Louisiana Slams EPA Over Lack of Urgency on Carbon-Project Approvals

(Reuters) — The U.S. Environmental Protection Agency (EPA) is moving too slowly to allow states to permit and oversee carbon-reduction projects, according to Louisiana's governor, slowing millions of dollars in investments designed to tackle greenhouse gas reduction.

Louisiana and other top oil-producing states say they can speed up permitting of carbon sequestration projects if allowed to handle decisions that currently fall under the EPA. There are dozens of these projects with multimillion-dollar price tags proposed by energy firms around the United States.

Developers would benefit from broadening permitting of so-called Class VI carbon capture and sequestration (CCS) wells to states, Louisiana Governor John Bel Edwards said in a letter last month to EPA Administrator Michael Regan seen by Reuters. The process has lacked clarity and a clear timeline, Edwards wrote.

"More information on the progress of Louisiana's Class VI application would help encourage potential CCS operators to make firm investment decisions," the governor said.

Offshore oil producers Talos Energy Inc., Occidental Petroleum Corp. and gas-exporter Sempra Infrastructure have proposed Louisiana carbon sequestration projects. The state's energy regulator has received little information from the EPA on the transfer timeline or process, a spokesperson said on Thursday.

"We are now seeing concepts begin to turn into investment decisions — but a recurring question is if and when Louisiana will receive primacy," or taking over permits and regulation from the EPA, Edwards wrote in a letter dated Jan. 18.

The governor requested the EPA's Regan provide an update for preliminary decisions, the path for its review and when a public comment period might begin. Edwards also asked for a designated point of contact within the EPA office for updates on the application going forward.

The EPA said on Thursday it was working on reviewing Louisiana's Class VI primacy application but did not have a specific timeline for when the review would be complete.

Edwards' office did not immediately respond to a request for comment.

Struggle For Permit Oversight

The uncertainty over primacy comes as the Biden administration is pushing for investments in clean energy and lower-carbon fuels to reduce greenhouse gas emissions by 50% by 2030 from 2005 levels. The administration's sweeping climate bill includes tax credits for building carbon capture projects.

“Louisiana businesses increasingly need carbon capture strategies to improve their environmental footprints, and a clear, consistent permitting path will give greater confidence to the investment decisions needed to move ahead,” said Charles Fridge, chief executive of Verde CO2, which is developing carbon projects in the state.

"The long-term health and success of our industry hinges on close collaboration with regulators and a sound, well-built permitting process at the state and federal levels,” he said.

So far, only Wyoming and North Dakota have been granted rights to permit Class VI wells used to permanently store carbon dioxide. Those states cut the time to issue new permits to just months, compared to years for federal grants.

Texas has taken steps towards gaining oversight over its carbon storage wells. A spokesperson for the state's oil and gas regulator did not immediately respond to a request for comment.

Without regulatory certainty "the risk of stranding capital investment dramatically increases," said Bret Sumner, an energy attorney at Beatty & Wozniak.

"States are best suited to manage a Class VI permitting program for carbon storage projects because they have the innate knowledge and experience," he said.

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