(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 the offer was compelling. The company, which soon gained the backing of energy billionaire Harold Hamm, would capture, transport and capture emissions from ethanol plants in the Upper Midwest and allow the corn industry to compete in lucrative new markets such as low-carbon jet fuel.
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It didn’t go as planned. After resistance from regulators and vocal opposition from farmers who don’t want to go anywhere near a project that they say tramples on the rights of landowners, Summit Carbon Solutions has gone back to the drawing board and the pipeline’s route Revised 6,300 times. The project’s expected start was pushed back to early 2026, two years later than originally forecast, with the estimated cost nearly doubling to about $8 billion.
Part of the challenge in implementing the project is its enormous footprint. The proposed path would cross five states – Iowa, Minnesota, Nebraska, South Dakota and finally North Dakota, where the carbon would be stored underground. If necessary, it could move forward without Nebraska and Minnesota, Summit says, but approvals from North Dakota, South Dakota and Iowa are all necessary to keep the project alive.
Regulators in Iowa and North Dakota are currently deliberating the project’s fate, with Iowa – the country’s top corn state – expected to release its approval decision any day. Even if everyone gives the green light, the company will have to raise billions of dollars and expand the pipeline’s planned route by another 500 miles to serve new customers – an expensive undertaking as the company says costs have increased by about $30 over the years % increased that it tried to get the project off the ground. And only if it can fend off opposition from the very group the project is intended to benefit: U.S. corn farmers.
The debate comes as the American corn industry approaches a crucial turning point. Although it is by far the world’s largest producer of staple foods, two of its key markets are at risk of shrinking. The United States has long been the largest corn exporter and has lost ground to agricultural powerhouse Brazil. At the same time, the rise of electric vehicles is likely to reduce demand for ethanol-infused gasoline to power cars. About 40% of corn in the U.S. goes to domestic mills 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
That’s why the U.S. corn industry is looking for new buyers, including producers of sustainable aviation fuel (SAF), a market that is still in its infancy but is expected to grow rapidly this decade. But jet fuel makers will not use ethanol, just one of the possible methods of producing SAF, unless the fuel’s so-called carbon intensity (CI) levels fall. Low scores are key to securing potentially lucrative federal tax credits. Carbon capture and storage (CCS), like Summit’s proposed project, is seen as critical to lowering the ethanol industry’s rating. Many U.S. facilities are unable to perform CCS on-site due to geologic constraints, making such pipelines important, according to advocates.
Reducing CI will also be critical to the use of ethanol for marine vessels, trucks, construction equipment and green chemicals, said Geoff Cooper, president of the Renewable Fuels Association, at an industry meeting in California in February.
“We will have a shrinking market with the internal combustion engine; That’s clear,” said Bruce Rastetter, founder of Summit Agricultural Group, the corporate sponsor behind the project. “The pipeline is the most transformative thing I have ever worked on in my life because it has such a direct impact on agriculture and everything related to it.”
But some corn farmers, who are usually quite supportive of the ethanol industry, are not convinced that the company’s solution is the right one, especially after its initial approach to landowners was seen by some as too hostile or even bullying. Tensions have been particularly high in South Dakota, where the summit plan was rejected last year on the grounds that it did not meet the county’s social distancing rules. Once Summit submits its new permit application, the state has up to a year to make a decision.
Summit Carbon’s biggest competitor, the now-defunct Navigator Pipeline backed by BlackRock Inc., failed last year after facing similar competition. Still, Navigator’s loss was a gain for Summit: Refiner Valero Energy Corp. and Poet LLC, the world’s largest biofuel producer, signed on to Summit’s project after the other project failed. This is one reason Summit has to expand its planned route, driving up costs.
South Dakota farmer Carol Kapperman and her husband in Minnehaha County are among those who do not welcome the proposed pipeline. They were surprised last year when they received a contract for their land, even though the state had rejected the company’s initial permit. “The price being offered is nowhere near the value of our land and is kind of a slap in the face,” she said. “But I don’t care if they offer a million dollars – I don’t want it.”
Joy Hohn, a neighbor of Kapperman who also grows corn, opposed the pipeline from the start, citing safety concerns. Summit’s heavy push didn’t help.
“We definitely support ethanol, but this made us think that if the industry supports these types of projects, maybe we don’t want to do it anymore,” said Hohn, a Republican who says the fight against Summit has motivates her to run for a position in the State Senate. “There are other ways to achieve these lower carbon intensity levels than putting a dangerous pipeline underground against the wishes of landowners.” Summit has repeatedly stated that its pipeline is safe.
Both Rastetter and Lee Blank, Summit Carbon’s chief executive officer, acknowledge that the company made mistakes early on in contacting landowners. Since then, it has laid off some people and taken a much more flexible approach. The company has also deployed a team to South Dakota counties to work with property owners to find the best new routes. Rastetter said Summit paid nearly $400 million in all five states for the right of way to their land.
Aside from government approvals and skeptical landowners, the project’s biggest hurdle may simply be time. Earlier this year, LanzaJet Inc. opened a $200 million plant in rural Georgia that will use Brazilian sugarcane ethanol as a feedstock to make greener jet fuel.
That’s “a slap in the face to all of us here who grow corn,” said Lance Lillibridge, a farmer in east-central Iowa who also raises soybeans, alfalfa and Red Angus cattle. “If this pipeline doesn’t come to fruition, it will be very destructive to the Midwest. Other countries will do that, and if we don’t do it, we won’t be able to compete with them. And then if we’re not competitive, we can’t stay in business.”
– With support from Tarso Veloso and Jennifer A. Dlouhy.
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