IN THE NEWS: CO2 Pipeline State of Development and Beyond
By David Kruse
May 25, 2023
Progress never comes easy and so it is for a project the scope of burying CO2 pipelines from IA to ND and IL. There are a lot of moving parts that must be connected and the process is still advancing. There is nothing apparent here in Iowa that would portend failure for the proposed CO2 pipelines. IA Governor Kim Reynolds favors adding CO2 sequestration to the Iowa ethanol industry supply chain. She is a very pro-business Governor and in control of the strings that facilitate these projects. IA Senate legislative leaders did not allow anti-CO2 pipeline bills into the junket so as to give the Governor cover. Otherwise, she would have had to veto them and they spared her the notoriety of such public exposure. This allows her to stay under the radar on what to many is an unpopular position. She also recently appointed 2 new members to the 3 person IUB board so there is no reason that when the T's are crossed and I's dotted that the projects will not get IUB approval. They hold their hearings in October.
Summit Carbon Solutions has acquired nearly 70% of its needed easements voluntarily from landowners. They are still negotiating with groups of farmers who have banded together to negotiate and are just looking forward to having the most leverage to make a deal. Each group represents several miles of the pipeline route so they should get closer to the finish line in chunks. The IUB board was also going to provide landowners with mediators if they wish to use one to negotiate on their behalf. The easement process is complicated and scares some people who need mentorship through it. I do not know what it pays but I would kind of like that job. Pipeline opponents do not like the idea of mediators as that means they will end up with agreement on an easement. The Dakota Access oil pipeline was approved with 75% of voluntary easements and it would be good if Summit could get to 80%. Pipeline opponents are looking for any obstacle that they can dream up to throw in front of the process but without help coming from the legislature, they will eventually lose as pipe is buried. If landowners stick to their guns and refuse to negotiate and the pipeline gains IUB eminent domain approval, they will be in the worst of all worlds. They will not be able to block the pipeline and they will not get paid what they should either. I talked to someone who fought Dakota Access in SD and it did not work out well for them.
Progress varies from state to state. Sound like the going is easiest in NE where they have no regulation regarding CO2 pipelines. NE laws governing hazardous material pertain to oil but not CO2. Legislation to block CO2 pipelines in SD by their House lost in Senate committee falling to get a full vote. The SD utilities board reportedly meets in September. Some in ND are trying to use their law against foreign ownership against Summit, which they claim has some foreign investors. The irony of that is that ND's largest shale oil developer, billionaire Harold Hamm, is one of the major investors in Summit. This is kind of like Florida going after Disney after all that Mickey Mouse has done for them. On farm surveys were ruled constitutional in ND but not so in IA. These companies have made significant outlays in legal expenses to handle the myriad of issues they confront. Court processes take time and delay can back up progress, which is the greatest loss.
While the CO2 pipeline process is on going, the ethanol industry is already moving on to what will be the next stage. Co2 sequestration allows the industry to produce low carbon fuel, which broadens the market and increases the value from monetization…making low carbon jet fuel from ethanol. The general trend is toward EVs and away from fossil fuels but by making ethanol a low carbon fuel by sequestering the CO2 in the production process it creates market opportunities that can have a far-reaching impact on the longevity of the ethanol industry. US airlines need to cut emissions and one way to accomplish that is to convert ethanol into sustainable aviation fuel. I have noted that by sequestering CO2 produced in the ethanol production process, it reduces the carbon score of ethanol to the level of EVs. That makes ethanol an even more sustainable low carbon fuel.
Bruce Rastetter is the CEO of many Summit commercial entitles, primary of which is Summit Ag here in IA. They own farmland, produce cattle, hogs, crops, and Bruce was one of the founders of the IA ethanol industry. One of his investor entities built the first corn-based ethanol plant in Brazil. The CO2 pipeline project named Summit Carbon Solutions is his. The Summit Ag Group recently announced that it is creating yet another entity, Summit Next Gen, which will take low carbon ethanol and turn it into jet fuel.
A press announcement stated, "Summit Next Gen will utilize Honeywell's (NASDAQ: HON) Ethanol to Jet processing technology to convert ethanol into sustainable aviation fuel (SAF). Through the project, Summit Next Gen creates an additional market for low-carbon ethanol producers and advances the sustainability goals of the difficult to decarbonize the aviation industry.
The facility, to be located in the U.S. Gulf Coast region, will utilize Honeywell's leading Ethanol to Jet (ETJ) process technology to transform low-carbon ethanol into sustainable aviation fuel (SAF)
The innovative project will produce over 250 million gallons of sustainable aviation fuel per year and is expected to be operational in 2025
The global aviation industry demands over 100 billion gallons of jet fuel annually and is expected to double in the next 20 years with increasing passenger demand. Governments, companies, and consumers are demanding low-carbon alternatives to traditional jet fuel; however, the current production of SAF remains challenged by the undersupply of feedstocks consisting of vegetable oils, animal fats and waste oils. The ETJ pathway provides a scalable and cost competitive solution now to solve this problem, and this is largely attributable to advancements undertaken by ethanol producers who have continued to reduce their carbon footprints through adoption of new technologies such as carbon capture and storage (CCS) and investments to boost efficiency.
Growing low-carbon markets, recent state-level programs, and incentives created under the Inflation Reduction Act that are broadly supported by the biofuels, energy, and aviation industries catalyzed the creation of Summit Next Gen to meet growing demand for SAF. Sustainable aviation fuel is nearly identical to petroleum-based jet fuel sources and is currently approved at blend rates up to 50% by ASTM International providing a "drop in fuel" solution.
"The creation of Summit Next Gen and our partnership with a technology leader like Honeywell UOP sets a new standard for the agriculture, ethanol, and aviation industries," said Bruce Rastetter, CEO of Summit Agricultural Group. "The agriculture and ethanol industries have a long history of continuous improvement producing more with less, and this has enabled forward-thinking ethanol producers to be favorably positioned for the present challenge of helping aviation reduce its carbon footprint."
Summit Ag and its related entities are building what could be described as a closed loop low carbon fuel supply chain. They own farmland, grow the corn, turn it into ethanol, reduce the ethanol carbon score through CO2 sequestration, and then turn that fuel into sustainable aviation fuel. There is a big stage here that has been set up that requires vision for people to see. Summit is using the stage tying it altogether. What they are doing is in the interest of all farmers who will be connected to this supply chain in some way themselves. Many who balk at being paid well for having pipe buried in their farms are not seeing it. I believe that those fighting it are crossways to our future.
###
David Kruse is author and producer of The CommStock Report, an ag commentary and market analysis available daily by radio and by subscription on DTN/FarmDayta and the Internet. CommStock Investments is a registered CTA, as well as an introducing brokerage.