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Committee rejects removing pipeline property‑tax exemption for CO2 transport after amendment debate
Summary
Senate Bill 2,320 — which would remove a property‑tax exemption for CO2 interstate pipelines used for secure geological storage — drew technical debate and an amendment to preserve exemptions for CO2 used in enhanced oil or gas recovery; the committee adopted a do‑not‑pass recommendation after the discussion.
Senate Bill 2,320, a proposal to eliminate a current property tax exemption for interstate CO2 pipelines used to transport carbon for secure geological storage, generated extended committee debate about incentives, long‑range storage capacity and stages of development for CO2 infrastructure.
Proponents of the exemption’s removal argued the state should not provide an untargeted tax break for permanent CO2 sequestration that consumes pore space without immediate local economic benefit. Senator Wallen offered an amendment (as requested by Senator Grama) to preserve the exemption for CO2 transported for enhanced oil recovery (EOR) or natural‑gas recovery while taxing pipelines carrying CO2 for permanent, non‑productive geological storage; the amendment passed by a narrow margin.
Opponents of the amendment (and of removing the exemption entirely) warned that the exemption had formed part of a long‑standing policy approach intended to attract CO2 pipeline investment and that changing the rule now could undermine multi‑state commercial plans and the staged build‑out needed to reach future EOR demand. Senator Patton noted North Dakota’s large storage capacity and recounted the decades‑long policy history encouraging CO2 infrastructure, arguing that altering the tax treatment now could discourage investment in a nascent market that will take years to reach full EOR use.
Committee discussion included technical clarifications: tax department staff and proponents explained the tax is levied on pipeline property similar to other pipelines and not directly on the CO2 mass; the federal 45Q tax credit for sequestration was mentioned as part of the broader economic calculus. After debate the committee proceeded to a motion for a do‑not‑pass recommendation on the bill; the motion carried on the committee roll call, and the committee assigned a carrier to the do‑not‑pass recommendation.
The record shows the amendment to exempt CO2 used for enhanced recovery passed narrowly (committee vote reported 3–2) and that the committee ultimately adopted a do‑not‑pass recommendation on the bill as amended, reflecting members’ concerns about changing incentives at an early stage of infrastructure development.
