Ethanol’s Next Competitive Advantage Could Be Carbon

Carbon performance could become an increasingly important source of competitive advantage for ethanol producers. Alongside feedstock costs, plant efficiency, and fuel sales, the ability to capture carbon and supply lower-carbon ethanol is becoming a factor in investment decisions.

A major announcement highlights this shifting dynamic.

The Andersons, a US agribusiness and renewable fuels company, has agreed to acquire Harvestone Low Carbon Partners. Harvestone operates three ethanol plants across North Dakota and Indiana, bringing additional fuel production capacity and carbon capture and sequestration capabilities to the proposed acquisition.

Additionally, the company's portfolio includes operating carbon storage infrastructure and further projects under development. Such a broad scope provides The Andersons with an opportunity to expand its position in lower-carbon ethanol.

And the investment case extends beyond the ethanol produced by those facilities.

Expected income from clean fuel production and carbon sequestration incentives is an important part of the deal's valuation. As Prima CarbonZero’s analysis highlights, the transaction shows that the ability to reduce emissions and access associated revenue opportunities is becoming a meaningful factor in determining the value of an ethanol business.

For the wider market, the deal raises an important question: how much will a producer's ability to manage carbon influence its future competitiveness?

Why Is Carbon Becoming a Competitive Factor in Ethanol?

Carbon management can change both the emissions profile of ethanol and the commercial opportunities available to its producer.

Ethanol fermentation generates biogenic carbon dioxide, meaning CO₂ originating from biological material. Capturing and permanently storing that CO₂ offers producers a way to reduce the fuel's lifecycle carbon intensity.

That reduction can have commercial value where policies or fuel programs reward lower emissions. Producers may benefit from incentives for qualifying activities or by supplying ethanol into markets where a lower certified carbon intensity carries additional value. Eligibility and the value available depend on the specific project and applicable rules.

This adds another dimension to competition. Plants with similar production capacity may have different earnings opportunities because their carbon performance and access to infrastructure differ.

What Does The Andersons' Acquisition Tell Us?

The agreement suggests that carbon capabilities are becoming part of buyers' assessment of ethanol assets.

Prima CarbonZero’s analysis highlights the importance of expected sequestration and clean fuel incentive revenues in The Andersons' investment case. The transaction provides a useful example of how carbon management can affect the value of an existing ethanol business.

The timing also matters here. The announcement came during a period of weakening ethanol prices, drawing attention to the potential for carbon-related revenue to support returns beyond conventional fuel sales.

Such opportunities do not remove exposure to feedstock costs, energy expenses, or changes in ethanol demand. However, they can broaden the factors that determine a plant's earning potential.

For investors, evaluating an ethanol asset increasingly means understanding the carbon opportunities associated with it and the work required to realize them.

Will Every Ethanol Producer Have the Same Opportunity?

The opportunity will vary considerably by plant. Capturing CO₂ is only one part of a wider system that must move, store, or use it economically.

A producer pursuing sequestration needs a viable storage route, the necessary approvals, and infrastructure that can operate reliably. The cost and availability of those elements influence whether a project can deliver worthwhile returns.

Commercial readiness matters as well. Harvestone's portfolio includes an operating sequestration project and facilities where storage is still under development. That distinction separates demonstrated capability from expected future performance.

An operating project provides evidence that a producer can capture and store carbon. A proposed project still faces questions around permitting, construction, financing, and startup. Those differences help explain why carbon capture plans alone don’t tell the whole story.

Could Ethanol’s CO₂ Find Value Beyond Storage?

Permanent storage is one potential destination for fermentation CO₂. Using it as an input for synthetic fuels offers another route, subject to different commercial requirements.

For instance, European Energy and Greenfield Global’s proposed e-methanol project alongside an ethanol plant in Québec illustrates this alternative. The development would use CO₂ from fermentation to produce synthetic methanol, linking ethanol production to another fuel market.

These two approaches create different business relationships. Sequestration depends on a workable storage solution. E-fuel production also requires suitable energy inputs, production infrastructure, and customers willing to commit to the resulting fuel.

Neither pathway is a universal answer for ethanol producers. The stronger opportunity will depend on several factors:

• Location

• Costs

• Policy conditions

• Securing credible commercial commitments

What Should the Ethanol Market Watch Next?

The clearest signal will be whether producers can turn carbon projects into dependable operations and realized revenue.

Announcements like these indicate ambition. Operating performance, completed infrastructure, and commercial agreements provide stronger evidence of an emerging advantage. Buyers and investors will need to assess those milestones alongside the conventional drivers of ethanol profitability.

The Andersons' agreement shows why that assessment matters. Carbon management is becoming part of the investment case for ethanol, with implications for how assets are valued and where capital is directed.

What Will Shape Biofuels Competitiveness in 2027?

Ethanol’s carbon opportunity is part of a broader shift across renewable fuels. Assessing its commercial potential requires a clear view of how policy incentives, feedstock availability, trade flows, and demand are developing together.

Join ResourceWise’s Q1 2027 Biofuels Market Outlook webinar on December 3, 2026, at 10:00 a.m. ET. Matthew Stone, VP of Business Development and Low Carbon Fuels, will examine the forces shaping biofuels and low-carbon feedstock markets across Europe and North America, as well as developments in sustainable aviation fuel, maritime fuels, and emerging synthetic fuels.

For businesses weighing investment, procurement, or market opportunities, the session will provide a broader perspective to support planning for the year ahead.

Register now to save your seat.