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‘It’s about property rights’: Some farmers resent ethanol industry’s push for carbon pipelines

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‘It’s about property rights’: Some farmers resent ethanol industry’s push for carbon pipelines

May 05, 2023 | 6:05 pm ET
By Joshua Haiar
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‘Its about property rights’: Some farmers resent ethanol industry’s push for carbon pipelines
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Craig Schaunaman, who farms thousands of acres near Aberdeen, looks out over his family farm. (Joshua Haiar/South Dakota Searchlight)

ABERDEEN — Craig Schaunaman, who farms thousands of acres, has been invested in the ethanol industry since its early days and even served on the board of an ethanol plant. 

But a carbon-capture pipeline supported by dozens of ethanol plants would cross his land, and he’s against it, even though ethanol officials say the pipeline is crucial to the future viability of the industry.

“Eminent domain should not be used for a private company’s gain,” Schaunaman said.

Schaunaman received a letter in mid-2021 from Summit Carbon Solutions, one of the companies planning to build a carbon-capture pipeline across the Midwest, requesting permission to conduct surveys on his land that would involve digging.

“I told them they were not allowed to do surveying without compensation,” he said. 

By the fall of 2021, Summit approached him with an initial offer that he considered “under market value” to place a permanent easement on his land. By May 2022, the company had offered him “three times as much,” but Schaunaman remained adamant about not allowing the construction of a pipeline carrying potentially hazardous liquified carbon dioxide on his property, saying, “It’s about property rights for me.” He declined to disclose the amounts of the offers. But he, like some other farmers, has an active lawsuit against Summit Carbon Solutions claiming the company doesn’t have a right to enter their land.

‘It’s about property rights’: Some farmers resent ethanol industry’s push for carbon pipelines
Craig Schaunaman sifts through his well-organized file of paperwork. (Joshua Haiar/South Dakota Searchlight)

In South Dakota, where two of every three ears of corn are turned into ethanol, Schaunaman isn’t the only corn farmer on a proposed carbon-capture pipeline route who says the ethanol industry is putting profits over property rights.

Ed Fischbach, a corn farmer near Mellette, never received an initial offer from Summit Carbon Solutions, because he signed on with a lawyer representing opponents of the project as soon as he could.

“I made it very clear in the very beginning that I was against it,” Fischbach said. “The ethanol companies are already making massive profits. They don’t need this to maintain viability.”

However, according to Sioux Falls-based POET, the nation’s largest ethanol producer, pursuing additional profits and higher demand for corn through a carbon-capture pipeline is worth it.

“Bioethanol companies like POET are moving forward with carbon-capture projects because they represent an unparalleled opportunity to create value for family farmers and drive investment in our rural communities,” said Erin Smith, a spokesperson with POET.

Fischbach said it all depends on what people value.

“Ethanol has had its drawbacks, too,” he said. “Land values have gone up, which isn’t good if you’re a young family farmer who has to pay more in taxes. There’s a lot of native grass that got torn up when the ethanol industry became strong, and people started planting corn on more marginal ground.”

Corn and carbon capture

Ethanol, which is typically made from corn, is an additive to gasoline that partially reduces the nation’s reliance on foreign oil. However, while ethanol is a renewable resource, its production still emits greenhouse gases, which trap heat and contribute to climate change. During the fermentation process, organic materials are broken down, releasing carbon dioxide. In addition, the production of ethanol requires fossil fuels for growing, transporting and processing corn.

To address some of that environmental impact, pipelines would capture carbon dioxide emitted from ethanol plants and transport it in liquefied form to be stored deep underground at a carbon sequestration site. The sites are in underground geologic formations where the carbon can be permanently injected. 

The Summit Carbon Solutions pipeline would run about 2,000 miles in total, connecting to 34 ethanol plants across South Dakota, Nebraska, Iowa, Minnesota and North Dakota (and sequestering the carbon at an underground site in North Dakota). It would transport up to 12 million tons of carbon dioxide per year.

Another project, the Heartland Greenway pipeline, would run about 1,300 miles in total, connecting to 31 ethanol plants across South Dakota, Iowa, Minnesota, Nebraska and Illinois (and sequestering the carbon at an underground site in Illinois). It would transport up to 15 million tons of carbon dioxide per year.

The goal of carbon sequestration is to remove carbon dioxide from the atmosphere, to mitigate climate change. It would also enable ethanol plants to sell more of their fuel in states and countries with higher emission standards — like California and Canada.

An ethanol plant near Aberdeen. (Joshua Haiar/South Dakota Searchlight)
An ethanol plant near Aberdeen. (Joshua Haiar/South Dakota Searchlight)

Some corn farmers acknowledge the need to address climate change but oppose building a pipeline that carries a hazardous product on or near their property. 

Liquid carbon dioxide pipelines operate at high pressures, typically around 300 pounds per square inch. That high pressure means any leak or rupture in the pipeline can burst with explosive force and release large amounts of carbon dioxide that displace oxygen quickly, posing a risk to nearby people and animals.

The federal government is currently reviewing safety standards for carbon pipelines, and California lawmakers passed a law barring the construction of new underground carbon dioxide pipelines until those standards are finalized.

“Most of the landowners that are against this thing are investors in the ethanol plants,” Fischbach said. “I don’t think I should have to sacrifice my land or my safety so they can make a few more dollars. That’s wrong. The only way that I will negotiate or talk to them is if I’m forced to.”

Eminent domain

Lawmakers rejected legislation introduced during the 2023 session in Pierre that would have prevented the pipeline projects from using eminent domain — a legal process for obtaining access to land from landowners who aren’t willing to grant it.  

Last month, Summit initiated dozens of eminent domain proceedings in state court — including against Fischbach and Schaunaman. Those are among more than 100 cases of pending state and federal litigation concerning proposed carbon pipelines in South Dakota.

A map of Summit Carbon Solution's proposed carbon-capture pipeline. (Courtesy of Summit Carbon Solutions)
A map of Summit Carbon Solution’s proposed carbon-capture pipeline. (Courtesy of Summit Carbon Solutions)

“I’m being forced to negotiate with a private company, against my will,” Schaunaman said.

Charlie Johnson, who farms land near Madison, is upset about Summit Carbon Solutions suing his landlord.

“I don’t think it’s right for one group of farmers to pirate onto the land of other farmers,” Johnson said. “Maybe we don’t need to be growing so much corn in South Dakota anymore, you know? Maybe we need to start considering more diversity in our crop rotations.”

John Satterfield, regulatory affairs director with Summit Carbon Solutions, said eminent domain has to be on the table; otherwise, no pipeline of any kind would ever get built.

“The expectation that people want to invest in a project like ours, without that tool available, is a misunderstanding of the business,” he said.

Elizabeth Burns Thompson, vice president of government and public affairs with the Heartland Greenway pipeline, said eminent domain is a last resort. Heartland Greenway has yet to leverage eminent domain.  

“It does not save us as a company time or money,” she said, “and it does not make us any friends. It’s only for sheer business purposes at its core.”

The route of the proposed Heartland Greenway pipeline. (Courtesy of Navigator CO2)
The route of the proposed Heartland Greenway pipeline. (Courtesy of Navigator CO2)

Schaunaman said a carbon-capture pipeline differs from other projects that have used eminent domain, like electrical power lines and water and oil pipelines.

“First of all, let’s get back to what eminent domain should be used for: infrastructure that benefits the public,” Schaunaman said. “Sure, a pipeline ‘of this nature’ would never get built, because it’s not for public use.”

The pipeline companies and POET said many farmers support the pipelines.

Summit Carbon Solutions said it has signed easements with 2,700 landowners across the Midwest, including with over 60% of landowners along the pipeline route in South Dakota. The Heartland Greenway pipeline is on a similar track.

Craig Schaunaman said the federal government’s payment of $85 per ton of liquid carbon dioxide stored underground, along with additional tax incentives based on the amount of greenhouse gas emissions captured during production, are the primary incentives driving pipeline projects. He claims that without those incentives, the projects would not be proposed.

“That’s the only thing driving this,” Schaunaman said.

Erin Smith of POET said federal incentives are not the only motivating factors.

“In addition to federal incentives, there is increasing domestic and international demand for climate solutions and lower carbon fuels that will build new local markets and drive economic growth across the Midwest for decades to come,” she said.

Furthermore, the $85 tax credit “doesn’t go on forever,” said Satterfield, of Summit. The credit is valid for 12 years from the start of sequestration.

Other ways to store carbon

There are other ways to sequester carbon within the ethanol production process that do not involve pipelines and sequestration sites. 

During photosynthesis, plants take in carbon dioxide and convert it into sugars and starches. Those compounds are then transported down into the roots and released into the soil, becoming food for microorganisms, in a process that keeps carbon trapped underground for centuries.

Some farmers suggest using the tax credits and federal subsidies to bolster already existing incentives for natural carbon sequestration practices like no-till farming and planting cover crops, which also result in healthier soils, more wildlife and cleaner water. Schaunaman said that would be better than “just pumping it in the ground and giving large corporations tax credits.”

All native grasslands in the country together sequester up to 1 billion metric tons of carbon dioxide each year, according to an estimate by Jim Blackburn, an environmental lawyer and professor who spoke to the Washington Post. The nation’s annual carbon dioxide output was nearly 6.4 billion metric tons in 2021, according to the Environmental Protection Agency.

POET, Summit and Navigator Co2, the company proposing the Heartland Greenway pipeline, all express support for both natural and pipeline-based sequestration methods.

POET said the company already has a program to incentivize cover crops and less invasive tillage practices.

And Burns Thompson with Navigator said by doing “all of the above,” ethanol will become even more valuable, given the lower carbon intensity score as a result. 

“It’s just not enough to produce green fuels,” she said. “We need to be producing green fuels in an increasingly greener fashion.”

The influence of EVs

Former South Dakota U.S. Sen. Tom Daschle played a lead role in passing the 2005 Renewable Fuel Standard. The law set a minimum requirement for the use of ethanol in fuel and made it more attractive for investors and farmers to get involved in making ethanol. Today, the United States is the world’s largest producer of ethanol, having produced over 15 billion gallons in 2021.

A wind turbine spins on a farmer's land near Aberdeen. (Joshua Haiar/South Dakota Searchlight)
A wind turbine on a farmer’s land near Aberdeen. (Joshua Haiar/South Dakota Searchlight)

While industry officials say the future can be even brighter, some pipeline opponents are skeptical that sequestering carbon via pipelines will create a long-term market for ethanol. They point to the worldwide movement toward electric vehicles.

“By the year 2030, they are going to outlaw the sale of any new vehicle that is not electric,” Fischbach predicted. “They don’t want ethanol. They are not going to get into those markets long-term. It’s just another faulty argument to convince people to support this pipeline.”

Schaunaman argues the state should be positioning young farmers for the economy of the future.

“You’re not going to stop the electric vehicle trend,” Schaunaman said. “That’s competition. Our job is to protect farming for future generations.”

That’s what proponents of the carbon pipelines say they’re doing.

Satterfield, of Summit Carbon Solutions, said while hybrids and electric vehicles will eat into ethanol’s market share, demand for green fuels “is not going anywhere anytime soon.”

And Burns Thompson with the Heartland Greenway pipeline said the ethanol industry and pipeline companies are researching what can be done with carbon, beyond sequestration.

“They are looking at how do you take that molecule and process it into a bio-based plastic, fertilizers or potentially new waves of biofuels,” she said. “But CO2 is going to need growth and efficient transportation to be able to do that.”

Whatever happens in the future, Fischbach said one thing has already been made clear to South Dakota farmers and ranchers. 

“Our politicians don’t seem to get the message that using eminent domain for private gain is nothing more than theft,” he said.

Both of the pipeline projects need a permit from South Dakota’s Public Utilities Commission. Public hearings on the permit applications are July 25-Aug. 3 for the Heartland Greenway pipeline and Sept. 11-22 for Summit Carbon Solutions.