche deployment toward early market formation. Within that shift, biogenic carbon is moving faster than the rest. Not all carbon is equal, and that distinction is starting to reshape how carbon is valued, traded, and used across industrial systems. LOS ANGELES, CALIFORNIA - JUNE 05: A worker walks beneath a United Airlines Boeing 737-900ER, billed as the 'flight for the planet', after it arrived at Los Angeles International Airport on 'World Environment Day' on June 5, 2019 in Los Angeles, California. The flight from Chicago to Los Angeles utilized aviation biofuel, carbon offsetting and efforts at zero carbon cabin waste. The airline says the flight was "the most eco-friendly commercial flight of its kind in the history of aviation." Biogenic CO₂ is released from biomass through processes such as fermentation or combustion, and is part of a short-term carbon cycle. That makes it fundamentally different from fossil carbon – and economically more actionable today.When captured and permanently stored, it can deliver net removal of CO₂ from the atmosphere. When utilized, it can substitute fossil carbon in fuels, chemicals, and materials. This dual role – removal and substitution – is what makes biogenic carbon strategically relevant. It is also the most immediately scalable form of carbon removal. Biogenic point sources typically emit CO₂ at concentrations of 12-18%, far higher than ambient air. This makes capture significantly more efficient and cost-effective than direct air capture, which remains two to six times more expensive and at an earlier stage of deployment.As a result, most near-term, bankable carbon removal is expected to come from biogenic sources – a trend already reflected in Petra Nova Carbon Capture Project flue gas duct which is part of a commercial-scale carbon capture system at the WA Parish power plant in Fort Bend County. Tuesday, Dec. 20, 2016. In the United States, policy has been a key driver. The 45Q tax credit, expanded and reinforced in the 2025 “One Big Beautiful Bill Act”, provides up to $85 per ton for point-source capture and $180 per ton for direct air capture in geological storage. It also introduced parity for utilization, allowing CO₂ used in products to qualify at similar levels. While 45Q does not fully cover costs, it creates a predictable revenue stream that improves project bankability. In many cases, that is enough to move projects from concept into financing. The effect is visible. The U.S. now has around 30 operational carbon capture projects, with dozens under construction and several hundred in development.LENA, IL - OCTOBER 4: Norm Crain displays an ear of corn and a beaker of 200 proof ethanol produced at the Adkins Energy ethanol production facility October 4, 2004 near Lena, Illinois. The facility uses corn to produce 40 million gallons of ethanol a year as well as 132 thousand tons of animal feed, a byproduct of the ethanol production. An average bushel of corn produces 2.7 gallons of ethanol. Currently the United States produces 3.3 billion gallons a year, by 2012 it is estimated production will exceed 5 billion gallons a year. of ethanol annually, generating large volumes of relatively pure CO₂ that are cheaper to capture than diluted industrial emissions. At the same time, it has extensive geological storage capacity – estimated at around Where capture, transport and storage can be co-located, projects are significantly easier to execute. This is one reason ethanol-based BECCS projects are among the most advanced.These agreements provide additional revenue certainty and are starting to unlock final investment decisions. The liquefied CO2 carrier Northern Pioneer of Northern Lights is pictured at Akershuskaia Oslo on June 17, 2025 in connection with the international high-level conference on carbon management. Carbon capture and storage involves the capture of CO2 emissions from industrial processes or from the burning of fossil fuels. This CO2 is then transported from where it was produced via ship and stored deep underground in geological formations. / Norway OUT Yet, even with these conditions in place, deployment remains uneven. Infrastructure is the most visible constraint. Expanding CO₂ transport networks, potentially requiring tens of thousands of miles of pipelines, and developing storage sites are capital-intensive and slow. There is also a structural gap in the business model. The 45Q tax credit applies for around 12 years, while the assets it supports are designed to operate for two or three decades.That gap must be filled through additional revenue streams, such as voluntary carbon markets, product markets, or future compliance systems, many of which are still evolving.In practice, no single mechanism carries these projects. Public policy provides the initial push, private capital finances development, and corporate buyers are beginning to create early demand. Projects move forward where these elements align. This photograph taken on March 19, 2025 shows European flags outside the EU headquarters in Brussels. Europe faces a similar challenge, but from a different starting point. Its net-zero pathway requires not only emissions reductions, but also durable carbon removals – with biogenic carbon capture among the most viable near-term options.The constraint is not CO₂ availability. Around 92 million tons per year of sustainable biogenic CO₂ have been identified across the EU, yet less than 3% has reached final investment decision so far.The challenge is structural. Europe’s CCUS value chain remains fragmented, with limited coordination between emitters, transport providers, and storage or utilization options. It is often unclear what happens to CO₂ once it leaves the capture site, how permanence is defined, and who carries long-term responsibility. This uncertainty directly affects investment.This is complemented by emerging support mechanisms for carbon removal as well as ongoing efforts to integrate removals into future compliance frameworks. More broadly, Europe’s bioeconomy strategy positions biomass and biogenic carbon within a €2.7 trillion industrial sector employing 17 million people.10 In contrast to the U.S., Europe is building the system logic before scaling deployment. Together, however, these approaches point to a broader shift already underway. The Pretreatment facilities of a carbon capture plant of cement manufacturer Heidelberg Materials is pictured at Brevik on June 18, 2025. . The project is the first industrial-scale capture effort in the cement industry worldwide. What is emerging is not yet a fully formed market, but a shift in how carbon is understood in industrial systems. In sectors such as fuels, chemicals and materials, carbon remains necessary. The question is no longer whether it is used, but where it comes from. The divergence between the U.S. and Europe reflects two approaches to the same transition: one prioritizing deployment, the other building the rules that will define long-term value. Both are incomplete but directionally aligned. In the next industrial cycle, carbon will no longer be treated primarily as a liability, but as a constrained input — one whose origin will matter as much as its price. The next carbon market will be defined not only by how much emissions are reduced, but by how effectively fossil carbon is replaced.
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