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Released January 31, 2025 | SUGAR LAND
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Researched by Industrial Info Resources (Sugar Land, Texas)--This week, legislation went up before the governments of North Dakota and South Dakota regarding carbon pipelines, specifically targeting the use of eminent domain in their construction. Summit Carbon Solutions LLC (Ames, Iowa), which aims to put an extensive carbon pipeline network in the Midwest, including both of the Dakotas, said it is concerned the legislation may hinder the development of its project.
Earlier this week, the South Dakota House of Representatives passed House Bill (HB) 1052, which would end the use of eminent domain by carbon pipeline companies in the state. Eminent domain allows companies to take private land for public use with a just, court-ordered compensation. The bill now goes to the state Senate for a vote.
At the bill's heart is the question of whether carbon pipelines in fact serve the public good, justifying the use of eminent domain in their construction. The project affected most by the potential legislation is Summit Carbon Solutions' planned carbon pipeline, which would capture carbon dioxide (CO2) from 57 ethanol plants in the U.S. Midwest, depositing it at a site in North Dakota. The Biden administration found the project worthwhile and planned to allocate funds to the project through the Inflation Reduction Act (IRA). However, President Donald Trump is taking aim at the IRA, considering it a wasteful use of U.S. funds. In 2022, the U.S. government lifted the tax credit for carbon capture and storage from $50 to $85 per ton of CO2, putting Summit's project, which would be able to take more than 18 million tons of CO2 annually, on track to make more than $1 billion in credits each year.
With the potential of IRA funding of being slashed or completely taken away, Summit now faces legal challenges in the Dakotas, adding to the company's headaches. In the hearings regarding the bill in South Dakota, Summit testified that the changed law would prevent it from negotiating with landowners who refused to grant voluntary easements, hindering the project at a crucial point. Critics of the bill argue that it's unfair to change the rules for carbon pipelines after Summit has invested substantial funds in the project under the existing legal framework.
The bill is now before the Senate for a vote. In the House, the bill received support and criticism from both sides of the aisle in a contest of personal rights, environmental issues and the state's business climate. While many Republicans voted no on the bill, Republican House Speaker Pro Tempore Karla Lems seemed to express the views of many of her fellow legislators when she said the pipelines can still be built in South Dakota, "They just don't get the supreme power of eminent domain to force their projects down the throats of South Dakota people." The bill passed the House in a vote of 49-19.
North Dakota
Also this week, North Dakota begin hearing several proposed bills regarding the construction of carbon pipelines and their use of eminent domain. The North Dakota House's Energy and Natural Resources Committee was set to hear three proposed bills regarding CO2 pipelines yesterday:
Major carbon pipelines such as Summit's are few and far between in the Midwest, so the proposed legislation in both states takes clear aim at Summit's pipeline development. The other leading CCS contender, Navigator Energy Services LLC's Heartland Greenway project, which included 1,200 miles of proposed pipelines spanning five states, was cancelled in October 2023. Leading U.S. ethanol producer Valero Energy Corporation (NYSE:VLO) (San Antonio, Texas) was signed on as an anchor shipper on the project. Following its cancellation, Valero signed on as a shipper on Summit's system, intending to capture and store CO2 from eight plants in Nebraska, Minnesota, Iowa and South Dakota on the system. Valero is aiming to reduce CO2 emissions companywide by 45 million metric tons by 2050. For more information, see March 8, 2024, article - After Cancellation of One Carbon Pipeline, Valero Signs with Another.
Summit Carbon's proposed pipeline and storage system, known as the Midwest Carbon Express capture system, is planned to span Iowa, Nebraska, Minnesota, South Dakota and North Dakota. Subscribers to Industrial Info's Global Market Intelligence (GMI) Project Database can learn more by viewing the related project reports.
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 trillion (USD).
Earlier this week, the South Dakota House of Representatives passed House Bill (HB) 1052, which would end the use of eminent domain by carbon pipeline companies in the state. Eminent domain allows companies to take private land for public use with a just, court-ordered compensation. The bill now goes to the state Senate for a vote.
At the bill's heart is the question of whether carbon pipelines in fact serve the public good, justifying the use of eminent domain in their construction. The project affected most by the potential legislation is Summit Carbon Solutions' planned carbon pipeline, which would capture carbon dioxide (CO2) from 57 ethanol plants in the U.S. Midwest, depositing it at a site in North Dakota. The Biden administration found the project worthwhile and planned to allocate funds to the project through the Inflation Reduction Act (IRA). However, President Donald Trump is taking aim at the IRA, considering it a wasteful use of U.S. funds. In 2022, the U.S. government lifted the tax credit for carbon capture and storage from $50 to $85 per ton of CO2, putting Summit's project, which would be able to take more than 18 million tons of CO2 annually, on track to make more than $1 billion in credits each year.
With the potential of IRA funding of being slashed or completely taken away, Summit now faces legal challenges in the Dakotas, adding to the company's headaches. In the hearings regarding the bill in South Dakota, Summit testified that the changed law would prevent it from negotiating with landowners who refused to grant voluntary easements, hindering the project at a crucial point. Critics of the bill argue that it's unfair to change the rules for carbon pipelines after Summit has invested substantial funds in the project under the existing legal framework.
The bill is now before the Senate for a vote. In the House, the bill received support and criticism from both sides of the aisle in a contest of personal rights, environmental issues and the state's business climate. While many Republicans voted no on the bill, Republican House Speaker Pro Tempore Karla Lems seemed to express the views of many of her fellow legislators when she said the pipelines can still be built in South Dakota, "They just don't get the supreme power of eminent domain to force their projects down the throats of South Dakota people." The bill passed the House in a vote of 49-19.
North Dakota
Also this week, North Dakota begin hearing several proposed bills regarding the construction of carbon pipelines and their use of eminent domain. The North Dakota House's Energy and Natural Resources Committee was set to hear three proposed bills regarding CO2 pipelines yesterday:
- HB 1414 is the most extensive of the three bills, proposing to take away eminent domain rights not only from carbon pipelines, but also from solar, wind and hydrogen projects. The bill also would revoke "common carrier" status for carbon pipelines, which would allow other companies to use the pipelines for a fee, which can be a factor in the use of eminent domain.
- HB 1292 removes common carrier status for carbon pipelines without changes to eminent domain rights.
- HB 1210 specifies that carbon pipeline companies are liable for damages if a pipeline leaks or ruptures.
- Senate Bill (SB) 2322 is similar to HB 1414, revoking the use of eminent domain and common carrier status for carbon pipelines.
- SB 2320 removes property tax exemptions for carbon pipelines. Current North Dakota law exempts carbon pipelines from property tax for 10 years.
- SB 2333 takes a completely different tack, encouraging carbon capture, creating a carbon fuels fund to incentivize ethanol plants to produce lower-carbon fuels, which could include carbon capture and storage (CCS) projects. The state would put $3 million into the fund every two years.
Major carbon pipelines such as Summit's are few and far between in the Midwest, so the proposed legislation in both states takes clear aim at Summit's pipeline development. The other leading CCS contender, Navigator Energy Services LLC's Heartland Greenway project, which included 1,200 miles of proposed pipelines spanning five states, was cancelled in October 2023. Leading U.S. ethanol producer Valero Energy Corporation (NYSE:VLO) (San Antonio, Texas) was signed on as an anchor shipper on the project. Following its cancellation, Valero signed on as a shipper on Summit's system, intending to capture and store CO2 from eight plants in Nebraska, Minnesota, Iowa and South Dakota on the system. Valero is aiming to reduce CO2 emissions companywide by 45 million metric tons by 2050. For more information, see March 8, 2024, article - After Cancellation of One Carbon Pipeline, Valero Signs with Another.
Summit Carbon's proposed pipeline and storage system, known as the Midwest Carbon Express capture system, is planned to span Iowa, Nebraska, Minnesota, South Dakota and North Dakota. Subscribers to Industrial Info's Global Market Intelligence (GMI) Project Database can learn more by viewing the related project reports.
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 trillion (USD).
