Carbon Dioxide (CO2) Pipeline Development: Federal Initiatives

INSIGHTi

Carbon Dioxide (CO2) Pipeline Development:

Federal Initiatives

June 2, 2023

Carbon dioxide (CO2) pipelines are essential components of carbon capture and storage (CCS) systems

which are proposed to reduce atmospheric emissions of man-made CO2, a greenhouse gas. Approximately

5,000 miles of pipeline already carry CO2 in the United States, primarily linking natural CO2 sources to

oil fields where CO2 is used for enhanced oil recovery. However, a much larger pipeline network likely

will be needed to meet national goals for greenhouse gas reduction. Developers already are seeking

permits for new CO2 pipelines. Summit Carbon Solutions, Navigator CO2 Ventures, and Wolf Carbon

Solutions are developing multistate projects in the Upper Midwest which, collectively, would comprise

over 3,600 miles of new pipeline for carbon capture from ethanol plants. Along with other actions to

promote CCS, the federal government has been advancing initiatives to promote such CO2 pipeline

projects, as discussed below.

Safety Regulation

The Pipelines and Hazardous Materials Safety Administration (PHMSA) within the Department of

Transportation (DOT) has statutory authority over CO2 pipeline safety. PHMSA has long regulated the

construction, operation and maintenance of CO2 pipelines (49 C.F.R. §§190, 195-199). However, a 2020

CO2 pipeline rupture in Satartia, MS, which required a local evacuation and caused 45 people to be

hospitalized, has prompted criticism from pipeline safety advocates that PHMSA’s existing regulations for

CO2 pipelines are inadequate. Safety concerns also have given rise to siting opposition among some

affected landowners and advocacy groups. In response to these criticisms, and findings from its own

Satartia investigation, PHMSA announced on May 26, 2022, that it was initiating a rulemaking to update

its CO2 pipeline safety standards. The agency plans to publish a Notice of Proposed Rulemaking in June

2024, but has not set a date for a final rule. Some stakeholders have expressed concern that developers

may begin constructing new CO2 pipelines before a new rule is finalized.

Financial Support

The Infrastructure Investment and Jobs Act (IIJA, P.L. 117-58) Section 40304 established within the

Department of Energy (DOE) a Carbon Dioxide Transportation Infrastructure Finance and Innovation

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(CIFIA) program for CO2 pipelines. The act authorized and appropriated $2.1 billion for low-interest

CIFIA loans and grants. Although CIFIA has not yet funded any pipeline projects, analysts expect that

developers such as Summit Carbon Solutions would apply for CIFIA funding. President Biden’s FY2024

budget request for CIFIA includes $308 million in direct loan subsidies and $25 million in grants.

The IIJA (Section 40314) also established a DOE program to support Regional Clean Hydrogen Hubs—

demonstration projects involving clean hydrogen producers and consumers and the connecting

infrastructure. Division J, Title III, appropriated $8 billion to support the program. In September 2022,

DOE made a Funding Opportunity Announcement for a first tranche of up to $7 billion to support six to

ten hub proposals that were due by April 7, 2023. DOE plans to announce the projects selected for award

negotiations in fall 2023. Although DOE has not publicly released hub funding applications, several

reportedly include carbon capture (e.g., from methane reforming to produce hydrogen) which could

require the development of CO2 pipelines.

The IIJA (Section 40303) also amended DOE’s existing carbon capture technology program to include

support for front-end engineering and design for CO2 transport infrastructure. Division J, Title III,

appropriated a total of $100 million for the period FY2022-FY2026. On May 17, 2023, DOE announced

$9 million in funding for three projects “to perform detailed engineering design studies for regional CO2

pipeline networks.” The three proposed networks would be located in Wyoming, and along the Gulf

Coasts of Texas and Louisiana.

Siting Authority

Currently, states have primary siting jurisdiction for CO2 pipelines, although federal approvals may be

required for certain pipeline segments (e.g., across federal lands). The USE IT Act (Section 102 of

Division S of P.L. 116-260) clarified CO2 pipeline eligibility for streamlined review of any necessary

federal permits which might be required. The law also directed the Council on Environmental Quality to

set guidance to expedite CO2 pipeline development. Some analysts have asserted, however, that the

absence of overall federal siting authority for CO2 pipelines could be “a significant problem.” Certain

proposals would federalize interstate CO2 pipeline siting, preempting state siting authority, akin to siting

for interstate natural gas pipelines under the Federal Energy Regulatory Commission. On May 10, 2023,

the Biden Administration urged Congress to “address the siting of ... carbon dioxide pipelines and storage

infrastructure and provide federal siting authority for such infrastructure.” Some stakeholders may object

to federalization of CO2 pipeline siting authority, however, contending that CO2 pipeline development for

CCS is relatively new and that there has not been a demonstrated need for federal preemption.

Issues for Congress

Some Members of Congress show ongoing interest in the expansion of the U.S. CO2 pipeline network.

For example, at a March 2023 hearing on pipeline safety of the House Committee on Transportation and

Infrastructure, Subcommittee on Railroads, Pipelines, and Hazardous Materials, the ranking member

stated, “the safe transmission of carbon dioxide to sequester locations is vital to meeting our carbon

reduction goals, and I want to make sure this can be implemented without delay.” In a similar vein, the

Building American Energy Security Act of 2023 (S. 1399, 118th Congress) would include CO2

transportation projects among those eligible for streamlined regulatory review and would prioritize them

as projects of “strategic national importance.”

Given the essential role of CO2 pipelines in CCS systems, economic and regulatory challenges to CO2

pipelines may limit the deployment of CCS. In particular, siting opposition due to safety concerns could

prevent CO2 pipeline development in some localities and increase development time and costs in others.

How and when PHMSA will update its CO2 pipeline safety standards might, therefore, be a key oversight

issue for Congress. Congress also may evaluate whether the financial incentives it has enacted to promote

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CO2 pipeline development are attracting pipeline developers as intended. Additionally, Congress may

monitor the progress of proposed CO2 pipeline projects in securing approvals from local, state, and

federal regulators to determine if further congressional action may be warranted regarding siting and

permitting.

Author Information

Paul W. Parfomak

Specialist in Energy Policy

Disclaimer

This document was prepared by the Congressional Research Service (CRS). CRS serves as nonpartisan shared staff

to congressional committees and Members of Congress. It operates solely at the behest of and under the direction of

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