Bill to give tax breaks to carbon capture facilities runs into opposition

A Mississippi pipeline burst, causing people to act like ‘zombies’

By: - February 8, 2022 4:45 am

Ethanol plants consume about 40% of the nation’s corn crop, but are seeking to ship off carbon emissions via pipelines to make their product more environmentally friendly. (Scott Olson/Getty Images)

LINCOLN — A bill to ensure that Nebraska ethanol plants can qualify for state tax incentives for building carbon-capture facilities is running into opposition from a leading environmental group.

The Bold Alliance, which includes Bold Nebraska, the group that led the fight against the Keystone XL crude oil pipeline, testified last week against a proposal to ensure that state ImagiNE Act tax breaks are allowed for the “capture, transport or geologic storage” of carbon dioxide, a leading greenhouse gas.

At least two companies are looking at building CO2 pipelines that cross Nebraska. The pipelines would transport the gas in liquid form, under high pressure, from ethanol plants and other manufacturers to storage deep underground.

Tax breaks ‘unnecessary’

A representative from the Bold Alliance testified at a legislative hearing Wednesday that it is unnecessary to provide tax breaks for projects that are already planned in the state and that such CO2 pipelines are risky and subject to no state regulation.

Advocates for the tax breaks said building carbon storage facilities will help the state’s ethanol industry attain a “greener” rating, which will improve sales to states like California and Oregon that are seeking more environmentally friendly fuels.

State Sen. Dan Hughes
State Sen. Dan Hughes of Venango (Courtesy of Unicameral Information Office)

The debate comes a year after state lawmakers passed a law allowing carbon storage facilities in the state.

This year, State Sen. Dan Hughes of Venango introduced Legislative Bill 801, which he said will clarify that Nebraska’s ethanol plants can get tax incentives if they build a storage facility on their own property.

‘A very big deal’

Hughes said current law provides incentives for CO2 pipelines that cross state borders but does not allow tax breaks for CO2 facilities that service only in-state customers. Tony Goins, the director of the Nebraska Department of Economic Development, gave that same assessment to the Legislature’s Revenue Committee during the public hearing.

Hughes said LB 801 would clarify that Nebraska’s ethanol plants would get the same tax credits, if they decided to build a carbon storage facility.

“It’s a very big deal,” the senator said. “It would certainly give Nebraska ethanol plants a greener rating to sell ethanol in the California and Oregon markets.”

Ken Winston, testifying for the Bold Alliance, said state tax incentives should be provided to attract new businesses and new jobs to the state, not to benefit projects that have already chosen to locate here. Winston also questioned the long-term viability of CO2 pipelines as the world transitions to electric vehicles and away from gas-powered engines.

Siting, routing regulations urged

He said that carbon pipelines can be dangerous, pointing to an incident two years ago in Satartia, Mississippi. A high-pressure pipeline carrying carbon dioxide mixed with hydrogen sulfide burst, releasing gas and leaving some residents confused, choking or unconscious. Forty-five people were sent to local hospitals.

State Sen. Eliot Bostar
State Sen. Eliot Bostar of Lincoln (Craig Chandler/University Communication)

Victims who inhaled the gas became disoriented and acted like “zombies,” one first responder told the (Jackson, Mississippi) Clarion Ledger.

Winston said that if lawmakers want to give tax incentives for such pipelines, the state should first enact regulations for siting and routing them and for reclamation of land. 

Lincoln Sen. Eliot Bostar has introduced LB 1186, which would regulate CO2 pipelines in the same way the Keystone XL was subject to route approval. 

Bostar said his bill would also set up a trust fund financed by pipeline firms so that if landowners wished to have a CO2 pipeline removed after it was shut down, funds would be available to do that.

One company, Summit Carbon Solutions, already began contacting Nebraska landowners last year. It is planning a $4.5 billion pipeline across five states to pipe CO2 to western North Dakota, where it would be sequestered deep underground.

The Revenue Committee took no action on LB 801 after the public hearing. But Bostar said he is working on an amendment to the bill to rule out tax breaks for pipelines but allow them for carbon storage facilities.

The Lincoln senator said he is in favor of anything that will reduce carbon emissions.

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Paul Hammel
Paul Hammel

Senior Reporter Paul Hammel has covered the Nebraska Legislature and Nebraska state government for decades. He started his career reporting for the Omaha Sun and later, editing the Papillion Times group in suburban Omaha. He joined the Lincoln Journal-Star as a sports enterprise reporter, and then a roving reporter covering southeast Nebraska. In 1990, he was hired by the Omaha World-Herald as a legislative reporter. Later, for 15 years, he roamed the state covering all kinds of news and feature stories. In the past decade, he served as chief of the Lincoln Bureau and enterprise reporter. Paul has won awards for reporting from Great Plains Journalism, the Associated Press, Nebraska Newspaper Association and Suburban Newspapers of America. A native of Ralston, Nebraska, he is vice president of the John G. Neihardt Foundation, a member of the Nebraska Hop Growers and a volunteer caretaker of Irvingdale Park in Lincoln.

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