Carbon dioxide pipelines are not new – but they’re making news. There are already approximately 5,000 miles of CO2 pipelines in the U.S. – most are used to transport CO2 from natural sources to oilfields to aid with oil extraction. But there is now a major effort to build a new pipeline network to transport CO2 captured from ethanol and fertilizer plants to permanent underground storage at sites in North Dakota and Illinois.
There are multiple factors driving the push for carbon capture pipelines. California, Oregon and Washington have implemented laws that require all fuel manufacturers (including ethanol) to reduce the “carbon intensity” of their fuels. In addition, the 2022 Inflation Reduction Act created powerful incentives of $85 per ton for companies that permanently store CO2 underground. Ethanol manufacturers have both a carrot and a stick motivating them to build pipelines and underground storage. Much of the new pipelines will traverse cropland in the Midwest and Great Plains.
It’s not a universally pleasant experience to have a pipeline built across your farm. The construction process is disruptive, heavy equipment compacts the soil, and sloppy contractors often mix subsoil and topsoil when they are covering up the pipes. Crop yields will often suffer in pipeline easements for years after construction is complete. Because most operations would not volunteer to host a pipeline, pipeline companies need eminent domain authority to ensure they can complete construction.
State governments have the primary authority to approve the siting and construction of CO2 pipelines as well as the eminent domain authority of the pipeline companies. These laws vary state-to-state, but they generally require pipeline companies to address safety and environmental concerns, provide notice to potentially impacted landowners, and minimize damage to landowner property. Some states preempt or restrict the authority of local governments to restrict pipelines while others allow zoning laws that would make construction difficult or impossible.
In recent months, the carbon pipeline companies have received some setbacks in state administrative proceedings. In September, the South Dakota Public Utilities Commission denied construction permits for two pipeline companies on the basis that their proposals were not compliant with state laws and regulations. This came on the heels of the North Dakota Public Service Commission’s rejection of a pipeline project. The companies plan to revise and resubmit their applications. The Iowa Utilities Board is holding contentious hearings on a pipeline permit.
Although the carbon pipeline companies have received some temporary setbacks, I do not expect these projects to be abandoned. Pipeline projects take years to receive approval and it’s often by patchwork. The White House and some members of Congress have called legislation that would federalize CO2 pipeline site approval based on concerns that state or local governments are stifling projects. There is precedent for this approach – the Federal Energy Regulatory Commission oversees siting for interstate natural gas pipelines.
