North Dakota bill would benefit CCS projects at ethanol plants

By Erin Voegele | January 25, 2021

Representatives of the North Dakota ethanol industry on Jan. 20 testified in favor of a bill that aims to create a sales and use tax exemption for carbon dioxide used for secure geologic storage. The state’s senate voted in favor of the bill the following day.

The legislation, Senate Bill 2152 was introduced on Jan. 8 and referred to the Senate Finance and Taxation Committee. The committee held a hearing on the bill on Jan. 20. Members of the North Dakota Senate voted 47 to zero in favor of the bill on Jan. 21. The North Dakota House will now address the legislation.

Lance Gaebe, executive director of the North Dakota Ethanol Producers Association; Gerald Bachmeier, president of the NDEPA and president and CEO of Red Trail Energy LLC; and Jeff Zueger, member of the NDEPA and CEO of Midwest AgEnergy, submitted testimony in favor of the bill during the Jan. 20 hearing.

In his written testimony, Gaebe stressed that the exemption of tax on the sales of carbon dioxide that will be geologically stored will provide additional value for the products North Dakota’s six ethanol plants produce. 

The state already exempts carbon dioxide used for enhanced oil recovery from sales and use tax. SB 2152 provides clarification that the same tax treatment can be extended to carbon dioxide used for secure geologic storage. “This bill would help shore up the carbon capture projects, and accompanying business models, the ethanol industry is actively formulating and building to add more value to agriculture,” Gaebe wrote.

Bachmeier noted that Red Trail Energy is currently working on a major carbon capture and storage (CCS) project. “This investment will provide an additional revenue opportunity for our company because we can capture and store the CO2 we would normally vent and improve the carbon intensity value of the ethanol we produce,” he wrote. “We will receive more for our ethanol from some markets and estimate the economic impact of this project to be tens of millions of dollars per year.”

MidWest Ag Energy is also developing a CCS project at its Blue Flint Ethanol facility. “This bill is important to the continued development of that project as it is contemplated that our CO2 will be transacted as part of a partnership to develop our project,” Zueger wrote. “The CO2 transaction is simply a mechanism to separate the production of CO2 from the storage of CO2 and we believe should not be a taxable event as the CO2 is simply going to be injected into the earth as opposed to being released into the atmosphere as occurs today.”

Additional information on the bill and full copies of written testimony is available on the North Dakota legislature website