Summit is one of three CO2 pipelines proposed to be built in Iowa.
A project to build a giant pipeline to remove carbon produced by the corn-based ethanol industry struck its first agreement to sell carbon-removal credits — part of a broader push to improve the green credentials of the fuel.
Summit Carbon Solutions, which is seeking permission to build the $5.5 billion pipeline through the heart of America’s Corn Belt including Iowa, said it will sell credits valued at up to $30 million to NextGen CDR Facility, a joint venture of Japanese conglomerate Mitsubishi and climate consultancy South Pole.
Each carbon credit represents 1 ton of carbon dioxide removed from the atmosphere. The credits then can be sold to other individuals or businesses to essentially buy down their own greenhouse gas emissions.
Together with two other deals that the joint venture announced this week, the transactions equal a quarter of all certified carbon removals to date, according to NextGen. Specific prices weren’t disclosed.
The corn-based ethanol industry, which has long fought claims from some opponents that the biofuel is worse for the planet than gasoline alone, is ramping up efforts to be more competitive in a rapidly shifting energy economy. Low-carbon fuel markets like California, as well as federal government incentives, are motivating producers to seek ways to hit net-zero or even negative carbon emissions.
For Ames-based Summit, the deal is part of its plan to monetize the potential environmental benefits of the project, which it hopes to have up and running by the first half of 2025 to tap potentially lucrative U.S. tax incentives. The firm says it will be the world’s largest carbon removal project, able to capture, transport and securely store up to 18 million tons of emissions a year from ethanol plants and other emitters. That’s the equivalent of about 4 million gasoline-powered cars.
The Summit pipeline is one of three CO2 pipelines proposed in Iowa, meant to capture carbon dioxide produced by ethanol plants and other industries and ship it to other states to be sequestered underground.
The Summit pipeline has more than two-thirds of landowner approvals needed for its route across five U.S. Midwestern states, though it faces opposition from environmentalists and some farmers citing concerns over safety and property rights. Summit has asked the Iowa Utilities Board to grant it eminent domain authority, which would allow it to force unwilling landowners to grant it easements for its route through the state — leading to protests and attempts by lawmakers to limit the authority.
Supporters say the pipeline would ensure ethanol’s value in an increasingly crowded market for low-carbon fuels, boosting profits for biofuel producers and corn farmers.
““Carbon is the next great commodity,” Summit Carbon Chief Executive Officer Lee Blank said in an interview. “It’s the next frontier for agriculture.”
While carbon removal technologies remain controversial — some argue the efforts are costly and only extend the life of fossil fuels — supporters say incentives in the Inflation Reduction Act are transformative enough that the technology is ready to take off.
The trio of deals that NextGen unveiled this week amounts to 193,125 metric tons of technological carbon removals. One is an agreement to buy carbon-removal credits from 1PointFive, a unit of Texas-based Occidental Petroleum that’s developing the world’s largest direct-air capture plant. It would remove carbon from the atmosphere and then pump it underground.
NextGen is seeking to secure more than 1 million tons of carbon removals by 2025 with captured emissions being stored by 2030 for more than a millennium. The average target price for NextGen’s portfolio is $200 a ton, according to Philip Moss, NextGen chair and head of tech carbon removals at South Pole. The venture is backed by companies including UBS and Swiss Re, who have also agreed to buy credits.
While Moss acknowledged the skepticism around how carbon-removal methods are measured, he stressed the venture’s emphasis on transparency and third-party verification.
“We have a lot of confidence around the ability to gauge how much carbon we are actually taking out of the atmosphere and putting underground,” Moss said.
