Senator John Hoeven sent The Crude Life the following statement after Green Plains announced that it would develop a pipeline network, in partnership with Summit Agricultural Group and its subsidiary Summit Carbon Solutions, to capture and transport CO2 from its ethanol production facilities in Iowa to North Dakota for geologic storage. The system is projected to have capacity for 10 million tons of CO2 storage per year from up to 40 ethanol plants. Construction is scheduled to begin in 2023, following feasibility and permitting phases, and will support approximately 10,000 jobs.
Hoeven stressed that the project is made possible due to efforts at both the state and federal level to develop the right legal, tax and regulatory environment for carbon capture, utilization and storage (CCUS) technologies. This includes:
- Securing Environmental Protection Agency (EPA) approval for North Dakota to be the primary regulator over Class VI wells, which are used for geologic or long-term CO2 storage, the first such approval in the nation.
- Implementing and enhancing the 45Q tax credit, one of the most important incentives to make CCUS projects commercially-viable.
“For more than a decade, North Dakota has been setting the stage for CCUS efforts like Green Plains’ new pipeline network,” said Senator Hoeven. “Major investments like this don’t just happen – it took the right legal framework, as well as regulatory and tax certainty. It started with our state’s CO2 storage task force in 2008, up through our recent work on the 45Q tax credit. That’s how we’ve been leading the way on CCUS, a true path forward for developing all of our nation’s energy resources, supporting both our economic and national security, while improving environmental stewardship.”
“We are excited to work with the state of North Dakota on this monumental new project,” said Bruce Rastetter, CEO of Summit Agricultural Group. “Not only are the geologic aspects of the state ideal for sequestering carbon, but the regulatory environment for expediting this type of project is welcoming. As Governor over a decade ago, Senator Hoeven laid the groundwork for sequestration of CO2, and has continued this critical work in the Senate by supporting the all-important 45Q tax credits and other CCUS-friendly policies.”
Securing State Primacy over Class VI Wells
Hoeven has worked since his time as governor to the secure the state’s role as the primary regulator of Class VI wells, which provides greater certainty to CCUS project developers. His efforts include:
- Establishing the North Dakota CO2 Storage Workgroup in 2008, during his time as governor.
- Helping advance a bill through the state legislature to create a regulatory framework for carbon sequestration under the North Dakota Industrial Commission.
- As U.S. Senator, moving the state’s application for regulatory primacy forward at the EPA and successfully pressing for its approval.
Enhancing the 45Q Tax Credit
Hoeven recently helped secure the final 45Q regulations, having worked closely with the Trump administration to move the final regulations forward. Specifically, the rule includes a more flexible definition of Carbon Capture Equipment (CCE), providing broader eligibility for the tax credit. In addition, the rule includes a provision similar to Hoeven’s CO2 Regulatory Certainty Act, ensuring that the tax credit works both for long-term storage and enhanced oil recovery. The senator also helped pass legislation providing a two-year extension on the construction deadline for the 45Q tax credit, helping incentivize the development of more CCUS projects.
Moving forward, Hoeven is prioritizing enhancements to make the 45Q tax credit more accessible and better incentivize the development of CCUS projects. This includes bipartisan legislation he helped introduce in the 116th Congress to:
- Provide a direct payment option for the 45Q and 48A tax incentives.
- Further extend the 45Q commence construction deadline through January 1, 2029.
- Allow the 45Q credit to offset tax obligations arising from the Base Erosion Avoidance Tax (BEAT), consistent with BEAT exceptions made for wind and solar energy production under the 2017 Tax Cuts and Jobs Act.
In other news, Green Plains Inc. (NASDAQ:GPRE), announced this week that three of its biorefineries have entered into a long term carbon offtake agreement with Summit Carbon Solutions (SCS), a subsidiary of Summit Agricultural Group. SCS announced a carbon capture and sequestration project that will create the infrastructure to transport CO2 from Iowa to North Dakota for deposit into geologic storage. Capturing and storing carbon is widely viewed as a key technology for reducing greenhouse gas emissions and combatting climate change. With this announcement, the biorefineries attached to the pipeline can dramatically reduce the carbon footprint of their biofuels. In addition, Green Plains’ Ultra-High Protein, renewable corn oil and other sustainable products will become true low carbon ingredients for aquaculture, pet food, dairy and poultry companies and low carbon feedstocks for renewable diesel.
“The partnership with Summit Carbon Solutions aligns with our ongoing transformation to lead the way in sustainable biorefining,” said Todd Becker, president and chief executive officer of Green Plains. “The future is low carbon, and while we have already made enormous strides in improving the efficiencies and sustainability of our processes through Project 24 and Fluid Quip’s extensive IP suite, taking advantage of the advancements in carbon sequestration is the next logical step of our evolution.”
“By capturing and sequestering the carbon dioxide from our biorefineries, we are able to reduce our CI score by as much as 50%, comparable or lower than other low carbon fuels available in the market today, and position our renewable fuels for low carbon markets globally,” added Becker. “Based on current LCFS markets, we believe we can achieve a minimum of 15 cents per gallon margin uplift as well as potential for carbon credits, 45Q tax incentives and direct returns on our investment in the pipeline and SCS.”
Green Plains will initially connect the biorefineries at Fairmont, Minn., Fergus Falls, Minn. and Superior, Iowa, and have the option to expand to additional locations as the pipeline network grows. When completed, SCS is expected to have infrastructure capable of capturing and sequestering 10 million tons of carbon dioxide annually, the equivalent of removing over two million cars from the road each year.
“Combined with growth in sustainable Ultra-High Protein, clean sugar production and renewable corn oil, carbon capture and sequestration will usher in a new era for our biorefinery products,” added Becker. “We believe this puts ethanol on a path toward achieving carbon neutrality. Collaborating with SCS on this project will help to address the urgent global need for decarbonization, while contributing to the infrastructure necessary to launch full scale carbon capture and sequestration for biorefineries across the Midwest.”
Green Plains will make an initial investment in Summit Carbon Solutions to help fund the development of the project, and expects the pipeline to begin operation in late 2024.
About Green Plains Inc.
Green Plains Inc. (NASDAQ:GPRE) is a leading biorefining company focused on the development and utilization of fermentation, agricultural and biological technologies in the processing of annually renewable crops into sustainable value-added ingredients. This includes the production of cleaner low carbon biofuels, renewable feedstocks for advanced biofuels and high purity alcohols for use in cleaners and disinfectants. Green Plains is an innovative producer of Ultra-High Protein and novel ingredients for animal and aquaculture diets to help satisfy a growing global appetite for sustainable protein. The Company also owns a 48.9% limited partner interest and a 2.0% general partner interest in Green Plains Partners LP. For more information, visit www.gpreinc.com.
About Summit Agricultural Group
Summit Agricultural Group is a diversified agribusiness operator and investment manager with operations in the United States and Brazil. Summit deploys capital across the agricultural supply chain with a particular focus at the intersection of agriculture and renewable energy. For more information, visit: www.summitag.com
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