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Grande: Look behind the curtain

Grande writes, "Carbon capture and sequestration is all the rage in North Dakota despite the fact that it is very expensive and the technology to accomplish the long-term storage at scale is not proven. But did you miss the more troubling aspect of this project? There is no end customer. The 'business' does not produce anything to be sold."

Bette Grande online photo
Bette Grande

While we argue with each other over the hot issue of the day, under the radar there is a fundamental change in how our economy works. In the past, high oil prices would lead to more drilling and producing more oil would lower prices back down. That is a market response to supply and demand.

But today, oil companies do not respond to traditional supply and demand forces. Why? Forces and events outside of traditional economics are distorting the market. Federal regulations are a significant factor along with the Environmental, Social, Governance movement. Oil companies find it difficult to secure the capital they require to drill additional wells because of the ESG movement.

In fact, as reported in this paper, Continental Resources is investing $250 million in a carbon dioxide pipeline. You might ask, why would an oil company invest precious capital in a carbon capture project? The simple answer is that this type of "green" investment will bolster Continental’s ESG profile.

But a closer look at carbon capture projects shows the fundamental shift in how our economy operates today. In free-market capitalism a company would produce a product or service and the success of that company would depend on attracting enough customers to be profitable. The good ol’ days.

Contrast that with the Summit Carbon Solutions project , a $4.5 billion carbon dioxide pipeline to connect 31 ethanol plants and ship the carbon dioxide to Mercer County where it will be stored underground. According to the article, Summit will not charge the ethanol plants to handle the carbon dioxide.

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Carbon capture and sequestration is all the rage in North Dakota despite the fact that it is very expensive and the technology to accomplish the long-term storage at scale is not proven. But did you miss the more troubling aspect of this project? There is no end customer. The “business” does not produce anything to be sold.

How does it make business sense to spend $4.5 billion on a pipeline that does not have an end customer? How do they pay for it?

Simple. Tax credits and carbon credits. Summit states that this project will remove 12 million tons of carbon each year and under current law known as 45Q they will receive $50 for each ton, or $600 million. Not bad.

And the Biden administration proposed an increase in the credit to $85/ton producing just over $1 billion a year in tax credits for a company that will generate no income to be taxed. But 45Q allows these credits to be sold and transferred to other companies to reduce corporate tax liability. Simply put, companies that buy these tax credits from Summit will save over $1 billion in taxes, each year.

I should add, the federal government dolling out $1 billion a year for this project is $31 trillion in debt and growing.

So, there you have it. Our new economy: no customers needed; the government will pay for it. Which means, of course, you and I will pay for it.

Grande represented the 41st District in the N.D. Legislature from 1996 to 2014. She is CEO of the Roughrider Policy Center, an "innovation over regulation" think tank. She is a wife, mom, grandma, lover of life and Jesus. Opinions are solely her own.

This column does not necessarily reflect the opinion of The Forum's editorial board nor Forum ownership.

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READ MORE COLUMNS FROM BETTE GRANDE
"The foundation for every wacky 'green' idea we are seeing today was laid years ago, usually in California," columnist Bette Grande writes.

Opinion by Bette Grande
Grande represented the 41st District in the N.D. Legislature from 1996 to 2014. She is CEO of the Roughrider Policy Center, an "innovation over regulation" think tank. She is a wife, mom, grandma, lover of life and Jesus. Opinions are solely her own.
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