Vault 44.01 is a company named for the industry it serves—more specifically, the greenhouse gas molecule it seeks to capture and lock away. 44.01 represents the molecular mass of carbon dioxide, and it may soon be a number, or at least a name, that’s well known across all carbon-emitting industries. Vault may not be unique in its mission to capture and sequester industrial carbon, but the lane it has chosen is. The company isn’t focused on pipelines or multi-plant CO2 aggregation, but near-site CCS. The ethanol sector is currently its top focus, and after only two years in business, Vault’s unique rise, early backing from by major investors and ability to find enthusiastic partners in ethanol production reveals much about its drive and trajectory. Scott Rennie, co-founder, president and CEO of Vault 44.01, offers valuable perspective on the ongoing connection between ethanol and carbon, the role ethanol producers might play in laying a blueprint for the broader CCS movement and the commitments required to make it all happen.
Rennie has experience with companies that have helped pioneer large-scale CCS. Prior to forming Vault, he spent time developing major CCS projects in North America with Schlumberger and ConocoPhillips, the former having completed more than 60 CCS projects globally and the latter having captured some 120 million metric tons of C02.
To build Vault, Rennie wanted to combine his CCS experience with a broad team of geoscientists, subsurface reservoir experts, finance specialists, project developers and others. The roster assembled is nothing short of A-list talent, he believes, and the credentials of Vault’s team members prove him right. The company has, in aggregate, over 60 years of direct experience with CCS, including Class VI permitting expertise (Class VI permits are required by the U.S. Environmental Protection Agency to ensure safe storage of captured CO2 in a secure geological formation). The team has been rounded out with professionals experienced in land acquisition, investment evaluation, capital formation and, importantly, project implementation.
“I wanted a strong core with real-world CCS project experience,” Rennie says. “CCS is an emerging industry, and it presents a lot of really interesting challenges, most of which our team has encountered in prior ventures including CCS projects dating back to 2005. We’re proud of the team we’ve built, growing from eight founding members in 2021 to 35 today, and continuing to grow to meet the needs of our expanding set of projects.”
A handful of large ethanol production companies may be capable of handling CCS project development in-house—from the installation of gas compression and dehydration equipment to permanent CO2 sequestration in deep reservoirs—but the vast majority don’t. That’s one reason Rennie and his team have made the ethanol industry a top focus. Ethanol plants typically don’t employ the types of professionals needed to make a CCS project come together, like geophysicists, reservoir engineers, experienced subsurface developers.
“Broadly, the geological characterization, the permitting process, the drilling of wells, shooting seismic, planning for long-term monitoring and site care—all the things that are important to building the sequestration site—most folks need that help,” Rennie says. “Sometimes the need moves upstream into the compression and tax credit monetization aspects of the project, and we have the capability to take on those scope elements as well.”
Rennie and his team are currently working on several projects with multiple ethanol facilities in areas that are well suited for on- or near-site sequestration, which he says can significantly improve project economics. A recently announced project in Indiana illustrates Vault’s flexible role in developing ethanol plant CCS.
In January, Vault and Cardinal Ethanol LLC announced a joint venture to design, implement and operate a CCS project at Cardinal’s facility near Union City, Indiana. The project aligns the goals of both Cardinal and Vault (to focus on near-site sequestration using its extensive industry know-how and financial backing). Cardinal and Vault’s partnership will be able to take advantage of the 45Q tax credit, which is currently valued at $85 per ton of carbon captured and permanently sequestered. In addition to 45Q, Cardinal and Vault retain an option to further benefit from programs such as 45Z tax credits, low-carbon fuel credits and voluntary carbon market credits.
Producing roughly 135 MMgy, Cardinal generates nearly 400,000 metric tons of CO2 per year from its corn fermentation process. Through the joint venture, One Carbon Partnership, Vault will help design, plan and construct the capture and injection infrastructure. The necessary Class VI permit has been submitted to the EPA.
Jeff Painter, CEO of Cardinal, says the partnership enhances shareholder value by bringing in the latest technology. It also helps the company “on its path to zero emission liquid fuels,” he says.
Rennie and his team worked with Cardinal for more than a year to develop the project to its current stage, and also to build trust with Cardinal and local stakeholders. Establishing trust is an important part of the process, he says, as ethanol producers and landowners, with limited background on how the process works, will ultimately have to trust Vault to execute on the ideas it presents. “We’re involved end-to-end with Cardinal—from the fermenters to the reservoir,” Rennie says. “With CCS, you need to get six to 10 aspects right. You have to get the geology right. You have to understand the permitting process. You have to get the real property rights, both surface and subsurface. You have to execute by well drilling and doing seismic. And you have to make sure that the finance and economics of the project are set up to provide a good return for both Vault and our ethanol partners.”
The Cardinal project represents only one of a few different ways Vault intends to work with ethanol clients, or those from other industries. Rennie and his team are open to a variety of commercial arrangements. With Cardinal, a joint venture was set up, and both parties hold a 50 percent stake in the project. Area leaders in Randolph County, where the ethanol plant is located, are happy with the development. At a commission meeting in December, county commissioners commented on the project, saying it was an exciting opportunity. In addition to building permits and other zoning requirements, the county commissioners commented that road-use agreements from wind and solar projects in the area could also apply to the ethanol CCS plan, with the roads being returned to good shape, if not better, post construction.
Another option for entities looking to work with Vault puts the host facility in charge of choosing, installing and running the compression and dehydration process. In that case, the ethanol plant would be responsible for capturing the carbon and preparing it for sequestration. “In that structure, we will pick up the CO2 at the plant gate and build the sequestration site and put it underground,” Rennie says.
Rennie and his team are proud to be serving the ethanol industry. “The ethanol industry sits at the vanguard of the CCS industry,” he says. “What happens with ethanol will create knowledge, infrastructure and practices that will extend into many other industries as the CCS industry matures.”
Not just any team of CCS experts can find success serving the ethanol industry, or others like power, forestry or cement production (all areas Vault is looking to or already involved with). In 2022, a private equity firm, Grey Rock Investment Partners, committed a capital round of up to $300 million into Vault. Understanding why the investment fund is backing Vault helps explain how important, and how big, CCS could become because of ethanol.
From day one of building their business model, the Vault team knew they needed access to capital. “We knew we weren’t going to go into CCS projects as consultants, but rather as equity participants, alongside our partners. We were going to invest in assets and take on certain elements of project risk that make sense for Vault so that our partners don’t have to,” Rennie says, “The need for capital was always there.”
In 2021 the team went to the capital market, including Grey Rock Investment Partners, a private equity firm that has invested over $1.3 billion in energy projects. The firm invests in the energy value chain, including but not limited to carbon capture, industrial electrification, power optimization, methane abatement, and natural resources. What Vault found across the private equity sector was a large group of firms that wanted to invest in the energy transition, but fewer that had a clear strategy around investing in CCS.
According to Rennie, the Grey Rock team had met with several other companies proposing big things in the CCS space. “I think what got them comfortable with Vault was the experience we had on the team and the way we were focusing on actionable projects,” he says. “We had put an early focus on ethanol.” In turn, Rennie says, Grey Rock intended to put a substantial proportion of capital toward CCS investments, a strategy that was attractive to the Vault team.
From a business execution angle, the philosophical approach applied by Vault’s team resonated with Grey Rock. Instead of getting a project and then outsourcing the technical work, Vault has always thought it would do the work better in-house with talent already on the team. “If somebody is on our team full time, they are going to work to fix the next problem or advance the business in any way they can,” he says. “We have an amazingly committed team and we work to get better every day. We are grateful for the faith that our ethanol partners have put in us, and we truly enjoy working with them toward delivering great projects.”
Author: Luke Geiver
Contact: editor@bbiinternational.com