US ELECTIONS: South Dakota on track to veto CO2 pipe law backed by Summit, ethanol producers

South Dakota voters were on track to reject a package of CO2 pipeline regulations intended to help carbon capture companies secure the social license to operate, dealing a blow to biofuel producers and project developer Summit Carbon Solutions.

About 60% voted on Nov. 5 to repeal the legislation, known as Referred Law 21, according to unofficial results from the South Dakota Secretary of State website, with 89% of precincts reporting. About 40% of South Dakotans voted in favor of keeping the CO2 pipeline law, which the state legislature and Governor Kristi Noem approved in March.

South Dakota does not currently have CO2 pipelines. The repeal comes as Summit is trying to permit a 2,500-mile pipeline across the US Midwest to transport CO2 from ethanol plants and other emitters to an underground storage site. The developer has already signed agreements to offtake CO2 from dozens of sources, including a sustainable aviation fuel project called Net-Zero 1 in Lake Preston, South Dakota, that was recently backed by the Biden administration.

Referred Law 21 would have allowed South Dakota counties to impose a surcharge of $1 per foot of CO2 pipeline crossing their jurisdictions and would make the pipeline company liable for any damage. The law also included a "landowner bill of rights" outlining the minimum responsibilities of the pipeline operator and terms of the easement agreement.

South Dakota Republican leaders had touted the law as a compromise between the affected counties and Summit, which applauded its original passage.

However, the legislation disappointed some landowners who had sought a state ban on eminent domain for CO2 pipelines. By July, the opponents had gathered enough signatures from South Dakota voters to spur a referendum on the pipeline law.

The repeal does not prevent Summit or other carbon capture developers from building in the state. However, supporters of Referred Law 21 had argued that a repeal would antagonize CO2 pipeline development and hurt the ethanol industry. Ethanol producers see the infrastructure as key to reducing their carbon footprint, allowing them to gain access to low-carbon fuel markets on the West Coast and federal subsidies.

Net-Zero 1 developer Gevo Inc., POET and other biofuels producers collectively contributed more than $2.5 million to the “Vote Yes for a Strong South Dakota” committee, according to campaign finance disclosures.

Committees that opposed Referred Law 21 received more modest contributions from individuals, farm owners, a few county Republican parties and Jane Fonda Climate PAC.