Southeastern Louisiana University deployed four buoys in Lake Maurepas on Feb. 1 for independent, scientific monitoring as part of Air Products’ work on its carbon storage project. Scientists will use data captured directly from the lake to closely monitor the ecosystem. (Photo credit: SLU)
Another legislative push to get more local governments more revenue from carbon capture and sequestration projects could be on the horizon.
With 30 such projects planned or proposed in Louisiana, talk about a tax on the injection and storage of carbon dioxide underground has gained traction as a possible way to garner additional money for infrastructure work and other parish-level needs.
Companies pay the state $7.50 per ton to store carbon dioxide, with proposed projects calling for millions of tons of CO2 to be placed underground annually. Past legislative proposals to carve out more revenue for local governments have failed to gain approval.
A Louisiana House Natural Resources and Environment Committee meeting saw extensive debate Tuesday on how local governments stand to benefit from the growing trend.
“We struggle from year to year,” said Allen Parish Administrator Jacob Dillehay said, arguing that his area has “fallen through the cracks” in terms of benefitting from the risk of carbon capture and sequestration (CCS) technologies.
Dillehay spoke on behalf of the Louisiana CO2 Alliance, a multicross-parish coalition concerned with the rollout of carbon sequestration. Carbon capture and engineering company 1PointFive, owned by energy company Occidental, currently has the only class six applications for CO2 underground storage pending state approval in Allen Parish.
The relatively new and controversial technology is making rapid advances throughout Louisiana as state and local lawmakers alike angle to get a share of the revenue. Projects are expected to begin receiving permit approval within the first half of 2025, according to the Louisiana Department of Energy and Natural Resources.
Currently under state law, parish governments get 30% of the revenue generated from CCS projects on state land within their parish. Another 30% goes to the state’s Mineral and Energy Operations Fund, which pays for industry regulation in Louisiana. The leftover 40% goes into the state general fund.
That revenue distribution breakdown applies to five of the six lease agreements for CCS projects approved so far on state land. But not for one planned for Allen Parish.
Its carbon capture facility is proposed for the West Bay Wildlife Management Area near Oakdale. The project is on private land owned by timber companies, but the Louisiana Department of Wildlife and Fisheries manages the land.
No money from the lease of that land is going to Allen Parish because the land is privately owned, and local governments are not allowed to tax carbon capture under Louisiana law.
Dillehay argued that shouldn’t be the case, and that “every parish that’s being forced to assume risk” connected with the expansion of carbon injection should get a higher share of revenue.
Proponents of carbon capture and storage tout it as a way to lessen the impact of smokestack industries. They see Louisiana’s geology as ideal for underground CO2 sequestration and point to its extensive history with fossil fuel storage and injection wells.
Critics have noted some methods of carbon capture offset any climate gains with the fossil fuel that’s needed to power them. They’re also skeptical when it comes to storing CO2 in certain areas, such as the proposed site under Lake Maurepas.
But with momentum behind bringing so many CCS projects on line, elected officials want to ensure their constituents benefit from the revenue they produce.
“We are as broke as the 10 Commandments over there’” Rep. DeWith Carrier, R-Oakdale, said at Tuesday’s hearing. The funding is much needed for infrastructure and other underfunded projects in Allen Parish, he added.
”We just want a little bit because we are taking the risk,” Carrier said.
Legislation Rep. Shane Mack, R-Livingston, proposed last year would have allowed parishes to assess their own taxes on CCS projects. It never received a vote to get out of a House committee.
Mack also authored two failed bills that would have stopped the Lake Maurepas carbon storage project, which is within his district, from advancing.
A bill that Rep. Jeremy LaCombe, R-Livonia, sponsored would have allowed parishes to share revenue generated from CCS leases on Wildlife and Fisheries land. It received legislative approval but was vetoed by Gov. Landry, who said the legislation would impact constitutionally protected funds.
Landry wrote in his veto message that he was “committed to working on future legislation” to give a larger share of revenue to local parishes without encountering constitutional issues.
LaCombe said Tuesday he intends to introduce a new version of the bill in the next session.