The U.S. merchant CO₂ market is roughly 30 million metric tons per year. That number has been growing at 3 to 5 percent annually driven by expanding food and beverage production, growing cold chain logistics, and new applications in enhanced oil recovery and controlled environment agriculture.
Supply has not kept pace. The structural shortage that caused the 2022 crisis has not been resolved. It has been papered over by a combination of price increases, demand destruction, and temporary restarts of marginal production facilities. The next disruption will expose the same fragility.
Where CO₂ Comes From Today
Approximately 40 percent of U.S. merchant CO₂ comes from ethanol fermentation plants concentrated in the Midwest. Another 30 percent comes from ammonia and hydrogen production facilities, primarily along the Gulf Coast. Natural CO₂ wells, mostly in Colorado and Mississippi, supply about 15 percent. The remainder comes from various industrial sources.
This concentration is the core vulnerability. Three source categories, in two geographic regions, supply 85 percent of the market. A hurricane, a maintenance outage, a feedstock price spike, or a policy change affecting any of these sources ripples across the entire national supply chain.
Demand Is Growing
Beverage carbonation remains the largest end use for high purity CO₂. But demand growth is coming from multiple directions. Modified atmosphere packaging for fresh food is expanding as retailers extend shelf life requirements. Controlled environment agriculture is scaling. Dry ice demand grew during COVID and has not returned to pre pandemic levels. New applications in concrete curing and pH adjustment for water treatment are emerging.
At the same time, the quality bar is rising. More buyers want beverage grade purity even for non beverage applications because the quality assurance infrastructure around ISBT spec testing is more robust. This is good for producers who can consistently meet the highest standards.
The SAF Wildcard
Sustainable aviation fuel production represents a potential major demand shock for the CO₂ market. Some SAF production pathways require CO₂ as a feedstock. If SAF production scales to meet airline decarbonization targets, the CO₂ demand could increase by millions of tons per year. Current supply cannot absorb this.
Where New Supply Comes From
Adding supply from existing source categories is difficult. Ethanol production is constrained by corn acreage and blending mandates. Ammonia plants are closing or converting to blue hydrogen. Natural CO₂ wells are depleting. The sources that built the current market are flat or declining.
New supply needs to come from new sources. RNG upgraders, landfill gas facilities, industrial flue gas capture, and direct air capture are all potential contributors. Of these, RNG upgrader CO₂ capture is the most commercially ready today. The gas is concentrated. The facilities exist. The technology works. The economics are proven.
The Path Forward
The merchant CO₂ market is going to get tighter before it gets better. Demand is growing. Traditional supply is flat. New supply takes time to build. The companies that build new production capacity now, particularly from distributed biogenic sources, will be well positioned when the next shortage hits. And it will hit.
That is the market reality we are building into at CleanCycleCarbon. Not hoping for a shortage. Building supply so that the next one is less severe.
