CF Industries Announces Emissions Reduction Project at Yazoo City, MS, Facility, Agreement with ExxonMobil to Transport and Sequester Up to 500,000 Metric Tons CO2 Annually

Rhea-AI Summary

CF Industries (NYSE: CF) announced a carbon capture and sequestration (CCS) project at its Yazoo City, Mississippi Complex, aiming to reduce CO2 emissions by up to 500,000 metric tons annually. The company signed an agreement with ExxonMobil for CO2 transport and sequestration, expected to start in 2028. CF Industries will invest $100 million in a CO2 dehydration and compression unit at the facility.

This project, along with a similar initiative in Donaldsonville, Louisiana, will help CF Industries achieve its 2030 emissions intensity reduction goal. The Yazoo City Complex will produce lower-carbon intensity ammonia and nitrogen products, meeting increasing demand from agriculture and mining industries aiming to reduce their carbon footprint.

Positive

• Reduction of CO2 emissions by up to 500,000 metric tons annually
• Expected to qualify for tax credits under Section 45Q of the Internal Revenue Code
• Increases availability of lower-carbon intensity nitrogen products
• Helps achieve the company's 2030 emissions intensity reduction goal
• Positions CF Industries at the forefront of low-carbon ammonia production

Negative

• Significant investment of $100 million required for the project

Insights

Environmental Sustainability Expert

CF Industries' announcement of a carbon capture and sequestration (CCS) project at its Yazoo City facility marks a significant step towards reducing industrial carbon emissions. The project, aimed at capturing up to 500,000 metric tons of CO2 annually, demonstrates a concrete commitment to sustainability in the ammonia production sector.

The partnership with ExxonMobil for CO2 transport and storage is particularly noteworthy. It leverages ExxonMobil's expertise in geological sequestration, potentially ensuring the long-term effectiveness of the carbon reduction efforts. The expected start date of 2028 allows time for thorough implementation but also indicates a sense of urgency in addressing climate change.

The $100 million investment in CO2 dehydration and compression infrastructure showcases CF Industries' willingness to allocate significant capital to environmental initiatives. This move aligns with the growing trend of heavy industries taking proactive steps to reduce their carbon footprint, partly driven by increasing regulatory pressures and market demands for lower-carbon products.

The potential qualification for Section 45Q tax credits adds a financial incentive, demonstrating how policy mechanisms can drive corporate environmental responsibility. However, it's important to monitor the project's progress and verify its actual impact once operational.

From a broader perspective, this project contributes to the emerging low-carbon ammonia market, which could play a vital role in the global transition to cleaner energy and agricultural practices. The ability to produce nitrogen products with a lower carbon intensity could give CF Industries a competitive edge in markets increasingly focused on sustainability.

Financial Analyst

CF Industries' investment in carbon capture and sequestration (CCS) at its Yazoo City facility represents a strategic move with potential long-term financial benefits. The $100 million capital expenditure, while significant, is a calculated investment in future-proofing the company's operations.

The project's eligibility for Section 45Q tax credits is a key financial consideration. These credits, which provide a monetary benefit per metric ton of CO2 sequestered, could substantially offset the initial investment over time. With a capacity to capture up to 500,000 metric tons of CO2 annually, the potential tax benefits could be considerable.

Moreover, this initiative positions CF Industries favorably in the evolving market for low-carbon products. As industries increasingly prioritize reducing emissions throughout their supply chains, CF Industries' ability to offer lower-carbon ammonia and nitrogen products could command premium pricing or secure preferential supplier status, potentially boosting revenue and market share.

The partnership with ExxonMobil for CO2 transport and storage spreads the project risk and leverages complementary expertise, which is financially prudent. However, investors should monitor the execution risks, including potential delays or cost overruns, given the project's scale and technological complexity.

This project, combined with the larger Donaldsonville CCS initiative, demonstrates CF Industries' commitment to meeting its 2030 emissions intensity reduction goal. Such proactive environmental stewardship could mitigate future regulatory risks and associated costs, providing long-term shareholder value protection.

While the immediate financial impact may be , this strategic investment aligns CF Industries with the global trend towards decarbonization, potentially enhancing its competitive position and long-term financial sustainability in an increasingly carbon-constrained world.

NORTHBROOK, Ill.--(BUSINESS WIRE)-- CF Industries Holdings, Inc. (NYSE: CF), the world’s largest producer of ammonia, today announced that it is moving forward with a carbon capture and sequestration (CCS) project at its Yazoo City, Mississippi, Complex that is expected to reduce carbon dioxide (CO₂) emitted to the atmosphere from the facility by up to 500,000 metric tons annually. As part of the project, the Company has signed a definitive commercial agreement with ExxonMobil for the transport and sequestration in permanent geologic storage of the CO₂. Sequestration is expected to start in 2028.

CF Industries will invest approximately $100 million into its Yazoo City Complex to build a CO₂ dehydration and compression unit to enable up to 500,000 metric tons of CO₂ generated as a byproduct of the ammonia production process and subsequently captured to be transported and stored. Once sequestration by ExxonMobil has commenced, CF Industries expects the project to qualify for tax credits under Section 45Q of the Internal Revenue Code, which provides a credit per metric ton of CO₂ sequestered.

“We are pleased to advance another significant decarbonization project that will keep CF Industries at the forefront of low-carbon ammonia production while also helping us achieve our 2030 emissions intensity reduction goal,” said Tony Will, president and chief executive officer, CF Industries Holdings, Inc. “This decarbonization project also will increase the availability of nitrogen products with a lower-carbon intensity for customers focused on reducing the carbon footprint of their businesses.”

Once sequestration has begun, the Yazoo City Complex will be able to manufacture products with a substantially lower carbon intensity than conventional ammonia production sites. Most of the ammonia produced at the Yazoo City Complex is upgraded into nitrogen fertilizers such as urea ammonium nitrate (UAN) solutions and ammonium nitrate (AN), or upgraded into diesel exhaust fluid, which is used to reduce NOx emissions from diesel trucks. AN produced at Yazoo City is used as fertilizer and also by the mining industry as a component of explosives. Demand for these products manufactured with a lower carbon intensity is expected to increase significantly as the agriculture and mining industries work to lower carbon emissions in their supply chains.

The Yazoo City CCS project represents CF Industries’ second major decarbonization project leveraging CCS technologies, as well as its second CCS project with ExxonMobil. The companies are progressing a CCS project at CF Industries’ Donaldsonville, Louisiana, facility that will sequester up to 2 million tons of CO2 annually that would otherwise have been emitted to the atmosphere. Sequestration for the Donaldsonville project is expected to begin in 2025. Implementation of the Donaldsonville and Yazoo City CCS projects will allow CF Industries to achieve the Company’s 2030 emissions intensity reduction goal.

About CF Industries Holdings, Inc.

At CF Industries, our mission is to provide clean energy to feed and fuel the world sustainably. With our employees focused on safe and reliable operations, environmental stewardship, and disciplined capital and corporate management, we are on a path to decarbonize our ammonia production network – the world’s largest – to enable green and low-carbon hydrogen and nitrogen products for energy, fertilizer, emissions abatement and other industrial activities. Our manufacturing complexes in the United States, Canada, and the United Kingdom, an unparalleled storage, transportation and distribution network in North America, and logistics capabilities enabling a global reach underpin our strategy to leverage our unique capabilities to accelerate the world’s transition to clean energy. CF Industries routinely posts investor announcements and additional information on the Company’s website at www.cfindustries.com and encourages those interested in the Company to check there frequently.

Cautionary Statement

Statements of future events, investments, or partnerships in this release are forward-looking statements. Actual future results, including project plans, partner participation, timing, capacities, and costs could vary depending on the ability to execute operational objectives on a timely and successful basis; implementation of government frameworks and permitting for carbon capture and storage and other lower-emission technologies; timely completion of construction projects; commercial and consumer interest in lower-emissions opportunities; changes in plans or objectives prior to final funding decisions or project startups; unforeseen technical or operational difficulties; and other market factors including changes in supply and demand and other market factors affecting future prices of oil, gas, and petrochemical products as well as ammonia and hydrogen products; and other factors discussed in this release and in Item 1A. Any forward-looking statement speaks only as of the date of this press release and the companies named herein disclaim any obligation to update any forward-looking statement. Risk Factors of ExxonMobil’s Annual Report on Form 10-K and under the heading “Factors Affecting Future Results” are available through the Investors page of ExxonMobil’s website at exxonmobil.com.

More detailed information about factors that may affect CF Industries Holdings, Inc.’s performance and could cause actual results to differ materially from those in any forward-looking statements may be found in CF Industries Holdings, Inc.’s filings with the Securities and Exchange Commission, including CF Industries Holdings, Inc.’s most recent annual and quarterly reports on Form 10-K and Form 10-Q, which are available in the Investor Relations section of the Company’s web site.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240725783919/en/

Media

Chris Close

Senior Director, Corporate Communications

847-405-2542 – cclose@cfindustries.com

Investors

Darla Rivera

Director, Investor Relations

847-405-2045 – darla.rivera@cfindustries.com

Source: CF Industries Holdings, Inc.

FAQ

What is CF Industries' new carbon capture project in Yazoo City, Mississippi?

CF Industries (NYSE: CF) is implementing a carbon capture and sequestration (CCS) project at its Yazoo City, Mississippi Complex, which aims to reduce CO2 emissions by up to 500,000 metric tons annually, starting in 2028.

How much is CF Industries investing in the Yazoo City CCS project?

CF Industries is investing approximately $100 million to build a CO2 dehydration and compression unit at its Yazoo City Complex for the CCS project.

Who is CF Industries partnering with for CO2 transport and sequestration in the Yazoo City project?

CF Industries has signed a definitive commercial agreement with ExxonMobil for the transport and sequestration of CO2 in permanent geologic storage for the Yazoo City project.

When is the CF Industries Yazoo City CCS project expected to start sequestration?

The CO2 sequestration for the CF Industries Yazoo City CCS project is expected to start in 2028.

How does the Yazoo City CCS project contribute to CF Industries' emissions reduction goals?

The Yazoo City CCS project, along with a similar project in Donaldsonville, Louisiana, will help CF Industries achieve its 2030 emissions intensity reduction goal and produce lower-carbon intensity ammonia and nitrogen products.