Scuttled CO2 Pipeline Renews Debate about State Hurdles

October 23, 2023

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by Jeffrey Tomich, Jason Plautz, Niina H. Farah (E&E News Energywire) The cancellation of a major carbon dioxide pipeline Friday rippled far beyond the Corn Belt, raising questions about the fate of similar projects and the viability of carbon capture technology at the scale envisioned by the Biden administration.

Opponents celebrated Navigator CO2 Ventures’ decision to scuttle the 1,300-mile Midwestern project weeks after a permit application was rejected by South Dakota regulators. Supporters lamented the company’s decision to cancel the Heartland Greenway pipeline — and at least one rival developer appears primed to pick up some of the pieces.

Less clear are the implications for the future of carbon pipelines, infrastructure viewed by many experts as a necessity to enable wider use of carbon capture and sequestration (CCS) and other emerging technologies. That’s in part because only certain regions of the country have geology required to sequester CO2 deep underground. The Department of Energy has said CCS is key to avoiding the worst consequences of climate change.

While federal regulators oversee most aspects of CO2 pipeline safety, state-level approval is key and has been a challenge for regulators in many states, said Martin Lockman, a fellow at Columbia University Law School’s Sabin Center for Climate Change Law. Permitting also can vary significantly from state to state, adding to the complexity and development timelines for multistate projects.

“The legal framework governing CO2 pipelines is heavily fragmented and often uncertain,” Lockman said. “In many states, it is unclear how existing laws should be applied to these kinds of projects, and many state regulators have very limited experience with CO2 pipelines.”

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DOE estimates 30,000 to 96,000 miles of pipeline could be needed to link capture sites with geologic storage. There’s only about 5,000 miles of CO2 pipeline in operation today in the United States.

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Burns-Thompson (Elizabeth Burns-Thompson, vice president of government and public affairs at Navigator) cited conversations around creating uniform federal permitting processes for CO2 pipeline projects with a multistate footprint similar to permitting structures for natural gas pipelines. “We believe those conversations should continue,” she added. READ MORE

Cancellation of Navigator CO2 pipeline raises critical issues for several industries (S&P Global)

Letter: Ethanol industry supports CO2 efforts (Bismarck Tribune)

On carbon pipelines, regular Iowans are winning some rounds against powerful ag interests (Des Moines Register)

CCS pipeline projects face state, local regulatory issues (Oil & Gas Journal)

Critics allege CO2 pipelines ‘farm the government’ for climate money while helping oil industry -- Summit says project isn’t for oil recovery but acknowledges ‘another carrier’ could use it (South Dakota Searchlight)

State regulators poised to decide Summit pipeline permit (Iowa Capital Dispatch)

Excerpt from S&P Global: Industry titans POET and Valero had 26 facilities collectively on the proposed route. Navigator also had a memorandum of understanding to supply around 600,000 mt/year of CO2 to Infinium to produce eFuels. While these companies stand out among those most affected by the announcement, Navigator’s decision also has far-reaching implications for the agriculture, biofuels and refining industries.

News of the cancellation wasn’t terribly shocking to followers of the recent hearings in states along the proposed route. Over the past few months, Navigator and Summit Carbon Solutions (another major CO2 pipeline company) have struggled mightily to secure permits for their projects.

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As an aside, and to avoid confusion, losing a pipeline application hearing is not fatal to a project. A losing party can reapply after making necessary changes, often involving a re-route or additional compliance with safety, environmental, or other regulations.

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Potential impact of Navigator decision on US ethanol

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Many ethanol producers have been counting on reducing the carbon intensity of their fuel via carbon capture, utilization and sequestration, which would enable them to sell their product at a higher price in low carbon fuel standard markets such as California, Oregon, Washington and British Columbia. Likewise, there is plenty of excitement around new technologies being used to convert ethanol into sustainable aviation fuel from companies like LanzaJet and Honeywell. However, average ethanol CI scores must move lower, and many believe that CCUS is the most cost effective and obvious way to do so. As noted by a Valero spokesperson following Navigator’s announcement: "We still see carbon capture and storage as a strategic opportunity to reduce the carbon intensity of conventional ethanol, which would also qualify it as a feedstock for SAF. Without carbon capture and storage, conventional ethanol does not have a pathway into SAF under today’s policies."

Carbon emissions can still be captured from ethanol plants, and the CO2 might be stored or transported in ways less economic than interstate pipelines. CO2 from ethanol plants has historically been shipped via truck and rail for use in medical facilities, for food processing and shipping, and for municipal water treatment systems. Decisions around whether ethanol CCUS projects will still be economically viable need to be evaluated on a case-by-case basis.

Using CO2 to produce eFuels is a new development, with companies such as HIF Global and Infinium setting up operations in Texas and 12 breaking ground on a commercial scale eJet facility in Washington. Neither Navigator nor Summit had plans to develop CO2 pipelines in either of those states. Setting up an eFuel facility in the heart of ethanol country is a business model that may be worth considering.

What, if anything, can or will the federal government do to intervene?

In July, President Joe Biden made a bold prediction regarding SAF in a speech in Auburn, Maine: "[M]ark my words -- the next 20 years, farmers are going to be providing 95% of all the sustainable airline fuel." Note the word "farmers." Biden’s statement cannot happen -- using currently available technology -- without low CI corn-based ethanol being used for SAF. In light of the latest development with Navigator, will the Biden administration do anything to intervene? Right now, the US Department of Treasury is close to issuing guidance pertaining to which life-cycle model will be used to measure emissions under the Inflation Reduction Act. Will it be inclined to lean toward the more favorable Greenhouse Gases, Regulated Emissions, and Energy Use in Transportation (GREET) model or the more stringent Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) model?

Navigator’s announcement is a signpost, but the business model to capture high-concentration CO2 from rural ethanol plants is not at a crisis stage yet. Following Navigator’s press release, Summit took a hospitable approach to those left stranded: "Summit Carbon Solutions welcomes and is well positioned to add additional plants and communities to our project footprint. We remain as committed to our project as the day we announced it." Other CO2 pipeline projects receive less press attention but are still pending (e.g., Wolf Carbon Solutions and the Trailblazer Conversion Project), and some ethanol facilities already have CCUS capabilities.

The US ethanol industry is resilient and is expected to continue to move forward. Without carbon capture, US ethanol production at the average CI score still qualifies for federal renewable identification numbers, state LCFS credits, and can be used for exports, industrial applications, etc. But the road to net zero just got a little bumpier. READ MORE

Excerpt from Bismarck Tribune:

We are extremely proud to represent the ethanol industry in 2023. Leadership from farmers, entrepreneurs, and policy makers gave this industry its beginning decades ago. And it is leadership from farmers, entrepreneurs, and policy makers that will now extend the life and strength of this industry in a market that is asking for low-carbon sustainable renewable fuels.

Today, the ethanol industry grinds anywhere from 40% to 60% of the corn grown in North Dakota. We contribute nearly $1.7 billion annually to the state’s economy, and the industry supports thousands of jobs. Thanks to an innovative private sector and supportive state government, our production capacity is more than five times what it was a decade ago. Perhaps most importantly, it has provided additional value to the state’s farmers—creating a lift of $.50 to $1 for every bushel. This needs to be celebrated.

To continue the industry’s strength and growth, we need access to new markets that are requiring low carbon fuels—from emerging and expanding North American markets to feedstock for sustainable aviation fuel. North Dakota is already leading the way. Red Trail Energy in Richardton has been capturing and storing the CO2 it produces for well over a year. They were the first-Class VI injection well approved by a state regulator with EPA primacy. The Blue Flint plant just started injecting its CO2 into the ground. Tharaldson Ethanol has signed onto the Summit Carbon Solutions project, which will capture CO2 from various Midwest ethanol plants and store it in central North Dakota.

These CO2 projects and new markets provide North Dakota agriculture with tremendous advantages. We believe that storing CO2 is only the beginning. New technologies are being developed to utilize CO2 for products such as anhydrous ammonia and urea, as well as green methanol and other low-carbon chemicals.

We all have to start supporting these carbon projects. Farmers, landowners, ethanol producers, counties, state agencies and others need to work together to better understand the importance of these projects to agriculture in our state. At the end of the day, the ethanol industry stands firmly in support of our members and their projects to bring more value to North Dakota.

Tracey Olson, Guardian Energy Hankinson

Jeff Zueger, Harvestone Low Carbon Partners

Ryan Carter, Tharaldson Ethanol Plant

Jodi Johnson, Red Trail Energy, LLC