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With cost upped to $1.45B, Project Tundra seeks funds from North Dakota energy board

The carbon capture venture's application to the recently formed Clean Sustainable Energy Authority estimates a substantially higher project cost then previously released figures.

Minnkota Power Cooperative's Milton Young Station, located near Center, N.D., burns lignite coal to generate electricity for customers in eastern North Dakota and northwestern Minnesota.
Minnkota Power Cooperative's Milton Young Station, located near Center, North Dakota, burns lignite coal to generate electricity for customers in eastern North Dakota and northwestern Minnesota.
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BISMARCK — Project Tundra, the expensive proposal to slash greenhouse gas emissions from a North Dakota coal plant, is one of eight projects seeking money from a recently established state fund aimed at fostering cleaner energy production.

The venture by Minnkota Power Cooperative is seeking $150 million in low-interest loans through the Clean Sustainable Energy Authority's second funding round, according to a list provided by authority director Al Anderson, looking to tap a fund that lawmakers established last year with Project Tundra specifically in mind.

Minnkota’s application estimates a substantially higher total cost for Project Tundra than previously released figures, at $1.45 billion, compared to the Grand Forks-based co-op's earlier projections of roughly $1 billion.

Minnkota spokesperson Ben Fladhammer said global supply chain limitations have increased Tundra's costs from original estimates. Though it's unclear whether those inflationary costs will last, Fladhammer said the co-op is factoring them into their revised estimates "out of an abundance of caution."

The co-op is planning to make a decision by the end of this year about whether to move forward with the fundraising stage of its project, Fladhammer said. If the project doesn't advance, Minnkota would not use any potential Clean Sustainable loans, leaving the money available for other companies, Fladhammer said.

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"Project Tundra would be a new benchmark for carbon capture and a major undertaking for our members, so we are taking this extra time to make certain the final design is both cost effective and cutting edge," he said, adding that Minnkota is optimistic the necessary funding partnerships will come after early-stage work is finished.

Engineering delays have recently pushed back Minnkota's decision on whether to green light Project Tundra. The project has received a total of $50 million in state and federal funding, Fladhammer said, though some of that money has benefited other carbon capture projects in addition to Tundra.

The Clean Sustainable Energy Authority was established by lawmakers in the 2021 legislative session to help greenhouse gas-intensive industries like oil, coal and ethanol cut their emissions and stay competitive in a cleaner-energy economy.

Top lawmakers said at the time that a $250 million low-interest loan program established under the Clean Sustainable Energy Authority was meant for Project Tundra, intentions that prompted some discussion at an interim legislative committee meeting on Tuesday, March 29.

"I sure hope the committee remembers that ($250 million) was put aside for Project Tundra," Rep. Jeff Delzer, R-Underwood said during a status update on the Clean Sustainable Energy Authority. Sen. Jessica Bell, R-Beulah, cautioned that while she hopes to see a large amount of funding go towards Minnkota's carbon capture project, the Legislature can't explicitly earmark the money for a specific company. Delzer agreed.

The Forum reported last year that the Bank of North Dakota, the country's only state-owned bank, initially declined to support the loan program , citing its size, subsidized interest rates and the risks of carbon capture technology, but later agreed to an arrangement that could shift the liability off their own balance sheet and onto taxpayers.

On top of the $250 million in low-interest loans, the Clean Sustainable Energy authority has also overseen a two year allocation of $40 million in grants and $20 million earmarked for hydrogen projects.

The Minnkota request exceeds the maximum available in the Clean Sustainable Energy Authority's $250 million loan pool, over half of which was dolled out in an inaugural funding round last year. Fladhammer called the $150 million request a recognition of "the current anticipated need for the project." Minnkota also indicated to the authority that it could apply for an additional $150 million in loans in a future funding round.

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Carbon capture endeavors like Project Tundra are looking to capitalize on a federal tax credit that pays companies to strip carbon dioxide off emissions and inject them permanently into the earth, preventing their warming effect on the atmosphere. North Dakota leaders view carbon capture as the pathway for making its fossil fuel industries more environmentally friendly for the long-term, but the technology has also been criticized by some environmental advocates who see it as needlessly expensive and unproven at a scale like Tundra's.

Funding recommendations from the Clean Sustainable Energy Authority require final approval by the Industrial Commission, the three-member regulatory panel chaired by Gov. Doug Burgum. In December the Industrial Commission approved the authority's inaugural funding recommendations, providing a total of $28 million in grants and $135 million in loans to six energy-related projects.

This time around, the authority received $32.7 million in grant requests and almost $225 million in loan requests. Meetings have not yet been scheduled for the panel to discuss its second round of applications, but Anderson said they are aiming to bring their recommendations before the Industrial Commission in May.

Project Tundra’s request is the largest that the Clean Sustainable Energy Authority has fielded so far. The seven other second round applicants are:

  • $5.8 million in grants for green hydrogen generation and storage developed by the Fargo-based BWR Innovations.
  • $5.4 million in grants for a waste-to-energy project by the Grand Forks-based Dakota Green Power.
  • $9 million in grants for a carbon capture and storage-related project by the Denver-based oil company Enerplus Resources Corporation.
  • $34.5 million in loans for Midwest AgEnergy and Carbon America Development’s carbon capture project at a McLean County ethanol plant.
  • $10 million in grants and $25 million in loans for the development of a renewable diesel and jet fuel plant developed by AIC Energy Corp.
  • $2.5 million in grants for a radioactive waste disposal facility by the Watford City-based Hydroil Solutions.
  • $15 million in loans for flaring mitigation through data centers by the Boston, Mass.-based Digital Stream Energy.

Readers can reach Forum reporter Adam Willis, a Report for America corps member, at awillis@forumcomm.com.

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