Louisiana Freezes New Carbon Capture Applications

Louisiana Gov. Jeff Landry this week signed an Executive Order declaring a moratorium on review of new permit applications for Class VI underground injection wells in the state and directing prioritized review of several pending applications seeking to construct Class VI wells in connection with proposed carbon capture and sequestration (CCS) facilities across the state to proceed.

The order directs the Louisiana Department of Energy and Natural Resources (LDENR) to suspend review of any new applications to construct a Class VI well submitted after its effective date and to spend the next 45 days reevaluating the status of the approximately 33 pending permit applications already received. The order prioritizes review of five specified applications for CCS projects in Point Coupee, Vernon, Calcasieu, Cameron, Caldwell and Ascension parishes.

Class VI wells are one of the core components of carbon capture and sequestration (CCS) facilities, which capture and liquefy carbon dioxide (CO₂) emissions from industrial sources such as power generation and manufacturing plants for reuse or disposal. The construction of a Class VI well allows CCS facilities to permanently remove their captured CO₂emissions from the atmosphere by injecting the liquid CO₂into underground geological formations. The resulting reduction in emissions can then be used or sold in carbon markets worldwide to offset emissions increases associated with expanding industrial activities under federal and foreign air permitting regimes.

Louisiana, one of the first states to be granted authority to regulate its own Class VI injection wells by the Environmental Protection Agency in late 2023, is a particularly attractive option for proposed CCS hubs due to its close proximity to manufacturing and energy corridors across the Southeast and its favorable subsurface geology, which features deep saline aquifers and porous rock reservoirs offering ample pore space.

Gov. Landry’s order notes that some projections have found that announced CCS projects alone have the potential to generate 17,000 new jobs and $76 billion dollars in capital investments across the state.  However, many of these projects have not yet submitted applications to construct the Class VI injection wells necessary for CO₂storage. The order could pause the development of these and any new CCS projects in Louisiana indefinitely.

CCS projects in the state have faced increasing scrutiny from parish governments and local community groups, and the order acknowledges the concerns of “citizens and communities” while citing recent state legislation requiring the LDENR to give “substantial consideration” to local governments’ comments on permit applications and other CCS-related actions. The order also points to President Donald Trump’s support of “energy innovation by advancing technologies” such as CCS and several national executive orders regarding energy, which it finds “necessitate constant evaluation of Louisiana’s own energy policies and laws.” Although CCS technology may “provide an opportunity to lift citizens of Louisiana out of poverty,” the order says this must be balanced against the State’s “vital obligation to protect the health, safety, and welfare of its citizens and the environment.”

Keep in mind, the order does not provide for an automatic end to the new review moratorium after the LDENR’s 45-day review period for pending applications ends. It remains unclear when consideration of new Class VI permit application may resume. In the meantime, the order and related LDENR memoranda make it clear that even pending permits will not be prioritized for review until they have been determined to be complete and compliant with regulatory procedures.

The Phelps Project Development Team is continuing to monitor these new developments.

Please contact David Topping, Bart Bacigalupi, Sophie Gray or any other member of the  Phelps Project Development Team if you have questions about CCS projects in Louisiana or need advice or guidance.