History and Safety

In part five of our carbon pipeline series, we look at the history of pipelines and the regulations behind them.

- By Alex Gray

As the ethanol industry seeks to decarbonize, to meet tax credit requirements, pipeline companies are planning to establish routes across the Midwest. Those pipelines are intended to transport and sequester carbon dioxide (CO2) generated during ethanol production, allowing ethanol plants to take advantage of tax credits.

The Inflation Reduction Act (IRA) of 2022 expanded the 45Q tax credit. According to documentation from the Iowa Corn Growers Association, this credit incentivizes carbon capture and sequestration (CCS), with the federal government providing funding as follows:

• $85 per metric ton (17¢ per gallon of ethanol) for CO2 permanently sequestered underground; and

• $60 per metric ton (12¢ per gallon of ethanol) for CO2 used for enhanced oil recovery or other industrial uses.

The 45Z tax credit specifically incentivizes fuel producers to lower their carbon intensity (CI) scores to 50 or lower. For on-road vehicles, 45Z offers 2¢ per gallon, up to $1 per gallon for every CI point reduction below 50.

For sustainable aviation fuel, 45Z offers 3½¢ per gallon, up to $1.75 per gallon for every CI point reduction below 50.

Growing a Pipeline

The first large-scale CO2 pipeline in the U.S. was the Canyon Reef pipeline, established in the 1970s for use during the enhanced oil recovery process in the Permian Basin in Texas. Pipeline infrastructure grew to around 3,000 miles during the early 2000s. Now, there are over 5,300 miles of carbon pipelines in the country, according to the U.S. Department of Transportation.