Louisiana Receives its First Class VI Carbon Capture Permit

Louisiana’s Department of Energy and Natural Resources (LDENR) issued the state’s first Class VI permit authorizing the injection of carbon dioxide (CO₂) into underground formations for storage. Issued in connection with a carbon sequestration project in Hackberry, Louisiana, the permit authorizes the injection of up to 2 million metric tons of CO_2/year for 20 years. There are currently 43 proposed carbon capture and sequestration projects in Louisiana, one of the few states to be awarded primary enforcement authority (or primacy) for the regulation of Class VI injection wells by the federal EPA. This means that, unlike many other states, the LDENR is in charge of the permit application review and approval process, allowing for more local control over proposed projects. Although the Hackberry approval is the culmination of a nearly 1.5-year permitting process, subsequent permitting actions should benefit from the LDNR’s early rigorous review process, reducing future permitting timelines to less than one year.

Carbon capture and sequestration projects have become increasingly prevalent, offering stakeholders innovative strategies for managing CO₂emissions. In a time when investors, customers, and governmental authorities often pressure industry to decrease CO₂emissions, these projects present opportunities for companies to participate in domestic and foreign carbon reduction incentives. When paired with power generation facilities, carbon capture and sequestration can compound multiple benefits, contributing to national energy independence, producing clean, carbon-neutral energy, and creating credits eligible for sale in carbon markets worldwide

Carbon capture and sequestration projects involve capturing CO₂before it is emitted from industrial facilities, transporting it to a permitted injection well, and injecting it deep underground for storage so that it cannot escape into the atmosphere. In addition to receiving a Class VI permit, before the capture, transportation, and injection of CO₂may be carried out, emitting companies, operators, and landowners will enter into various agreements creating the necessary rights and obligations to undertake these activities and allocating the risks related thereto. Before entering into any such agreement, there are many issues all parties will need to consider, including ones raised by state officials.

Understanding the political headwinds, the varying regulatory regimes, and securing the appropriate legal services will be crucial to effectively navigating the risks in this new and complex environment. The Phelps Renewable Energy Project Development team can assist clients with all project needs, including permitting, environmental, public approval, real estate, title, finance, tax incentives and construction. 

Please contact Bart Bacigalupi, David Topping, Joseph Giarrusso, Paxson C. Guest or any member of the Phelps Renewable Energy Project Development working group if you have questions or need advice or guidance.