(Bloomberg) — When executives announced plans in 2021 to build the world’s largest carbon capture and storage project in the heart of the U.S. grain belt, they thought their pitch was convincing. The venture soon gained the backing of energy billionaire Harold Hamm by capturing, transporting, and trapping emissions from ethanol plants in the upper Midwest, helping the corn industry turn into lucrative new products like low-carbon jet fuel. It will enable them to compete in the market.
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Things didn't go as planned. After a backlash from regulators and vocal opposition from farmers who wanted no access to the project, which they said trampled on landowner rights, Summit Carbon Solutions went back to square one and rerouted the pipeline 6,300 times. . The project's planned start date has been pushed back to early 2026, two years later than originally predicted, and the estimated cost has nearly doubled to about $8 billion.
One of the challenges in getting the project off the ground is its huge footprint. The proposed route would cross five states: Iowa, Minnesota, Nebraska, South Dakota, and eventually North Dakota, and the carbon would be stored underground. Summit said the project could move forward without Nebraska and Minnesota if necessary, but approval from North Dakota, South Dakota and Iowa is all needed for the project to survive.
Regulators in Iowa and North Dakota are currently considering the fate of the project, and Iowa, the nation's top corn state, is expected to announce a permitting decision soon. Even if all companies give the green light, the company would then have to raise billions of dollars and add another 500 miles to its proposed pipeline route to accommodate new customers. This will be an expensive undertaking, as the company says costs have risen about 30% in recent years. He said he is trying to get the project back on track. And that's only if the project can fend off opposition from the very group it promises to benefit: U.S. corn farmers.
The debate comes as the U.S. corn industry approaches a critical tipping point. The company is by far the world's largest producer of staple grains, but two of its major markets are at risk of contraction. The United States, which has long been the largest exporter of corn, is now at a disadvantage compared to the agricultural powerhouse Brazil. At the same time, the rise of electric vehicles threatens to reduce demand for the ethanol-blended gasoline used to power cars. About 40% of U.S. corn goes to domestic plants that produce ethanol for use as transportation fuel.
Read more: The fate of U.S. corn farmers depends on the future of green air travel
As a result, the U.S. corn industry is seeking new buyers, including producers of sustainable aviation fuel (SAF). Although this market is still in its infancy, it is expected to grow rapidly over the next decade. But jet fuel manufacturers won't use ethanol, one possible way to make SAF, unless the fuel's so-called carbon intensity score (CI) goes down. A low score is key to securing potentially lucrative federal tax credits. Carbon capture and storage (CCS), like the projects proposed by Summit, is seen as critical to lowering the ethanol industry's valuation. Supporters say many U.S. plants are unable to implement CCS on site due to geological constraints, making these pipelines important.
Reducing CI is key when using ethanol in shipping, trucking, construction equipment and green chemicals, Renewable Fuels Association President Jeff Cooper said at an industry conference in California in February. He said it would be.
“The market for internal combustion engines is going to shrink. That's clear,” said Bruce Rastetter, founder of Summit Agricultural Group, a corporate sponsor of the group behind the project. “The pipeline is the most transformative thing I've ever worked on in my life because it has a direct impact on agriculture and everything that touches it.”
But some corn farmers, who are typically very supportive of the ethanol industry, are worried about the company's resolution, especially after the company's initial approach to landowners was seen by some as too hostile or even bullying. Not convinced that the strategy is the right one. Tensions have been particularly high in South Dakota, which last year rejected Summit's plans for not following county distancing rules. Once Summit submits a new permit application, the state will have up to a year to make a decision.
Summit Carbon's biggest rival, the now-defunct Navigator pipeline backed by BlackRock Inc., failed last year after wrestling with similar opposition. Still, Navigator's loss was Summit's gain. Refiner Valero Energy Corp. and Poet LLC, the world's largest producer of biofuels, signed on to Summit's project after one fell through. This is one reason Summit needs to expand its planned route and increase costs.
Minnehaha County, South Dakota, farmer Carol Copperman and her husband are among those who do not welcome the proposed pipeline. They were surprised last year when they received a contract for the land, despite the state denying the company's initial permit. “The price offered is nowhere near what our land is worth and it's like a slap in the face,” she said. “But I don't care if they offer $1 million. I don't want that.”
Copperman's neighbor, Joy Horn, who also grows corn, opposed the pipeline from the beginning, citing safety concerns. Heavy pressure from the summit didn't help either.
“We definitely support ethanol, but we started to think that if the industry supports these types of projects, we might not want to continue supporting them,” said Horn, a Republican. She says that her struggle with this became her motivation. to run for state senate. “Instead of putting dangerous pipelines underground against the wishes of landowners, there are other ways to get lower carbon intensity scores.” Summitt has repeatedly said her company's pipelines are safe.
Both Mr. Rastetter and Summit Carbon CEO Lee Blank admit that the company made early mistakes in the way it approached landowners. It has since laid off some people and adopted a more flexible approach. The company also sent teams to South Dakota counties to work with property owners to find the best new routes. Rastetter said Summit paid nearly $400 million for rights-of-way to its land across five states.
Besides state permits and skeptical landowners, the project's biggest hurdle may be time. Earlier this year, LanzaJet Inc. opened a $200 million facility in rural Georgia to produce low-pollution jet fuel using Brazilian sugarcane ethanol as one of its feedstocks.
It's “a slap in the face to all of us who grow corn here,” said Lance Lillibridge, a farmer in east-central Iowa who also raises soybeans, alfalfa and Red Angus cattle. “If this pipeline doesn't happen, it's going to be very disruptive to the Midwest. Other countries are trying to do this, so if we don't do it, we can't compete with them. And if you can’t compete, you can’t stay in business.”
–With assistance from Tarso Veloso and Jennifer A Dlouhy.
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