The Necessity of Carbon Dioxide Pipelines
For quite some time, I have wanted write about carbon capture. This is a big topic, and so instead of attempting a broad overview, I will look at the specific issue of carbon dioxide pipelines. We will look at the context of CO₂ pipelines within efforts to develop carbon capture, why they are controversial, and what the way forward may be.
Carbon capture and storage/sequestration (CCS) or carbon capture, utilization, and storage/sequestration (CCUS) is a technique to remove CO₂ from an exhaust stream of an industrial process and either use it for some other purpose or sequester it in geologic storage. The exhaust stream may be from a coal or natural gas power plant, a steel mill, a cement plant, or anywhere that carbon-intensive fuels are combusted. An emerging strategy is to capture CO₂ from the ambient atmosphere and is called direct air capture. DAC is most likely necessary to reduce atmospheric CO₂ concentration under any credible climate stabilization policy, though it is much more expensive and energy-intensive than other forms of CCS because CO₂ concentration in the atmosphere is lower than in concentrated waste streams.
CC(U)S is controversial. Supporters argue that fossil fuels will remain part of the world energy mix for the foreseeable future, especially in direct industrial uses such as heat; reducing the negative environmental impacts of fossil fuels is necessary; and carbon capture in many cases is the most credible strategy for doing so. Critics argue that CCS prolongs the usage of fossil fuels by eliminating the impetus to phase them out, thereby increasing emissions in the long run. I take the former view for reasons that are beyond the scope of this post, but the issue is important to understand when we get into the controversies and permitting issues around CO₂ pipelines.
The Global CCS Institute explains how carbon capture works here. The most prevalent use of captured CO₂ is enhanced oil recovery, with other uses in the food industry, beverage carbonation, and various other applications. Emerging and proposed uses include aggregates and cement, synthetic fuels and methanol, carbon-based materials, and algae growth. So far, these alternate uses have struggled to gain traction. The Global CCS Institute reports that world CCS facilities have a capacity to capture 49 million tons of CO₂ per year—about 0.1% of world emissions—and there are an additional 312 million tons of capacity in various stages of the development pipeline.
The facilities that capture CO₂ and the facilities that use CO₂, including sites of geologic sequestration, are not the same, and so there is a need to transport CO₂ from the former to the latter. In theory, a CO₂ user could use direct air capture to generate the CO₂ they need on-site, but I would guess it more likely that under the DAC route, DAC facilities would be large and centralized, like a solar farm or a wind farm, and thus transportation would still be needed. Pipelines are the most prevalent means of doing so, and that is likely to remain true.
Federal support for CCS in the United States is governed mainly by a section of the tax code known as 45Q. The tax credit was created under the Energy Improvement and Extension Act of 2008, expanded under the Bipartisan Budget Act of 2018, and expanded again under the Inflation Reduction Act of 2022 to up to $85 per ton captured, depending on whether certain labor requirements are met. Most mainstream estimates of the social cost of carbon fall between $50 to $100 per ton, as do most estimates of CCS costs from various industrial point sources. The 45Q credit for direct air capture may be higher than this, as is its cost.
As of 2023, the United States has a CO₂ pipeline network extending 5,385 miles and with a capacity of 80 million tons of CO₂ per year. The network crossed the 5000 mile mark in 2013 and has remained mostly stagnant since then. One would think, given the expansion of 45Q and general heightened interest in CCS, that the network would be expanding. Here, Daniel Walsh assesses that all phases of a CCS project, including bidding, permitting, and construction, including of necessary infrastructure such as CO₂ pipelines, can take up to 160 months, or more than 13 years. By comparison, seven years elapsed between President Kennedy’s “We choose to go to the moon” speech and the landing of Apollo 11. It thus remains to be seen the impact of 45Q on pipeline capacity, but expanded capacity is almost certainly necessary for CCS to expand substantially.
Opposition to CO₂ pipelines is as fierce as opposition to any other kind of infrastructure. The issue was a difficult one for Republicans in the 2024 primary campaign, with Vivek Ramaswamy opposing them—invoking the “climate change is a hoax” line and issues of eminent domain—and other candidates ducking the issue. Legacy environmental groups such as the Sierra Club oppose them, along with carbon capture in general, with the classic trope of monied interests against the environment. And then there is good old-fashioned NIMBYism.
Along with interests for reducing CO₂ emissions, the ethanol industry has been the major advocate for CO₂ pipelines. Ethanol plants were recently assessed to be one of the cheapest sources from which CO₂ might be captured, at $55 per ton or less, and 45Q tax credits are an important feature of the industry’s business model.
Safety is one of the biggest issues invoked by pipeline opponents. On February 22, 2020, a CO₂ pipeline rupture near the town of Satartia, Mississippi forced the evaluation of ~200 residents and caused 45 hospitalizations and 0 fatalities. A study last year found that from 2004 to 2021, there were $5.87 million dollars of damages from CO₂ pipeline failures, over half of which resulted from the Satartia incident.
I don’t want to be cavalier about injuries and the risk of fatalities, but the danger needs to be placed in perspective. The paper assessed that the economic risk is on the order of $2 million per year. This is higher than observed damages in all years except 2020, which may be appropriate given the nature of kurtosis risk. If pipeline capacity increased by about a factor of 40, then all CO₂ emissions from point sources in the United States could be captured and transported. Then the economic risk would be $80 million, assuming no reduction per-mile of pipeline. A report from Greenpeace (take the trustworthiness of this source for whatever you will) finds $600 billion of damages—nearly 8000 times as much—from coal burning in the United States per year, as well as 230,000 premature deaths per year.
Looking at it another way, $2 million of economic risk for 80 million tons of CO₂ transport is a cost of about $0.25 per ton, about 0.25% to 0.5% of mainstream estimates of the social cost of carbon. Sensationalist reporting about dangers from CO₂ pipelines thus cross the line into fearmongering.
Due to opposition, several CO₂ pipelines have been cancelled recently, including the Heartland Greenway project from Navigator CO₂ Ventures. This would have been a network of pipelines, sourced from ethanol plants in the Midwest and Great Plains, with a capacity of 15 million tons per year.
For these reasons, groups such as the Energy Futures Initiative—a project of Ernest Moniz, Secretary of Energy during Barack Obama’s second term—call for federalization of permitting of CO₂ pipelines. This paper calls for federalization of permitting and eminent domain for new CO₂ pipelines, as is now the case with natural gas pipelines, and the Biden administration made a similar proposal last year.
Permitting reform is a complicated subject, and it applies to many more areas than CO₂ pipelines. Federalization is, in and of itself, not a complete answer. The National Environmental Policy Act, for instance, is notorious as a source of lengthy and expensive reviews and as a platform for obstructionist litigation. I can’t attempt to do the topic justice today.
The biggest problem I see, though, is that permitting has become a tool for the pursuit of broad policy goals that have failed through the transparent, democratic process. Carbon capture, and in particular credits under 45Q, has been affirmed by Congress multiple times and under presidents of both major parties. The idea that CCS should be blocked so as to foreclose the route of global warming free fossil fuels and thus compel governments to ban fossil fuels is not grounded in reality and would not even come close to being enacted under anything resembling an open, democratic process. Yet this is the strategy pursued by most legacy environmental groups, and this strategy will succeed without significant permitting reform. Well, partially succeed. We will find that the alternative to fossil fuels with CCS is not renewable energy; it is fossil fuels without CCS.
There are alternatives to CO₂ pipelines for the transportation of carbon dioxide. A recent report from the Department of Energy assessed that average transportation costs for CO₂ are $5-25 per ton for pipelines, $14-25/ton for shipping, and $35-60 for truck and rail. Shipping is obviously not possible for Midwest and Great Plains ethanol refineries, and so the alternative is more expensive, but still feasible, vehicle transportation.
Aside from circumventing obstructionism, a recent article argues that rail transport may be cheaper than pipeline transport for small volumes (less than 2 million tons) over short distances, which might apply to ethanol refineries. Truck transport is assessed not to be as attractive.
There may be a lesson from Yucca Mountain here. The U.S. government spent decades and billions of dollars trying to develop Yucca Mountain as a site for geologic storage of nuclear waste, against intense ideological opposition and NIMBYism, while numerous other solutions exist for what is a minor problem. Climate change induced by CO₂ emissions is a much more serious problem than nuclear waste, but it too is a problem that will be solved more easily when advocates are creative with solutions, rather than fixated on a single solution.
The above discussion on permitting reform notwithstanding, I have my doubts as to how far CCS will get, even with permitting reform, tax credits, and all other reasonable policy support. Solutions like nuclear power, wind, solar, electric vehicles, heat pumps, hydrogen-reduced steel, and so on all can, at least in theory, become dominant technologies without public support if the technology and industry structure develop sufficiently. Carbon sequestration, by contrast, will never stand on its own without public support. I am unable to see any realistic pathway under which carbon utilization stands on its own without support.
But as I’ve said here before many times, I regard some form of carbon pricing as the only credible pathway to broad emissions reductions. Tax credits such as 45Q are a kind of de facto carbon pricing, at least for a specific application, though I would say that it remains to be seen how effective they will be in inducing CCS.
Quick Hits
I’ve given this section the short shrift lately, and so today I will make up for that.
Last year, an analysis at the Wilson Center found that both political and militant Islamism are doing poorly in the 2020s, both with Islamist political parties doing badly in elections and those that are succeeded downplaying explicitly religious policies. It remains to be seen (yeah, I know I say that a lot) whether this is a blip or the start of a lasting trend. However, recent surveys have found sharply increased rates of secularism in the Middle East and in Iran, which to me suggests the latter.
In time for the anniversary, ProPublica has published a piece on possible Saudi involvement in the September 11 attacks, as well as insinuating that upper echelons of the FBI and the CIA worked to suppress investigations of the involvement of Saudi officials, which is why is has taken more than 20 years for the question to be taken seriously. ProPublica also reported on the lawsuit last year, and on an FBI report suggesting connections that was declassified in 2021, and in 2020, on Operation Encore, the investigation of a small FBI team into Saudi complicity. ProPublica deserves gratitude for their ongoing reporting on this issue.
At Foreign Affairs, Max Boot is skeptical of the idea that Ronald Reagan won the Cold War. The piece is interesting but a bit confusing to me. Is Boot arguing against the idea that Reagan’s hawkish policies in the first term, especially the arms build up, the Strategic Defense Initiative, and support for anti-communist rebels in Afghanistan and Nicaragua are the primary cause for the fall of the Soviet Union? If so, I would find that convincing, but this may be a strawman position. If instead he is making the stronger claim that Reagan’s hawkish policies had no significant effect on the longevity of the Soviet Union, then I find that much less convincing. Boot recently published a biography on the 40th president. I find it remarkable how rapidly Reagan’s historical reputation has changed, with his transformation from a near-mythological figure in the Republican Party in 2012 to one who has been forgotten, if not openly repudiated, four years later.
John Cochrane (the Grumpy Economist) calls into question the common wisdom that high interest rates lead to lower inflation, especially in the long run. The post is long and full of technicalities that I don’t fully understand. But the final paragraph is especially intriguing.
A last thought: Throughout all of macroeconomics, the economic damage of recessions comes entirely because prices are sticky. If prices were flexible, monetary policy would result in costless inflation, instantly, and no unemployment. Economists and central bankers take “stickiness” as given and go on to advocate complex policies that take advantage of them. But if sticky prices are the key economic problem causing all the pain of recessions, why does essentially nobody advocate policies to unstick prices? Instead we have intervention after intervention to make prices more sticky: price controls, rent controls, union support, and so on. Similarly, if bond markets are routinely “dysfunctional,” should we not figure out why and fix them, rather than use this as an excuse for central banks to go on a shopping spree?
Most of the world is experiencing falling birth rates, and North Korea is no exception, having also fallen into sub-replacement territory, though not as deeply as their neighbors China, Japan, Russia, and especially their counterpart, South Korea. Given uncertainties around birth rate numbers in China and India, I would not be confident that North Korea’s are reported accurately. Micah McCartney at Newsweek reports that North Korea is responding by cracking down on providers of abortion and contraception. A few months ago, I discussed how Romania, under Nicolae Ceaușescu, experienced a rebound in birth rates after implementing similar policies, but only temporarily and at great social cost. Whatever your theory is of falling birth rates, a good test is whether it can explain North Korea.
And finally, fans of the 1995 cult classic Earthbound, a role-playing game for the Super Nintendo Entertainment System, will appreciate this fan rendition of the Runaway Five’s performance in Fourside. The Runaway Five is an in-game blues band that is based on the real-life Blues Brothers.
Money, that's what I want.
Money, that's what is hot.
Money, that's what I want.
Money, it's what we ain't got,
'cept freedom, freedom, freedom is what we've really sought!