Bluestem last looked at the oppressed ethanol carbon pipeline industry just a few days ago in Ethanol carbon capture update: Lincoln could become 6th county to regulate carbon pipelines.
This after October's South Dakotans First: property rights coalition plans to lobby for eminent domain restrictions.
Now the carbon capture warriors are organizing to fight back against landowners and their allies that question the safety and viability of the sprawling, water-thirsty proposed pipeline infrastructure.
At the South Dakota Searchlight, Joshua Haiar reported Thursday in Carbon pipeline debate spawns another new organization:
A second group has formed in response to disputes over a proposed carbon dioxide pipeline in South Dakota, this time in support of policies that could result in the pipeline’s construction.
A news release from the newly formed South Dakota Ag Alliance said it will “mediate and advocate for reasonable solutions to difficult ag and rural development issues” such as carbon pipeline proposals. That includes advocating for policies to provide a better deal and greater peace of mind for affected landowners.
Co-founders Rob Skjonsberg and Jason Glodt are prominent figures in South Dakota politics.
Glodt formerly did governmental affairs work for a carbon pipeline company, Navigator CO2, that has since terminated its proposed project. He is a lawyer and co-founder, with Skjonsberg, of GSG Strategies, a government relations, advocacy and campaign strategy firm. Glodt also served in the administrations of Governors Mike Rounds and Dennis Daugaard.
Skjonsberg, a rancher and farmer, formerly worked as chief of staff for Rounds, served on the state Board of Economic Development Board under Daugaard and worked as a senior vice president of government affairs for the Poet biofuels company.
The two said they are not being paid by anyone to lead the new nonprofit, and they’re not working with Summit Carbon Solutions, the remaining company proposing a carbon pipeline in the state.
“I haven’t said anything to them,” Skjonsberg said.
Summit, based in Iowa, wants to collect carbon dioxide emissions from 32 Midwest ethanol plants, including some in South Dakota. The carbon would be liquefied and transported through a multi-billion-dollar pipeline for burial in North Dakota, making the project eligible for federal tax credits that incentivize the removal of heat-trapping gasses from the atmosphere.
The South Dakota Public Utilities Commission rejected Summit’s permit application in September, citing problems including the route’s conflicts with county ordinances that require minimum distances between pipelines and existing features. The company plans to adjust its route and reapply.
Last month, the coalition South Dakotans First formed to protect property rights for landowners in response to Summit’s earlier filing — and later withdrawal — of eminent domain actions against more than 150 landowners. “Eminent domain” refers to the power to access private property for public use, provided the owner is justly compensated.
South Dakotans First includes the South Dakota Farmers Union, Dakota Rural Action, Landowners for Eminent Domain Reform and various landowners.
Glodt and Skjonsberg announced their new nonprofit Thursday as the South Dakota Farmers Union annual convention was happening in Huron. Farmers Union President Doug Sombke reacted to the news by phone.
“It’s Summit’s new public relations group,” Sombke said. “I mean, they still want to use eminent domain on us. Why should we negotiate when we won?”
During a convention panel discussion Thursday, landowner Ed Fischbach said South Dakotans First will support legislation including a ban on eminent domain for carbon pipelines. Similar legislation failed last winter at the Capitol in Pierre.
Glodt and Skjonsberg said they applaud a recent policy statement by the South Dakota Farm Bureau that says if a pipeline company has voluntary access agreements — called easements — with two-thirds of affected landowners, the company should be able to use eminent domain on the rest.
Glodt and Skjonsberg are additionally advocating for state legislation they say will protect landowner rights: reforms of land survey processes, liability protections for landowners, minimum depth requirements for pipelines, and ensuring additional recurring compensation for landowners.
They aim to provide legal and regulatory certainty for carbon pipelines.
“The government shouldn’t be able to move the goalpost after the deal is negotiated in good faith,” Skjonsberg said.
Skjonsberg also wants to replace the minimum setback distances for carbon pipelines adopted by counties with a statewide standard.
“At the state level, we should talk about setbacks,” Skjonsberg said. “You could end up with a complete hodgepodge of setback distances. And if you’re a company, how do you deal with that? It’s nonsense.”
When the going gets tough, send in the public relations, government affairs guys. (I'm so old, I remember when they were called lobbyists
Also at the Searchlight, Summit Carbon Solutions CEO Lee Blank and Chief Operating Officer Jimmy Powell sat down with Haiar to explain it all to the peasants.
It's all in another South Dakota Searchlight where they lay out the case that carbon capture pipelines represent the only hope for the ethanol industry and acres and acres of monocropping.
Q&A: Carbon pipeline execs say ethanol’s future hangs in the balance
By Joshua HaiarMARION — If South Dakota’s ethanol industry does not reduce the amount of heat-trapping carbon dioxide it emits into the atmosphere, the industry’s future is grim.
That’s according to two top executives of the remaining carbon-capture pipeline company hoping to capture, liquefy and bury carbon dioxide from South Dakota ethanol plants. They said markets around the globe are demanding lower carbon emissions.
“Electric vehicles are continuing to grow,” said Summit Carbon Solutions CEO Lee Blank. “They are, and maybe not here, but in cities. Our gas consumption is going down. So how do we open up other markets so ethanol consumption goes up?”
One of those other markets, according to Summit, could be sustainable aviation fuel from a plant proposed in Lake Preston by a company called Gevo.
Summit’s pipeline would cross land owned by state Rep. Karla Lems, R-Canton. She said a carbon-capture pipeline isn’t the only way to lower emissions from corn-based ethanol.
“What would it mean if ethanol plants only purchased corn from farmers doing sustainable practices,” Lems asked, “like no-till and cover crops, which pull carbon into the ground?”
In September, state regulators denied permits for Summit and another company seeking to build carbon pipelines in the state.
The other company, Navigator C02, has since withdrawn its plan. Iowa-based Summit plans to resubmit an application after modifying its route.
The company aims to capture carbon dioxide emitted from 32 Midwest ethanol plants and transport it in liquefied form for underground storage in North Dakota, thereby making the project eligible for federal tax credits that incentivize the removal of greenhouse gasses from the atmosphere.
Summit’s multi-billion-dollar project is led by Blank and Chief Operating Officer Jimmy Powell. Blank is an experienced agriculture industry executive, while Powell’s background is in energy, pipelines and oil.
On Wednesday, the two sat down with South Dakota Searchlight at NuGen in Marion, which is one of Summit’s partner ethanol plants.
The following are excerpts — edited for length — from that interview.
Why is your pipeline project important to ethanol plants?
Blank: The reason it’s important to the ethanol industry is it lowers the carbon intensity on their products. And there are markets today nationally and globally that want a lower carbon-intensity fuel, and they’ll pay a premium for that.
And so by lowering that carbon intensity on the ethanol that they’re producing, they can sell that ethanol into premium markets and deliver a premium back to the ethanol plant.
Powell: To sell in these markets, and to sell to the sustainable aviation markets, which are evolving, you have to have a carbon intensity score of less than 50.
This plant [NuGen in Marion] is one of the newer plants, and it’s in that ballpark. A lot of the plants that we partner with have a score in the 60s and 70s.
If they power this entire plant with a solar farm or wind turbines, it’s going to give them a three- or five-point reduction. Meanwhile, by pulling the CO2 stream out of their process, it cuts it 25 to 30 points.
So they can’t get the same bang for their buck doing anything but pulling the CO2 out.
Right now, it’s about a 50-cent margin in those low-carbon fuel markets. So, if it’s 15 cents to transport to those markets, they net 35 cents a gallon.
What is Summit Carbon Solutions’ business model?
Blank: We partner with the plants. So it’s a shared revenue model with the plants.
We’re putting up all the capital for all the capture equipment, all the infrastructure, all the sequestration. We don’t ask the plant to put up anything. And then, through the premiums — what we call “uplift,” which is what Jimmy was just talking about, that 35 cents a gallon uplift — we share the operating costs and return on our capital back out of that, and then everything else is shared with the plant.
So the plants don’t make any investment. But after we get a return on investment, everything from there is a shared model going forward.
So that’s how we earn revenues off of this particular model through a shared partnership with the ethanol industry.
Who will receive the federal tax credits?
Blank: The tax credit is just one of the revenue streams that gets split in the revenue model as it comes in.
Once we put that ton of carbon in the ground, that generates the tax credit for that ton that’s been sequestered.
And then, that tax credit comes back to the business and it’s shared. After we take the operating expenses out of the company, just like everything else, that revenue from that tax credit is a shared model.
Sustainable aviation fuel is one of the future markets discussed that could make up for the loss in ethanol demand as electric vehicles grow in popularity. How does Summit fit into that?
Blank: The U.S. ethanol industry is supplying about 15 billion gallons into U.S. gasoline markets.
There are 100 billion gallons, globally, of aviation fuel. They all have sustainable goals that they want to try to meet by 2030, 2040, 2050.
They’re saying that without low carbon-intensity ethanol, there is no way the airline industry will meet its sustainability goals. And that’s because, basically, without the carbon pipeline, you can’t get the carbon intensity score low enough on the ethanol to qualify for the sustainable aviation fuel markets.
And so, it’s important that we get it done, because it opens up the ethanol industry to another market. It’s not 100 billion gallons, because it’s a blend, but it’s an additional 50 billion gallons.
Think about that: The gasoline markets are only supplying 15 billion gallons today.
We can open this up for agriculture to another 50 billion gallons of ethanol. Imagine what that can do for the U.S. corn farmer and what it means to the value of his farming operation going forward.
Are you saying sustainable aviation fuel would be 50% ethanol?
Blank: No, it’s a ratio.
So, remember, the first thing that has to happen is we have to lower the carbon intensity score of the ethanol. Then it has to go through a process through a sustainable aviation fuel plant that has to work to get it to a position where it’s what they call a drop-in fuel.
And I’m not an engineer, so I’m not going to tell you exactly how that works, but that drop-in fuel then becomes a fuel that will fly.
As a matter of fact, yesterday, Virgin flew their first 100% sustainable Aviation fuel flight across the Atlantic Ocean with all drop-in sustainable aviation fuel.
Now, they can blend it, and they probably will blend it going forward. But it’s a big blend. So you open up the ethanol markets to a massive market.
Powell: The goal of the major airlines, like Delta, United and Southwest, their goal is 3 billion gallons of sustainable aviation fuel by 2030. They’re targets, but they are pushing for that today.
In this country today, there are less than 100 million gallons produced. So, plants have to be built and they have to be operational.
I’m sure you know about Gevo in this state being one. And if we don’t have this project, if it’s not successful in South Dakota, Gevo will not construct here.
So, the 15 or so ethanol plants in this state will be disadvantaged from that aspect. They won’t be able to access that.
To be clear, what percentage of sustainable aviation fuel would be ethanol?
Powell: Well, think about it like this: It’s like the gasoline at Casey’s. You can get 10% ethanol all the way to E85.
And so, it depends on what the airlines require. Is it 15% blend, 50% blend?
But globally, the way I think about it, the way it’s been presented to us is that the mass demand in the market is about 50% of the total demand.
So, if there’s 100 billion gallons of aviation fuel demand in the market, half of that would be available to sustainable aviation fuel.
Your project’s ability to access land from unwilling landowners via eminent domain stems from its status as a common carrier pipeline — a type of pipeline required by law to offer its services to the public on a non-discriminatory basis. Who else do you anticipate will be asking you to carry their carbon dioxide?
Blank: There are lots of opportunities for that. There are fertilizer plants looking for transport and storage, and others.
But with the failure of Navigator, you know, there’s now another piece of the ethanol industry that would like to think about coming on our pipe now that Navigator’s no longer happening. Those are common carrier-type discussions. When the 45Q tax credit went from $50 a ton to $85 a ton, everything really became available.
And many people don’t want the partnership like we have with this plant. Many just want us to ship it and sequester it for them, and that’s more of the common carrier-type model, and that’s all coming at us now.
Powell: One way to think about it is we’re designing the system for 18 million tons. We don’t have 18 million tons in our contracts.
So we’ll do an open season, like any other pipeline would. And so if you can get your product to the pipeline, and get your product off the pipeline, and it meets our quality spec, we’ll transport it.
Does that mean you’re unable to say no to a customer looking to use liquid carbon for oil-well extraction, by injecting it underground to make the oil flow better?
Powell: We can [say no], because we can’t get it off the pipeline. We’re sequestering it 80 or 90 miles southeast of the oil and gas production areas in North Dakota. So we don’t have a way to get it there.
Now, if a company wanted to build a pipeline and take it from us, and move it up there, that’s something we would have to entertain.
But right now we’re partnered with ethanol. They want to sequester it because it benefits them to do that. And that’s our business model.
That'll trach the yokels to challenge the corporate masters. Bluestem anticipates some South Dakota state lawmakers to get in line for the benefits of these ways of thinking.
The fate of ethanol. after all, hangs in the balanace.
Photo: Dave Fendrich (walking) helps Bryant Hofer (in combine) harvest a field of corn on Oct. 2, 2013, near Salem. (Scott Olson/Getty Images/via South Dakota Searchlight).
Related posts
- Ethanol carbon capture update: Lincoln could become 6th county to regulate carbon pipelines
- outh Dakotans First: property rights coalition plans to lobby for eminent domain restrictions.
- Final arguments for Summit ethanol carbon pipeline Iowa permit are due in January
- Critics allege CO2 pipelines ‘farm the government’ for climate $$ while helping oil industry; bills fuel debate over ethanol’s environmental impact, with climate implications
- Ethanol carbon pipeline update: Summit permit decision in Iowa not expected until next year
- If first you don't succeed: Summit's new route in North Dakota adds thirteen miles of pipeline
- Defying the odds: Meet the attorney for 1,000 clients who beat two pipeline companies
- Summit Carbon stands to benefit from Navigator's canceled pipeline, but IA opponents sue to block Summit Carbon water permit
- Cancel culture: Navigator withdraws ethanol carbon pipeline permit application in Iowa
- Navigator CO2 cancels multistate pipeline project
- Summit Carbon Solutions says ethanol carbon pipeline system won’t be operational until 2026
- Some Iowa landowners were confused by Summit Carbon Solution eminent domain process
- Navigator CO2 pulls its ethanol carbon pipeline permit application in Illinois
- Ethanol carbon pipeline news digest: Gevo aviation fuel needs Summit Carbon Solutions and more!
- Iowa Capital Dispatch: Summit pipeline hearing will resume on Tuesday; Navigator asks Iowa regulators to pause its pipeline permit request
- Iowa Capital Dispatch: Local officials in Iowa have potential to block carbon capture projects
- IA Capital Dispatch: Summit permit process in North Dakota has reached ‘uncharted waters
- North Dakota Public Service Commission votes 2-1 to reopen Summit Carbon pipeline case
- Navigator CO2 has not ‘taken any state off the map’ after SD pipeline permit rejection
- Ethanol carbon pipeline digest: reaction to denial; water use in IA; rich guy resists subpoena
- Iowa utility regulators want to finish Summit pipeline permit hearing by month’s end
- State denies Summit permit; both ethanol carbon pipelines proposed in South Dakota now rejected
- Summit Carbon Solutions forges ahead despite SD PUC staff's motion to deny pipeline permit
- SD PUC staff motion: non-mysterious portents in the air about potential denial of Summit Carbon Solution's pipeline permit application
- South Dakota Navigator pipeline decision might jeopardize Summit Carbon Solutions proposal
- Breaking: South Dakota Public Utilities Commission unanimously denies Navigator ethanol CO2 pipeline project permit
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