Iowa lawmakers advance bill to tax CO2 transported through pipelines in the state

DES MOINES — All liquefied CO2 transported through pipelines in Iowa would be taxed per metric ton under legislation proposed by a top Senate Republican that was advanced by legislators Wednesday.

The measure is opposed by both landowners and a carbon capture pipeline company.

The legislation, Senate File 2069, is the second hazardous liquid pipeline related bill pushed by Senate Majority Leader Mike Klimesh of Spillville this session as he attempts to take the reins on a yearslong debate over landowner rights and economic development at the Iowa Capitol.

The bill would impose a rate of $2.50 per metric ton for any liquefied carbon dioxide transported by a pipeline company in or through Iowa and would reduce the rate to $1 per metric ton if the CO2 is used for enhanced oil recovery, an oil extraction technique used to extract crude oil from a reservoir after initial extraction.

Revenue from the tax would go into the Iowa Taxpayer Relief Fund, which was created by state legislators to hold unused general fund revenue with the goal of providing tax relief.

Earlier in the Iowa legislative session, Klimesh proposed a bill that would allow pipeline companies to amend their planned and approved routes to enter into voluntary easements with landowners and avoid using eminent domain.

While both Republican members on the subcommittee, Sens. Dan Dawson, of Council Bluffs, and Jason Schultz, of Schleswig, signed off to advance the tax bill, they expressed hesitation on the mechanics of the tax rate.

Dawson said he has “high interest” in the legislation, arguing that it could help grow Iowa’s tax base.

Schultz said he needs more clarification on the different tax rates, adding that he is glad lawmakers are having the discussion near the beginning of the legislative session.

Democratic state Sen. Tony Bisignano, of Des Moines, did not sign off on advancing the legislation, saying he believes lawmakers should address property rights before developing tax rates for liquefied CO2.

“We need to deal with the fundamental bill of property rights and eminent domain. And once that happens, the air starts to clear, and we can start to pin down all the ancillary things that come with something like this,” Bisignano said.

Summit Carbon Solutions, the company looking to build a carbon sequestration pipeline that would cut through Iowa, also expressed opposition to the legislation, arguing that it would increase the cost of company services, which would trickle down to ethanol producers and Iowa corn growers.

“Just like any other tax, it increases and increases the cost,” Jake Ketzner, representing Summit Carbon Solutions, said. “We'd rather see ethanol plant producers paying farmers more for their corn instead of paying for a new tax.”

Ketzner added that placing a tax on liquefied CO2 would make Iowa’s ethanol industry less competitive compared to neighboring states, including Nebraska, where a similar tax doesn’t exist.

Chris Boshart, CEO of ethanol processing plant CORN, LP in Goldfield, said a tax on liquefied carbon transported through pipelines would increase his company’s cost of operations.

“These kind of fees are just going to get passed back through us,” Boshart said. “As it lowers the marketabilities of the product, the value that we could sell, our increased cost is just going to reduce what we can pay to farmers.”

Landowners want lawmakers to prioritize property rights

Jess Mazour, an activist with the Sierra Club and a leader among landowners opposed to CO2 pipelines, said the bill fails to address landowner rights, adding that any revenue collected from the tax should go to the state general fund or straight to the counties to help Iowans impacted by pipeline construction. The Iowa Chapter of the Sierra Club is registered undecided on the bill.

“We're looking at a bill that no one asked for, while avoiding the issue that everyone's asking for,” Mazour said.

Kathy Carter, a landowner from Floyd County who is opposed to the Summit pipeline, called the bill a “distraction” that takes the focus away from landowner rights.

“It's a pat them on the head, make them feel good, gesture. Throw Iowans a bone and they'll shut up,” Carter said.