Carbon Capture, Use and Storage

With a renewed focus on carbon capture, use and storage, energy companies, chemicals manufacturers and other large industrial producers of carbon intensive commodities are doubling down on innovation to reduce, capture and store CO₂ emissions, or to use such emissions by chemically turning them into saleable products or in enhanced oil or natural gas recovery. Holland & Knight's Carbon Capture, Use and Storage Team assists clients in bringing carbon capture, use and storage (CCUS) projects to life by leveraging the firm's vast experience in the energy and industrial sectors (both traditional and transitional), tax credits and renewable energy incentives. In addition, the team is supported by knowledgeable and skilled attorneys and professionals within the firm's market-leading practices in project development, project finance (including tax equity financing and U.S. Department of Energy loan financing), tax, environmental, energy regulatory, real estate, midstream pipeline, well disposal and storage, CO₂ and product sales agreements, construction and federal energy policy.

Holland & Knight attorneys and professionals work with developers and investors to develop and finance CCUS projects (as well as other renewable projects that incorporate CCUS), while helping to navigate rapidly evolving regulatory and tax environments that are key to commercial success.

Our Carbon Capture, Use and Storage Team's experience includes advising and handling:

• Joint development agreements, joint venture agreements, carbon sequestration agreements and mergers and acquisitions (M&A)
• Internal Revenue Code (IRC) Section 45Q carbon capture, use and sequestration tax credits, including latest developments in federal and state clean tax policy and status of direct pay
• Financing (tax equity, debt, sale-leasebacks), intercreditor, security and equity contribution agreements, including latest deal structures required by tax equity investors
• Class VI well permits, including negotiating with the U.S. Environmental Protection Agency (EPA) and state regulatory authorities on the financial responsibility under such permits, as well as strategies and legislative initiatives to limit (or quantify) liability for future releases
• Governmental regulatory and relations, including pipeline, permitting and environmental regulations (monitoring, clean water, pollution discharge and air quality)
• Siting, leases and real estate issues, including pore space issues
• Low carbon fuel standards (LCFS) and other renewable energy incentives to help maximize biofuel sales and other transaction economics, including the federal Renewable Fuel Standard (RFS) and Renewable Identification Numbers (RINs), and California's low carbon fuel standard and LCFS credits
• CO₂ purchase and sale agreements, transport agreements and storage monitoring agreements
• Engineering, procurement and construction (EPC) contracts
• Operation and maintenance agreements, including for CO₂ capture, pipeline and storage facilities
• Equipment supply agreements
• Analysis of public-private partnership (P3) structures to jointly develop with government carbon capture schemes, including governmental immunity structuring
• Analysis of investments in forest cover as an option to develop carbon capture and carbon credits
• Following, analyzing and providing advice relating to primacy of federal and state CO₂ regulatory initiatives

Representative Engagements

• Advising the sponsor of a major carbon capture, use and storage (CCUS) project in North Dakota at a 705-megawatt (MW) coal-plant, including structuring considerations for the utilization of Section 45Q tax credits and investment and financing opportunities under the Inflation Reduction Act of 2022 (IRA), as well as advising on sequestration agreements, fuel supply contracts, front-end engineering and design (FEED) agreements, engineering, procurement and construction (EPC) contracts and other project development matters
• Advised a large timberlands owner holding millions of acres across several southern U.S. states on the current state and federal regulatory landscape for CCUS and developed a form of pore space lease to be used in negotiations with proposed projects
• Representation of a large oil and gas producer in structuring a joint venture with a midstream company to capture CO₂ from a steel mill and transport the CO₂ approximately 50 miles to an oil and gas reservoir for enhanced oil recovery (EOR), including structuring the sharing of the EOR economics
• Representation of a multinational power company on transactional and regulatory issues in connection with its proposed development and operation of an e-methanol production facility, which involves the construction and operation of a 700 MW hydrogen electrolyser, a carbon capture system that will capture CO₂ emissions from an existing paper mill, a methanol synthesis unit, and potential pipeline transportation and storage facilities
• Assisted the State of New York and the New York Power Authority (NYPA) in issuing a Clean Coal and CCUS request for proposal (RFP) and negotiated with developers for a 600 megawatt (MW) project in Western New York with underground CCUS proposals; our team developed the full power purchase agreement for the state with CCUS provisions
• Representation of a midstream company on the joint development of a CCUS project with the potential capacity to transport and store up to 50 million metric tons of carbon dioxide
• Representation of an owner and operator of a CO₂ EOR system in the negotiation of CO₂ sales, offtake and other commercial transactions
• Advised Hyperion Resources, as developer, on a proposed new "green refinery" in South Dakota, which would include a 300 MW integrated gasification combined cycle (IGCC) power plant and CCUS
• Handled several proposed U.S. Department of Energy (DOE) loan-funded renewable energy projects, including CCUS
• Representing a global oil and gas company in public-private partnership (P3) project involving reforestation and carbon ownership, including financing, licenses, contracts and exit points
• Advising on "blue" ammonia project in Louisiana, which will burn natural gas to make ammonia, and capture and sequester those emissions
• Advising multiple clients on carbon capture deal structuring, including tax equity and direct pay scenarios, pipeline, storage and pore space issues, DOE and government loan financing, and qualification and carbon scoring for California's low carbon fuel standard
• Advised a client in the negotiation to close of an EPC contract for a carbon capture facility that captures CO₂ from the flue gas of a cement factory and then chemically converts the CO₂ to saleable products, such as baking soda and sulfuric acid
• Advised a client looking at investing into a carbon capture business, including due diligence of the assets of that business
• Negotiating on behalf of oil company new provisions to be included into CO₂ sales agreement to qualify for Internal Revenue Code (IRC) Section 45Q carbon capture credits
• Advising project developers on maximizing available Sections 45Q, 45V, 45Z and other tax credits on a single project