EPA decision to give Louisiana permit rights could lead to carbon capture surge

The US Environmental Protection Agency’s (EPA) end-December decision to grant Louisiana the power to approve carbon capture projects could open the door to a wave of new project applications and additional states seeking the same authority.

Louisiana is the third state—after North Dakota and Wyoming—given primary authority by EPA to issue permits for the Class VI wells used in carbon capture and sequestration (CCS). North Dakota approved its fourth well permit last spring, and an ethanol producer is already capturing and storing carbon there. 

Texas, West Virginia, and Arizona all have similar requests into EPA. The federal agency took 4 years to approve Louisiana’s bid for primacy.

Proponents say giving more states primary authority to issue permits will accelerate approval of new projects essential to reduce CO₂. 

Oil, gas, and chemical companies have championed adding CCS projects to core exploration and production operations.  

The Inflation Reduction Act of 2023 fueled additional interest. Companies can receive a tax credit up to $85/ton to capture and permanently store carbon about a mile below the earth’s surface.

As applications continue to flow in, EPA now has a backlog of Class VI well-permit applications, including about 20 from companies operating in Louisiana, an EPA spokesman said Jan. 4 in a written statement. Under the new agreement, Louisiana will handle all new Class VI applications in the state, and EPA has begun discussing handover of permit applications already submitted, the EPA spokeswoman said. 

API executive vice-president of policy, economics and regulatory affairs Dustin Meyer in a Jan. 5 interview called the Louisiana decision “a big step.” 

“We applaud EPA, and we believe Louisiana has the expertise” to tackle permitting while ensuring safety, he said. “Individual states are closer to the issue than EPA and are better able to make decisions” because they understand state-specific issues, like geology, Meyer said. He expects additional states “to follow a similar pathway" by asking for primacy, which should result in a greater buildout of carbon capture technology.

Louisiana Oil and Gas Association president Mike Moncla called the decision “a huge victory for Louisiana,” noting that the state’s Department of Natural Resources and Office of Conservation have worked with EPA over the past 2 years to ensure that Louisiana’s permitting process meets or exceeds EPA’s standards. The state “now stands at the forefront” of the carbon capture industry, Moncla said, adding that he expects new proposals to surge. 

Louisiana Gov. John Bel Edwards (D) said EPA’s decision could hasten the state’s efforts to serve as a major hub for CCS projects thanks to Louisiana’s geology and existing pipeline infrastructure. 

“While CO₂ sequestration is not the only strategy available for carbon management, it is the most mature and market-ready tool available in the near term,” he said in a statement. 

Critics, including environmental groups, questioned whether Louisiana was capable of proper oversight, citing the state’s spotty environmental record. But EPA insists that the state must at least apply federal minimum standards, consistent with the Safe Drinking Water Act, before issuing permits. 

“EPA’s proposal also follows guidance from the Council on Environmental Quality to ensure that the advancement of carbon capture, utilization, and sequestration technologies are done in a responsible manner that incorporates the input of communities and reflects the best available science,” the agency noted.

Environmental justice advocates argued the move would put people near the projects at risk. EPA countered that the agreement with Louisiana includes safeguards to protect the poorer, often minority, communities that disproportionately reside near energy infrastructure. The agreement’s environmental justice standards will serve as a model for other states, the EPA spokeswoman said. 

Carbon capture technology is a proven, well-known technology that is used extensively in the oil industry to capture CO₂ at the wellsite, API’s Meyer said. “State authority should allow companies to apply the technology to other applications, like refinery operations and natural gas-fired power plants,” he said, adding that the technology “still has a lot of work to do both in terms of innovation and improvement.”