After years of battles over oil pipelines, two companies are pitching carbon dioxide (CO2) pipelines that would crisscross six states and combine to sink as much as 24 million metric tons of carbon emissions into geological 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 percent 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. At least 31 ethanol plants are signed on with Summit, including Green Plains Energy and five of its ethanol plants in Nebraska and Iowa. Summit’s Midwest Carbon Express pipeline, estimated to cost $4.5 billion, plans to run through Iowa, Minnesota, Nebraska and South Dakota and sink carbon dioxide into a geological formation in North Dakota about a mile into the ground.
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. The Navigator pipeline, projected at $2 billion in costs, will stretch 1,200 miles across Nebraska, South Dakota, Minnesota and Iowa and sink its carbon dioxide at two sites in Illinois near where the Archer-Daniels-Midland Co. is already sinking carbon into the ground.
Carbon emissions proposition
Both Summit and Navigator project their pipelines will sequester about 12 million metric tons of carbon dioxide per year. If that comes to fruition, the carbon sequestered would equate to eliminating the emissions of about 5.2 million vehicles.
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. “As the project continues to grow and evolve, we would expect to expand that universe,” Vining said. “Technically, any emitter is theoretically a customer.”
Vining said the pipeline will be a tool to help ethanol plants and other companies diversify their revenue sources.
Vining said there’s a value proposition in the pipelines not just for the ethanol plants, but the farmers who deliver corn to those facilities. “These pipeline projects are going to reshape how pipelines have intersected with ag,” Vining said. “Instead of just being a pathway for a pipeline to go across the state of Iowa, this pipeline is going to serve a purpose and be a conduit for value.
“It’s going to create a significant opportunity for the local ethanol plant by virtue of compressing its CI (carbon intensity) score. That’s going to give them different value options in the future.”
Jim Pirolli, chief commercial officer for Summit Carbon Solutions, talked about the Summit project recently at the American Coalition for Ethanol annual meeting. Pirolli highlighted that carbon capture begins with the corn plant.
“The corn plants filter CO2 out of the air, put it into the kernel and we release it during fermentation, then capture and sequester it forever back into the earth,” Pirolli said.
Pirolli added there is a possibility to link 40 million acres of farmland tied to these ethanol plants in the Midwest to voluntary carbon markets as well. He indicated Microsoft and John Deere are interested in buying voluntary credits from Summit because of the ability to measure every gram of carbon going down into the well.
Steffen Mueller, an economist who does biofuel life cycle modeling at the University of Illinois in Chicago, told DTN ethanol plants face a numbers game to lower their carbon intensity scores in states with low-carbon fuel standards—with the main focus being California. Pipelines that sink carbon deep into the ground could become a game-changer for those plants.
California’s Low Carbon Fuel Standard (LCFS) 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.
Other states such as Oregon, Washington, Minnesota and Massachusetts have created low-carbon fuel programs that largely are modeled after California. That’s starting a slow migration of legislation as other states follow the lead, Vining said.
Along with LCFS credits, pipeline developers are pushing to meet construction goals to make them eligible for federal tax credits known as Section 45Q credits. Companies that capture and store carbon emissions by 2026 can receive $50 per ton for up to 12 years. While the 45Q credit was increased in 2018, there are several proposals in Congress to expand or adjust the credit. The Biden administration seeks to increase the credit to range from $85 to $120 per ton and extend the construction deadline through 2030.
Skeptics ahead
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?”
Another unanswered question, Kleeb said, is whether the pipelines will seek to use eminent domain. She and others will be working to organize landowners to make them more aware of their own property rights and the risk. She and others representing environmental groups have a webinar later this week on those risks.
“I am more concerned about how we save rural communities and make sure property rights are respected, not to mention that we literally have no information about long-term risks,” she said. “So, for me, it’s unproven and untested. Why should farmers and ranchers have to give up their land for the pipelines so that a bunch of companies can make billions of dollars while the landowners again assume all of the risk?” Kleeb said.
Summit has sent letters to Nebraska landowners highlighting the state’s ethanol plants and noting pipelines offer a solution for a zero-carbon footprint for ethanol producers. The letter seeks to set up meetings with landowners along the proposed route to seek access for survey work.
DTN asked both Navigator and Summit in an email whether the companies would use eminent domain to access land. Summit replied the company’s goal is to “rely only on voluntary agreements that provide real value to the landowner while allowing the project to move forward.”
Navigator stated the company’s principal objective is to work closely with landowners and regulators to deliver the best outcome for all the stakeholders involved. “We are not yet at a point in the Heartland Greenway System’s development to have had the proper engagement with regulators and landowners to know if it is necessary to consider,” Navigator stated. “We look forward to executing a project that will greatly benefit landowners, the environment and the local rural communities we will be operating in.” — Chris Clayton, DTN ag policy editor
