Carbon Dioxide (CO2) Pipeline Development: Federal Initiatives

Carbon Dioxide (CO2) Pipeline Development: Federal Initiatives

INSIGHTi

Carbon Dioxide (CO2) Pipeline Development:
Federal Initiatives
June 2, 2023
Carbon dioxide (CO2) pipelines are essential components of carbon capture and storage (CCS) systems
which are proposed to reduce atmospheric emissions of man-made CO2, a greenhouse gas. Approximately
5,000 miles of pipeline already carry CO2 in the United States, primarily linking natural CO2 sources to
oil fields where CO2 is used for enhanced oil recovery. However, a much larger pipeline network likely
will be needed to meet national goals for greenhouse gas reduction. Developers already are seeking
permits for new CO2 pipelines. Summit Carbon Solutions, Navigator CO2 Ventures, and Wolf Carbon
Solutions are developing multistate projects in the Upper Midwest which, collectively, would comprise
over 3,600 miles of new pipeline for carbon capture from ethanol plants. Along with other actions to
promote CCS, the federal government has been advancing initiatives to promote such CO2 pipeline
projects, as discussed below.
Safety Regulation
The Pipelines and Hazardous Materials Safety Administration (PHMSA) within the Department of
Transportation (DOT) has statutory authority over CO2 pipeline safety. PHMSA has long regulated the
construction, operation and maintenance of CO2 pipelines (49 C.F.R. §§190, 195-199). However, a 2020
CO2 pipeline rupture in Satartia, MS, which required a local evacuation and caused 45 people to be
hospitalized, has prompted criticism from pipeline safety advocates that PHMSA’s existing regulations for
CO2 pipelines are inadequate. Safety concerns also have given rise to siting opposition among some
affected landowners and advocacy groups. In response to these criticisms, and findings from its own
Satartia investigation, PHMSA announced on May 26, 2022, that it was initiating a rulemaking to update
its CO2 pipeline safety standards. The agency plans to publish a Notice of Proposed Rulemaking in June
2024, but has not set a date for a final rule. Some stakeholders have expressed concern that developers
may begin constructing new CO2 pipelines before a new rule is finalized.
Financial Support
The Infrastructure Investment and Jobs Act (IIJA, P.L. 117-58) Section 40304 established within the
Department of Energy (DOE) a Carbon Dioxide Transportation Infrastructure Finance and Innovation
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(CIFIA) program for CO2 pipelines. The act authorized and appropriated $2.1 billion for low-interest
CIFIA loans and grants. Although CIFIA has not yet funded any pipeline projects, analysts expect that
developers such as Summit Carbon Solutions would apply for CIFIA funding. President Biden’s FY2024
budget request for CIFIA includes $308 million in direct loan subsidies and $25 million in grants.
The IIJA (Section 40314) also established a DOE program to support Regional Clean Hydrogen Hubs—
demonstration projects involving clean hydrogen producers and consumers and the connecting
infrastructure. Division J, Title III, appropriated $8 billion to support the program. In September 2022,
DOE made a Funding Opportunity Announcement for a first tranche of up to $7 billion to support six to
ten hub proposals that were due by April 7, 2023. DOE plans to announce the projects selected for award
negotiations in fall 2023. Although DOE has not publicly released hub funding applications, several
reportedly include carbon capture (e.g., from methane reforming to produce hydrogen) which could
require the development of CO2 pipelines.
The IIJA (Section 40303) also amended DOE’s existing carbon capture technology program to include
support for front-end engineering and design for CO2 transport infrastructure. Division J, Title III,
appropriated a total of $100 million for the period FY2022-FY2026. On May 17, 2023, DOE announced
$9 million in funding for three projects “to perform detailed engineering design studies for regional CO2
pipeline networks.” The three proposed networks would be located in Wyoming, and along the Gulf
Coasts of Texas and Louisiana.
Siting Authority
Currently, states have primary siting jurisdiction for CO2 pipelines, although federal approvals may be
required for certain pipeline segments (e.g., across federal lands). The USE IT Act (Section 102 of
Division S of P.L. 116-260) clarified CO2 pipeline eligibility for streamlined review of any necessary
federal permits which might be required. The law also directed the Council on Environmental Quality to
set guidance to expedite CO2 pipeline development. Some analysts have asserted, however, that the
absence of overall federal siting authority for CO2 pipelines could be “a significant problem.” Certain
proposals would federalize interstate CO2 pipeline siting, preempting state siting authority, akin to siting
for interstate natural gas pipelines under the Federal Energy Regulatory Commission. On May 10, 2023,
the Biden Administration urged Congress to “address the siting of ... carbon dioxide pipelines and storage
infrastructure and provide federal siting authority for such infrastructure.” Some stakeholders may object
to federalization of CO2 pipeline siting authority, however, contending that CO2 pipeline development for
CCS is relatively new and that there has not been a demonstrated need for federal preemption.
Issues for Congress
Some Members of Congress show ongoing interest in the expansion of the U.S. CO2 pipeline network.
For example, at a March 2023 hearing on pipeline safety of the House Committee on Transportation and
Infrastructure, Subcommittee on Railroads, Pipelines, and Hazardous Materials, the ranking member
stated, “the safe transmission of carbon dioxide to sequester locations is vital to meeting our carbon
reduction goals, and I want to make sure this can be implemented without delay.” In a similar vein, the
Building American Energy Security Act of 2023 (S. 1399, 118th Congress) would include CO2
transportation projects among those eligible for streamlined regulatory review and would prioritize them
as projects of “strategic national importance.”
Given the essential role of CO2 pipelines in CCS systems, economic and regulatory challenges to CO2
pipelines may limit the deployment of CCS. In particular, siting opposition due to safety concerns could
prevent CO2 pipeline development in some localities and increase development time and costs in others.
How and when PHMSA will update its CO2 pipeline safety standards might, therefore, be a key oversight
issue for Congress. Congress also may evaluate whether the financial incentives it has enacted to promote

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CO2 pipeline development are attracting pipeline developers as intended. Additionally, Congress may
monitor the progress of proposed CO2 pipeline projects in securing approvals from local, state, and
federal regulators to determine if further congressional action may be warranted regarding siting and
permitting.

Author Information

Paul W. Parfomak

Specialist in Energy Policy

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