Louisiana is one step closer to issuing its own permits for carbon sequestration projects after getting the initial green light from federal regulators, a move that could speed up the carbon capture and storage (CCS) rollout on the US Gulf Coast.
The US Environmental Protection Agency, which regulates underground CO2 storage in 48 states, issued a proposed rule on April 27 that would hand that authority within the state's borders to Louisiana. If finalized, Louisiana would be able to permit and oversee its own "Class VI" wells, used to inject CO2 underground to reduce the impact of the planet-warming gas.
The infrastructure is a necessary component of plans by dozens of companies to capture their emissions and sequester them, which would make them eligible for federal tax credits for carbon capture. But the EPA has issued only two Class VI well permits to date, both in Illinois, and has more than 50 applications pending.
Nearly half of those applications are in Louisiana, a state with both a high concentration of heavy emitters and geology suited for underground CO2 storage. Applicants include subsidiaries of Occidental Petroleum Corp. and Shell PLC.
Other CCS developers in Louisiana have yet to apply for permits, including Air Products & Chemicals Inc., which is building a $4.5 billion blue hydrogen plant in Ascension Parish, La. The company plans to capture more than 5 million metric tons of CO2 annually from the facility and inject the emissions beneath nearby Lake Maurepas.
Industry watchers say the EPA's slowness to permit Class VI wells has been a major bottleneck in CCS deployment that could be sped up by granting states primacy, or regulatory authority. Two states, North Dakota and Wyoming, have applied for and secured primacy so far, with an average wait time in North Dakota of about seven months for a Class VI permit. By comparison, the two EPA permits in Illinois each took about six years to process.
Three other states — Arizona, Texas and West Virginia — have Class VI primacy applications pending, according to the EPA.
Louisiana's pending approval "gives us an edge over other states," Sen. Bill Cassidy (R-La.) said in a statement. The senator had pushed the Biden administration for a timely decision on the application, which Louisiana submitted in 2021.
Jessie Stolark, executive director of CCS advocacy group Carbon Capture Coalition, also lauded the EPA's conditional application approval for Louisiana.
"Timely and effective Class VI permitting is an essential component to scaling carbon storage opportunities, and the broader carbon management industry, at the pace required to meet midcentury climate targets," Stolark said in an email.
The EPA said in an April 28 news release that Louisiana's Class VI program, which the state outlined in its primacy application, "meets all requirements for approval." The agency will hold a June 15 public hearing on the proposed rule in Baton Rouge, La.
"It remains to be seen how the public will approach EPA's proposed approval of Louisiana's primacy application, but given increasing opposition to or concerns regarding CCS voiced by environmental groups and certain other stakeholders, it would not be surprising if there will be significant public comment," Vinson & Elkins LLP said in a May 1 research note.
The law firm said a final rule may not come until fall 2023 at the earliest.
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