Pipelines Seek to Hit Net-Zero Ethanol-- Carbon Pipelines Offer Ethanol Lower Carbon Footprints and Tax Credits

by Chris Clayton (DTN Progressive Farmer) After years of battles over oil pipelines, two companies are pitching carbon dioxide pipelines that would crisscross six states and combine to sink as much as 24 million metric tons of carbon emissions into geologic formations -- if they can convince landowners and others their pipelines will help the local ag economy.

The proposed pipeline projects reflect a new strategy in the way ethanol plants can lower their overall carbon footprints. The pipelines will also change the way agriculture has interacted with pipelines. Farmers and landowners will be asked for right-of-way access that may financially benefit the ethanol plants where they sell their corn.

The competing Midwest carbon pipelines were launched within weeks of each other, both with major financial backing and a separate collection of ethanol companies lined up as customers and partners. The pipelines offer ethanol plants more favorable market access in low-carbon fuel markets, the possibility of selling carbon offsets, and federal tax credits for sinking carbon into the ground.

The companies project their ethanol-plant customers can get to "net-zero" emissions by the end of the decade. That fits into President Joe Biden's goal to cut U.S. emissions by at least 50% by 2030.

Summit Carbon Solutions is led by Bruce Rastetter, an Iowa agribusiness leader who operates both pork and ethanol companies in the state. Summit Carbon Solutions, which also has investment support from John Deere, is developing what could amount to 2,000 miles of pipeline.

Navigator CO2 Ventures, created by the Texas-based pipeline company Navigator Energy Services, is partnering with the investment firm BlackRock Real Assets as the major financial backer and Valero Energy Co., with eight ethanol plants that will connect to Navigator's Heartland Greenway pipeline.

Matt Vining, CEO of Navigator CO2 Ventures, said Navigator expects its initial customers will be ethanol plants, but the pipeline will also be looking to connect fertilizer plants and some other stand-alone manufacturers.

In a video on YouTube, Summit noted that capturing 12 million metric tons of carbon emissions is equivalent to the carbon stored by 14.7 million acres of forest.

California's Low-Carbon Fuel Standard continues ratcheting down the carbon intensity of liquid fuels each year. The price of a carbon credit under the LCFS has traded this year in a range from $173 to $201 per metric ton. The California Air Resources Board reports credits worth 2.125 million metric tons were traded in July with the average price per credit at $188 a ton.

Along with LCFC credits, pipeline developers are pushing to meet construction goals to make them eligible for federal tax credits known as Section 45Q credits.

The Biden administration seeks to increase the credit to range from $85 to $120 per ton and extend the construction deadline through 2030.

The $50-a-ton 45Q tax credits are critical to helping ethanol plants pull resources together to develop a pipeline that can ship the carbon dioxide to a site geologically a mile into the ground.

Jane Kleeb of Bold Nebraska has been battling petroleum pipelines and supports biofuel production. The carbon pipelines, though, raise many of the same concerns for Kleeb that come with the petroleum pipelines. Right now, there are questions about the safety of the pipelines, considering the volumes of carbon that will move through them, and what would happen to people in the vicinity of a line break or explosion, she said.

"From my perspective, it seems yet again that farmers, ranchers and rural communities are going to be the guinea pigs for essentially technology that has not been proven yet," Kleeb said. She added, "So we're going to dump a bunch of carbon in the ground, and then what happens in 10 years, 20 years, 30 years or 50 years? What are the long-term effects here?"