How to Get Your Operations Past CO2 Supply Uncertainties

The COVID-19 pandemic brought with it so many changes in how the food and beverage industry operates—and wreaked so much havoc in how the supply chain works. In many cases, the pandemic exacerbated situations that were already in motion.

The supply of carbon dioxide, which touches so many different aspects of food and beverage manufacturing, is one situation like this. CO₂ supply was already looking dicey before the pandemic. It was worsened by conditions seen during the pandemic, and has improved to a point since, but it is far from a stable supply and industry will continue to be threatened by short supplies and exorbitant prices.

CO₂ availability has become such a big issue for the beverage industry, the International Society of Beverage Technologists (ISBT) has been holding a separate CO₂ Symposium in conjunction with its annual BevTech conference for the past two years. At this year’s event, coming up in early May, ISBT will release a CO₂ Source Assessment Guide.

“Most people just don’t realize how interwoven CO₂ is into the daily fabric of our lives,” said Bob Yeoman, manufacturing director for Spectrum Carbonics, at last year’s BevTech event. “It’s part of everything that we do. Literally, it touches food, it touches the medical profession, fabrication, welding—it’s really a ubiquitous substance.”

Listen to this podcast on how the CO2 shortage will affect the food and beverage industry.

Just within food and beverage, CO₂ has a wide range of uses. A few examples: It creates the fizz in many of our alcoholic and non-alcoholic drinks, it acts as a freezing or chilling agent in many food-related processes, it’s used as a cleaning agent throughout the manufacturing floor, and it’s also used to stun animals such as pigs and poultry before slaughtering.

There are several companies and organizations that are working on solutions to this very significant challenge. They’re developing new ways to access and recover the CO₂ that’s being produced, they’re creating cleaner sources for creating CO₂ in the first place, and they’re enabling alternatives to CO₂ for some of the use cases.

Why is there a CO₂ shortage?

For the most part, the CO₂ that is used by industry is a byproduct from the combustion of fossil fuels. During the COVID-19 lockdown, fewer people were driving their cars, causing a steep drop in gasoline consumption and therefore gasoline production. “When that happened, we lost over 30% capacity for commercial CO₂,” Yeoman says.

“We’ve seen the market over the past two to three years really shift,” adds Lindsey Cole, sales director for food and beverage at FuelCell Energy. “As the market has shifted with COVID, ethanol plants shutting down, less people traveling, we’re moving towards electric vehicles—all of that has impacted and started to shrink the CO₂ market.”

Though people have since gone back to driving their cars, that’s not the whole story. CO₂ was already faced with issues related to aging infrastructure, energy pricing, decarbonization, and carbon credits, just to name a few. Those issues are ongoing.

In some respects, CO₂ availability has improved because of renewed fuel production. “But what we have seen since the pandemic is the shortages are happening with more frequency,” says Amy George, president of Earthly Labs, noting that shortages are more acute on the coasts, away from most of the wells and ethanol producers.

The shortage isn’t felt just by the end users but also by distributors. “The CO₂ middle-market distributors aren’t able to get CO₂ from the large suppliers. So then they have to go to their customers and basically negotiate: ‘Do you really need what you forecasted your need is?” George explains. “There’s a lot of storage management, like people buying more tanks and storing more, so that they’re not cut short.”

CO₂ prices continue to increase, and there is continued uncertainty in the market. As wells reach their end of life, new climate initiatives incentivize the reduction of new wells. Another issue is that the U.S. government has incentivized sequestering CO₂ byproduct (burying it, essentially) over selling it for reuse by industry.

Beverage Industry Grapples With Carbon Dioxide Shortages

“So they’ve seen a lot of price hits, force majeures from their current providers, and again, there’s just not a great replacement for what goes into your beer at the end of the day,” Cole says. “And making sure that that’s consistent and that taste is there is a really key piece of this.”

Large users of CO₂ might have the clout they need to continue to demand a supply, but smaller companies might find themselves faced either with prices they can’t afford or no options at all. Talking to a small soda producer at last year’s BevTech, he mentioned having to shut down production when they couldn’t get their hands on CO₂ for their drinks.

“At the small producer—brewery, food producers that use CO₂ or dry ice—we’ve seen them continue to look for alternative supplies, or to capture and reuse their own,” George says.

It has become an important issue of supply chain resilience, George adds. The industry is shifting from thinking about CO₂ as a spot market problem to realizing that they need to look seriously at new supplies and figuring out how to use less and recycle more.

Recovering CO₂ byproduct

Earthly Labs got its start in the craft brew segment, developing a technology to help small CO₂ producers capture and reuse CO₂ byproduct. The supplier has expanded into other beverage industries such as wine, spirits, and non-alcoholic beverages, as well as food and energy markets.

Brewers produce CO₂ primarily in their fermentation process and use CO₂ not only for the bubbles in their beer, but also purging of bottles, cleaning of vessels, etc. “The average craft brewer is making CO₂ through fermentation every day they’re brewing, and then they’re buying it from a third-party supplier,” George says. “We help them recover what would be waste and then avoid the CO₂ costs—not only those costs of the CO₂ molecules that they need to carbonate the beer and package and purge, but also the delivery fees, and they oftentimes are renting tanks, and then they have surcharges or other accessorial fees that come throughout the year.”

The Earthly Labs system is called CiCi—offered in different sizes and scales as CiCi (Oak), the company’s first commercial carbon capture product, about the size of a double-door refrigerator; CiCi (Elm), a larger system that leverages standardized, modular skids; and CiCi (Teak), a smaller unit. All three models operate on the same principles: CO₂ is captured off a fermentation tank, run through pre-scrubbing steps to remove any foam or water that’s in the gas, scrubbed to remove volatile organic compounds (VOCs) and other impurities; and then liquefied inside a chiller to be provided to the brewer as liquid CO₂, which is easier to store.

Maine Beer, a craft brewer in Freeport, Maine, just north of Portland, has been using the CiCi (Oak) system since November 2022. “It takes our naturally produced CO₂ from fermentation and goes through a series of drying, compressing, and chilling to put it into liquid phase under pressure, where we store it on site,” says Dave Love, sustainability manager for Maine Beer. “We have the CO₂ storage from the reclaimed CO₂ hooked directly into our main CO₂ line so that way we can blend it with our bulk CO₂ that we use in production.”

In late 2022, Maine Beer installed a CiCi (Oak) system from Earthly Labs to start capturing its own CO2 supply from its fermentation process.Maine Beer

Maine Beer purposely sized its CiCi system small for the amount of beer it produces (40,000 barrels in 2023) so that it continues to use third-party CO₂ as well. “The main reason why we didn’t size the unit to cover 100% of our CO₂ is because we don’t want to ever be reliant on one infrastructure, just for the sake of business security. So we still have our bulk CO₂ contracts that are coming to fill our tank, albeit now 40 to 50% as often as they were previously,” Love says. “It’s a good way to appease the security aspect. We’re no longer reliant on bulk, we’re no longer just reclaimed, we can do either.”

The brewer doesn’t want to find itself in the kind of situation it was in earlier in 2022. “It was early August, maybe late July, where we got hit with a force majeure in our CO₂ contract. Between COVID kind of catching up to everything, planned maintenance occurring on multiple plants at the same time that our supply was reliant on, disruptions in the gas industry,” Love recalls. “All of these things coupled together led to a nationwide CO₂ shortage. Our force majeure pretty much said, ‘We’re going to do whatever we can, but we are making no promises.’”

The team at Maine Beer saw the writing on the wall and did not want to be put in this situation again. “So, to protect our investments—get beer in the tank, we can’t lose a batch of beer—we decided to move along with this. It was just the right time, it was a perfect security investment, and it’s one that’s paid off.”

CO₂ is used in several different places at Maine Beer. “We are right now using CO₂ in our cellar processes, so that’s creating head pressure for our transfers whenever we’re going into the centrifuge. And then coming out of the centrifuge, we’ll use it to carbonate,” Love says. “In addition to that, whenever we dry hop, we’ll need to introduce CO₂ to the system as sort of a blanket gas.” CO₂ is also used to purge bottles on the bottling line, to purge kegs on the kegging line, and to pour beer.

Initially, Maine Beer was able to capture about 240 lb of CO₂ a day. “But after making a few changes to the system—in the programming, as well as a hardware upgrade for our chiller unit—we’re up to 360 lb a day, so it’s increased by almost 50%,” Love says.

CO₂ from power creation

FuelCell Energy’s CO₂ Recovery platform also helps food and beverage producers capture CO₂ from their own operations, but it pulls that CO₂ from the exhaust streams of coal- or gas-fired power plants. The system could be used in any plant that uses natural gas or boilers to power its processes. But it makes most sense in a plant that needs CO₂ for its processes, therefore using the recovery system as a value stream for the plant, helping to reduce operational costs and supply chain issues.

With this in mind, FuelCell Energy addresses three key sectors: beverage production and bottling, flash freezing, and meat processing. “It’s a huge part of what goes into [the meat} industry of stunning animals humanely, how they flash freeze the meat, how they chill the meat, how it’s ground—that all includes CO₂ in different capacities,” Cole says.

To operate, the company’s molten carbonate fuel cell needs a methane-rich stream coming in, and then the system separates out the CO₂ molecules. “We’re not using combustion in this process,” Cole explains. “This is a chemical process that happens as just part of how the fuel cell creates electricity, CO₂, and heat.”

With FuelCell Energy’s technology, CO2 recovered from fuel cells can be used directly on site.FuelCell Energy

The liquefied CO₂ is stored at the manufacturer’s facility to be used in processes there. For beverage producers putting CO₂ into drinks, the CO₂ is purified to beverage grade (following ISBT standards) before being stored on site. “Our anode gas—the gas that’s coming off of the fuel cell to begin with—that CO₂ stream is super, super pure, so it doesn’t take us very much to get it up to that beverage-grade level vs. other sources that you look at that are combustion-based,” Cole says.

In FuelCell Energy’s recovery process, fuel cells electrochemically react fuel and air to create power. Heat also comes off the fuel cells, creating another value stream. “You’ve got the CO₂, the power for the plant, as well as heat, so we could put this heat as hot water back into the boilers,” Cole says.

Fuel cells can be configured as microgrids, supplying power during normal operation and in the event of a disturbance. “Our smaller unit is the 1.4 MW, and that gets downgraded a little bit to offset for the production of the CO₂ itself,” Cole says. “They’re typically running 24/7, and we’re making CO₂ in that process. Our 1.4 MW makes about 10 tons of CO₂ a day. Our larger unit, the 2.8 MW, is making 20 tons a day.”

A small bottler will likely not have more need than 10 tons a day, Cole adds. “If you’re looking at a larger meat processing plant, they’re using 30 to 50 tons a day.”

Upfront costs

Of course, putting in a system like Earthly Labs’ CiCi or FuelCell’s CO₂ Recovery requires upfront investment.

“We run ROI analysis and help them to understand how much we can capture and what that payback is, but it’s somewhere in the two- to three-year timeframe for the average craft brewer,” George says of the CiCi system. Also, the system comes in a variety of sizes and price points, depending on the scale of the brewery.

As luck would have it, Maine Beer happened to have some extra cash on hand when it came time to make the decision about investing in a carbon capture system, Love says. They had some plans for that cash in terms of infrastructure for further growth, but decided to divert it to address the CO₂ situation. “We thought this was one thing that we can invest right now to make sure that all of our growth going forward is going to happen according to plan,” he says. “With the return on investment, if we lose CO₂ and we can’t get a delivery for a month, which happened in 2022, then that ROI… In the event that we do have another CO₂ catastrophe, it’s just bam, this has immediately paid for itself.”

Creating a separate sidestream business

Technically, even beyond using it in their own operations, food and beverage companies could sell the CO₂ they’re creating/recovering to other companies in need of the gas.

“But a lot of people don't want to break out of their normal business routine and shells, so that’s where that becomes a mindset change for their current operations,” Cole says. “To get into a CO₂ business, that’s not necessarily their core business and they don’t typically want to do that.”

Earthly Labs has some customers that are selling their excess CO₂, George says. “It is a way for them to realize value from a waste much like they do with spent grain or other byproducts of brewing,” she says. “It’s a new model. We are early days, just like carbon capture is early days in the market, but it is beneficial to the brewers.”

George also sees interest growing in a CO₂ exchange—the concept of buying excess CO₂ from a variety of markets. Earthly Labs has a national leafy greens grower as a customer that needed CO₂ to stimulate growth at its grow facilities. They had previously used another form of enrichment that was more polluting and not as sustainable. “They are an organic brand, so having organic, naturally produced CO₂ was in alignment with their values,” George explains.

Earthly Labs helps to organize and identify partners that could supply the CO₂ volume the grower needs for its facilities. “They came to us and said, ‘Hey, we really want to partner with your customers,’ and they finance the equipment. So we went out and found brewers that were ready to capture CO₂,” George says. “We created a supply chain network of breweries that are supplying this grower. They supply weekly CO₂ deliveries to power their leafy greens.”

The sustainability factor

Not only are companies helping to moderate their supply chain issues, there are added benefits related to sustainability.

“We’re pulling off flue gases from their boilers, so we do help reduce their emissions, and we are a cleaner source of power than most grids,” Cole says. “So you have a sustainability aspect in there for sure.”

Earthly Labs was really launched, in 2016, as an environmental initiative. Having worked for a software company that monitored emission sources from large-scale manufacturers (helping them to manage their production and emissions at the same time), George knew there was an opportunity to put the technology into different markets to address climate change.

“Most of the activity had focused on really large-scale emitters, but a lot of the environmental action was happening in mid to small business,” George says. “I thought, ‘Let’s take this tech out of legacy industry and put it in faster-moving markets that have smaller sources, and therefore the cost is lower.’ If you can find some value drivers for them, then they’re going to be motivated to implement it.”

The sustainability aspect is often an important one for craft brewers, and for Maine Beer, sustainability has been a major win with the CiCi system. In the past, when the brewery fermented its beer, they had to be very careful about CO₂ ventilation, Love explains. “Since then, we’ve been able to cut our power expenditure for overall CO₂ ventilation. Because it’s being directed and captured in a responsible way and not just going on the cellar floor, we’ve reduced our fan speeds by 50%, which during the wintertime is great because we’re no longer sucking in cold air,” he says. “We’re saving on our heating and ventilation, as well as making a safe environment. Our overall ambient CO₂ levels have drastically dropped.”

Keep production going

Ultimately, the various solutions around CO₂ are just about keeping production up and running. “We have had customers experience significant revenue loss not being able to get CO₂, so they’ve lost thousands of dollars,” George says. “We have seen regions of the world where they just simply couldn’t get CO₂ for months at a time. That really compromised their business to the point where some of the breweries just didn’t make it.”

Capturing CO₂ on site is an insurance policy for keeping your production running, George adds. “Someday, we think it’ll be commonplace for brewers to have CO₂, and for all of us to look at emission sources in a different manner.”