The Cost Structure of CO₂ for Greenhouse Operations

CO₂ enrichment is standard practice in commercial greenhouse operations, with research showing yield improvements of 20-40% for many crops. However, the economics of CO₂ supply are changing rapidly due to rising carbon taxes and increasing logistics costs.Understanding the full cost structure helps operators evaluate different supply options.

Current CO₂ Supply Chain Economics: Most greenhouse CO₂ comes from industrial byproducts—primarily natural gas processing, ammonia production, and ethanol fermentation. This CO₂ must undergo several processing steps before delivery: Capture and purification remove impurities to meet food-grade standards (typically 99.5%+ purity for greenhouse use).Liquefaction requires cooling to -78.5°C or compression to 56.5 bar at ambient temperature, enabling transport and storage. Transportation involves specialized tanker trucks rated for hazardous materials, with associated regulatory compliance costs. Storage at greenhouse sites requires pressurized tanks, safety systems, and regular inspections. Each step adds cost and complexity. More significantly, each step also generates additional CO₂ emissions.

Rising Carbon Tax Impact: Life cycle assessments of fossil-derived CO₂supply chains show that delivering one ton of CO₂ to a greenhouse generates approximately 1.5 tons of total CO₂ emissions. This multiplier includes: Energy for liquefaction and compression accounts for roughly 0.3 tons CO₂ per ton delivered. Diesel fuel for transportation adds approximately 0.15 tons per ton delivered, varying with distance. Fugitive emissions during transfer and storage contribute about 0.05 tons per ton delivered. As EU carbon prices currently trade above €80per ton and are projected to reach €126 per ton by 2030, this hidden carbon burden creates increasing financial exposure for operations using delivered CO₂. The EU Emissions Trading System (ETS) directly affects CO₂ costs through multiple pathways. Upstream producers face carbon costs for the energy used in capture, purification, and liquefaction. These costs are passed through to purchasers. Transportation costs increase as diesel fuel prices incorporate carbon taxes. Some jurisdictions are considering applying carbon taxes to the CO₂ itself, as it represents fossil carbon being introduced into the atmosphere. The carbon price trajectory is structurally upward. The EU's Linear Reduction Factor accelerates to -4.3% annually through 2027 and -4.4% through 2030, deliberately tightening the emissions cap. This policy mechanism ensures continued price pressure regardless of short-term market fluctuations.

Technical Challenges in Delivered Supply: CO₂ transport requires compliance with hazardous materials regulations, including specialized driver training and certification, vehicle placarding and documentation, emergency response planning, and route restrictions in urban areas. These regulatory requirements add overhead to every delivery. The physics of CO₂ transport also creates efficiency challenges. Liquid CO₂ requires maintaining cryogenic temperatures during transport, with some product loss to boil-off. Gaseous CO₂ at high pressure requires heavy-walled pressure vessels, reducing payload per truck.The density of CO₂ (even when liquefied or compressed) means trucks reach volume capacity before weight limits, reducing cost efficiency compared to other industrial gases. Rural greenhouse locations face a particular challenge: the final delivery segment is disproportionately expensive per kilometer due to lower delivery density and longer return trips for trucks. Beyond cost, delivered CO₂ presents operational challenges. Supply timing is determined by delivery schedules rather than plant needs. Peak demand during bright, warm weather (when photosynthesis is highest)may not align with delivery availability. Storage capacity requirements to buffer against delivery delays or supply disruptions represent significant capital investment. The 2022 European CO₂ shortage, when approximately 70% of ammonia production capacity shut down due to high natural gas prices, demonstrated the vulnerability of depending on byproduct CO₂sources. When the primary product (ammonia) becomes uneconomical to produce, the byproduct (CO₂) becomes unavailable regardless of demand.

Conclusion: The economics of greenhouse CO₂ supply are shifting. Rising carbon prices, increasing transportation costs, and supply chain vulnerabilities are changing the cost structure of delivered CO₂.Meanwhile, DAC technology and falling renewable electricity costs are making on-site generation increasingly viable. For greenhouse operators, this creates a decision point: continue with delivered supply while costs trend upward, or invest in on-site generation infrastructure that eliminates transportation, reduces carbon tax exposure, and provides long-term cost stability. The choice depends on operation size, location, electricity costs, and access to capital, but the underlying trends favour on-site solutions for medium to large operations.