Burying carbon dioxide deep in North Dakota's geology may combat climate change. Is it financially feasible?

BISMARCK — For some of North Dakota’s legacy industries, like coal power, the future could depend on the capacity of companies to deliver on bold promises around carbon capture. The pricey and so far sparsely used technology has nonetheless elevated the ambitions of North Dakota’s energy sector and would be the cornerstone in Gov. Doug Burgum’s recent target to achieve statewide carbon neutrality by 2030.

An old technology made vogue again in the national effort to curb greenhouse gas emissions and combat climate change, carbon capture refers to the process of stripping carbon dioxide molecules off emissions to prevent their warming effect on the earth’s atmosphere.

North Dakota's budding roster of carbon capture projects range from storing the would-be air pollution of coal-fired power plants deep in the earth, to removing carbon dioxide from synthetic natural gas to manufacture hydrogen energy, to pumping carbon dioxide into declining oil wells to jump-start their production, to creating a carbon sink under North Dakota to hold the greenhouse gas output of ethanol plants all over the Midwest.

The technology, however, can be expensive. And though interest in the field has surged in recent years, some analysts warn that the pathway to financial success is narrow.

“The potential for (carbon capture) is tremendous, but that doesn’t mean every single project makes sense,” said Alex Dewar, a senior director at Boston Consulting Group’s Center for Energy Impact.

Dewar, who consults large corporations on their decarbonization goals, said the critical job is in parsing which projects are making unattainable or “greenwashing” claims, and which have a realistic plan to scrub their carbon footprint.

“Because it's incredibly easy to say that you're gonna start a project,” he said. “It's incredibly challenging to actually reach a final investment decision and pull one off.”

In part, it’s because North Dakota’s economy revolves around a handful of industries with big carbon footprints: agriculture, coal and oil. Governments all over the world are setting aggressive goals to slash greenhouse gas emissions and many Wall Street investors have looked to prioritize clean energy projects — developments that have threatened the business models of carbon-intensive industries.

But while interest in carbon capture has boomed across the country in recent years, two key factors could separate North Dakota from the pack. First: its geology. To permanently trap carbon, you generally need to inject it into either subterranean saltwater cavities or oil and gas reservoirs. Charlie Gorecki, director of the state's Energy and Environmental Research Center (EERC) noted that the same properties that have turned North Dakota into the country's second biggest supplier of oil also make it ideal for underground carbon storage.

And unlike other states, North Dakota has the jurisdiction to regulate this process itself. Thanks to a greenlight from the U.S. Environmental Protection Agency in 2018, companies looking to stash their carbon under North Dakota can work directly through the state, bypassing the longer and more cumbersome federal authorization process. It’s not a flashy advantage, but Dewar described it as North Dakota’s “real, distinctive” edge in the emerging carbon storage market.

“The ability to actually develop a project hinges upon the regulatory structure, and that's where North Dakota has led the way,” he said.

Though carbon capture aims to slash the greenhouse gas emissions of several polluting industries, it’s a divisive topic among environmentalists. Opponents argue that carbon capture could consume billions in state, federal and private dollars — in some cases to prop up fossil fuel companies — even as affordable clean energy resources like wind and solar are readily available.

Brad Crabtree, vice president of carbon management at the Great Plains Institute, a nonprofit group that advocates for policies to incentivize carbon capture, lamented that debates over the technology have become so zero sum. “If we pursue these technologies in synergy," he said, "then we’re going to get to zero (emissions) a lot faster and at less cost."

Still, ambitions to use carbon capture and storage to create “clean coal,” a more complex and expensive process than using the technology in certain other industries, are especially contentious. That’s the goal at two central North Dakota power plants, where the $1 billion venture Project Tundra expects to move into fundraising stages later this year , and the recently announced, $1.5 billion proposal to retrofit Coal Creek Station for carbon capture is part of a plan to rescue the state’s largest coal-fired power plant from shutting down.

State leaders see carbon capture as the solution for a declining coal industry that could preserve thousands of jobs in central North Dakota, while many in the state’s environmental community view that prospect as a very expensive pipe dream.

To achieve economy-wide carbon neutrality, North Dakota would have to balance its total carbon emissions — from its energy sector but also from more diffuse sources like cars on the road — with an equivalent volume of carbon stored or put to alternative uses. Annual, energy-related carbon dioxide emissions in North Dakota total about 59 million tons, according to 2018 estimates by the U.S. Energy Information Administration, a figure that pales in comparison to the up to 252 billion tons of potential storage space the EERC estimates is underneath North Dakota. To neutralize North Dakota emissions, Burgum envisions not only capturing and storing much of the state’s own carbon dioxide, but stockpiling similar quantities from other states.

Paving one path on that front is a massive, proposed pipeline network that would connect dozens of ethanol plants across the Midwest and coalesce their carbon dioxide in North Dakota, where it would be stored permanently underground. That project, announced earlier this year by the Iowa-based Summit Carbon Solutions and projected to begin operating by early 2024, would represent a 25% increase in the annual volume of carbon dioxide stored globally today.

Jon Probst, managing director of investment at the parent company Summit Agricultural Group, said he expects the volume of their ethanol carbon hub to keep growing. As new partners have signed on since their initial announcement in February — bringing the current total to 31 ethanol plants — the project's estimated cost has more than doubled, to $4.5 billion. With current commitments, the company plans to inject 20% of the ethanol industry’s annual emissions into the Williston Basin. And if the federal government expands incentives for carbon storage, Probst said Summit hopes to loop in other industries like fertilizer production and even power plants.

Until a few years ago, there was virtually no business case for carbon storage. That changed with the creation of a federal tax credit that rewards companies for sequestering their carbon dioxide underground. Established in 2018 at $50 to the ton of stored carbon dioxide, the program has spurred several dozen carbon capture ventures around the country in the last few years, according to a Clean Air Task Force tracker .

When it comes to the cost efficiency of carbon capture, Gorecki explained that the game is in the concentration of carbon dioxide. Ethanol fermentation releases a highly pure emissions stream made up almost entirely of carbon dioxide, making the gas relatively cheap and easy to capture. The emissions from burning coal, on the other hand, include just fractional portions of the greenhouse gas that require complex engineering jobs and expensive operations to efficiently sieve.

Gorecki and Crabtree said carbon capture ventures at coal plants are on the verge of closing the gap that would allow coal plants to profit off these federal tax credits. “All of that stuff has been advanced and advanced and advanced,” Gorecki said of the engineering challenges, “to the point where we should be really close.”

Other analysts are skeptical. Dewar said the most promising carbon capture projects can take advantage of multiple government incentives, with ethanol-focused efforts like Summit Carbon Solutions potentially able to cash in on both federal tax credits and state-level programs like the low-carbon fuel standard in California. Even if Congress bumps up the federal tax credit value — a possible inclusion in their massive infrastructure package — Dewar argued that it likely still wouldn’t be enough to put carbon capture at coal plants “in the money.”

“There really is not a business case yet today, or anywhere close to it, to make those investments,” he said.

Carbon capture comes in many forms, but one reason for the technology’s recent hype is the promise of federal payments simply for burying carbon dioxide. While the engineering process can be complex, the objective for many of the carbon capture proposals in North Dakota, like Project Tundra and Summit Carbon Solutions, is simple: collect payments for putting carbon dioxide into the earth and keeping it there.

But the federal tax program also pays a lesser credit for carbon dioxide stored through an alternative use. Carbon capture’s “biggest prize,” Burgum attested when he announced the 2030 carbon neutral target, is in “enhanced oil recovery,” a process state leaders hope could be a double windfall to North Dakota’s coal and oil industries. Under the tax program, companies can cash federal payments for storing carbon dioxide in old, declining oil wells, where the mix of carbon dioxide and oil underground galvanizes production.

The Texas-based company Denbury Inc. is working on a pipeline expansion to deliver carbon dioxide from Wyoming for enhanced oil recovery in southwest North Dakota, and greenhouse gas output from the financially-troubled Great Plains Synfuels Plant near Beulah has been piped north to boost Canadian oil fields for years.

Burgum has touted the practice as an incentive for the state to import carbon dioxide in huge volumes, as well as an avenue to achieve carbon negative oil production.

Today, about 40 million tons of carbon dioxide are captured and stored globally each year, according to a November report by the Global CCS Institute . There are 12 commercially-operating carbon capture projects in the United States, all but one of which are geared toward enhanced oil recovery.

But the federal tax credits have prompted research and broad investor interest in other applications of the technology. Many permits are pending in Washington, and, in North Dakota, an ethanol plant near Richardton is awaiting regulatory clearance for the state’s first injection well. While carbon capture has largely been used for boosting oil field production in the United States, Crabtree said recent proposals have trended dramatically toward simple storage.

When it comes to coal power, only two projects have ever successfully captured and stored carbon dioxide at commercial scale, one just over the border in Saskatchewan and the other in Texas. Dewar noted that both were made possible because of large-scale government and corporate commitments, and both ran into costly engineering problems.

But even though neither of these projects was market-driven, Dewar argued that they successfully demonstrated the application and feasibility of carbon capture technology. Today's new ventures — or those that survive the fundraising wringer — should help to further shave costs and improve reliability.

"The more you do it, the more you learn, you do it better the next time,” Dewar said.

Readers can reach Forum reporter Adam Willis, a Report for America corps member, at awillis@forumcomm.com.