North Dakota has done much to position itself as a leader when it comes to taking carbon emissions out of its power generation. Not only has Gov. Doug Burgum has set a goal of net carbon neural — or maybe even net carbon negative by 2030 — but several large deals are already on the table to help make the vision reality.

Chief among these, of course, is the recently announced blue hydrogen hub at the Synfuels plant, where they plan to use cutting edge technology to capture at least 95 percent of carbon dioxide emissions, generating blue hydrogen that will be comparable to green when it comes to carbon intensity. At the same plant, there is also the recently announced expansion project that will capture 1.5 million more tons of carbon dioxide for permanent geological storage. That’s in addition to the 2 million tons of carbon dioxide already captured by the plant and shipped to Canada for enhanced oil recovery.

There’s also Project Tundra, a $1 billion advancement looking to capture emissions from coal power and remove it from the equation for good. More recently, Rainbow Creek has agreed to purchase Coal Creek Station with similar intent.

Red Trail Energy, meanwhile, is looking to capture carbon emissions from its ethanol production, to create a premium decarbonized fuel it will market to California.

But there is one factor that’s been sucking the wind out of the sails for these projects right now. ESG metrics that paint with such a broad brush, financing for these projects has suddenly become problematic.

Stacey Dahl with Minnkota Power talked about that difficulty during the inaugural Bully Pulpit Speaker Series, kicked off with an appearance by Goldman Sachs Chairman and CEO David Solomon.

Minnkota Power has been aggressive about adding green energy sources like wind and hydro. Green power sources are now nearly 50 percent of the backbone of their system. But they have also retained their coal plant, which they view as key for reliable base power. Through Project Tundra, they plan to decarbonize the plant by sequestering 90 percent of its carbon dioxide emissions.

“These are substantial, meaningful reductions,” Dahl said. “We have worked with the best scientists in the world to have very high confidence in the ability to capture the CO2. We know the technology works. We have the highest competence in safely sequestering that CO2. On a technical basis, we feel very confident.”

What they are no longer confident about, however, is financing.

“Early on in our project, as we were bringing on our development staff and looking for an outside financial advisor, we paired with a multinational bank that had a real interest in this project,” she said. “And it wasn’t very long into that relationship when the broader parent company made the decision that no more investment in coal. No more relationships with coal. Full stop, even if this was a technological solution.”

Solomon told Dahl he would put her in touch with someone at Goldman Sachs to talk about the project, to try to help them navigate the political aspect.

“You know politically our society wants black and white answers,” he said. “They want yes and no.”

The real world, though is more nuanced. And, in the real world, the reality is the fossil fuel sector is still needed and will be needed for quite some time while things are in transition.

“Black and white rules that say you can’t do this, you can’t do that aren’t helpful in that transition,” Solomon said. “You’re in a transition. You’re doing exactly what you need to do, but transitions are transitions. They are not light switch on, light switch off. And so, you know, I think a better functionality to this is to look at each situation individually and think about whether each situation is right, wrong, indifferent individually.”

Goldman Sachs No. 1 goal during this transitionary phase is not to cut off financing altogether, but to work with clients to become more sustainable.

“That’s the lens we look through,” he said. “And you know, I’d certainly be delighted to get you know people in dialogue with you if we can be helpful in thinking that trough. But one of the things that I will say and look, this is just, you know the reality, that I think that we all have to accept. The institutional capital world is done with coal.”

That’ doesn’t necessarily mean transitioning or innovating to make existing coal plants cleaner, Solomon added.

“But I just don’t think the institutional capital world is going backwards on this,” he said. “Too much of the institutional capital is controlled by parties that have decided for good or bad that they want to accelerate that process. It’s going to be very very difficult to finance you know coal on a go-forward basis anywhere in the world. It’s not just here, but anywhere in the world. I don’t see that getting easier.”

All that doesn’t mean, however, that there won’t be private capital available for such projects, Solomon added.

“We are going to need and use coal in this country to create power to create our grid for a very, very long time,” he said. “The capital that will be looking at these opportunities is private capital, whether it’s a business like yours that takes your resources and says hey, here’s an interesting opportunity. But you’re gonna see private capital, you’re gonna see family offices, you’re gonna see private pools of capital that are gonna start looking at this. Because candidly, it’s very attractive from an investment perspective if you understand it the way you do.”

Jeff Jonson with Rainbow Creek Energy meanwhile wanted to know what are the chances of doubling the 45Q tax credits to help with carbon sequestration at coal plants.

Sen. Cramer said the effort actually has “unlikely” allies on the Democratic side of the aisle.

“I mean, I’m on the Environment and Public Works Committee with Sheldon Whitehouse,” he said. “I”ve listen to at least 150 of his 250 speeches on you know, sustainability, and we disagree on just about everything, but we agree that innovation is the solution to the problem that you know he’s more concerned about probably than I am, and I think that’s healthy. I think we’ll get to some agreement.”

It doesn’t hurt, Cramer added, that President Joe Biden has also referenced carbon capture as one of the solutions in his own statements.

“We’ve got some allies,” Cramer said. “I think we can make it work. But it’s going to take a vehicle that’s going to require a serious transaction to make that happen.”

Ron Ness, president of the North Dakota Petroleum Council, told Solomon Bakken operators understand that consumers want a cleaner barrel, North Dakota’s industry has responded with a variety of innovations to accomplish that.

Yet about half the banking industry isn’t allowing Bakken operators access to capital.

“The economics of the Bakken , dollar for dollar, well for well, compete with any basin in the country including the Permian,” Ness said. “And you know, when I look at Goldman Sachs. You guys are bullish on oil, but yet you sell on the Bakken. And we think that the Bakken is where this innovation is going to take place. We think that the capitalization of the Bakken producers is critical, because of the backing, the partnership that we’ve got in this state, so we’re starving for capital quite frankly.”

Ness said North Dakota Petroleum Council would be interested in any conversations about the situation.

“We need to understand what we can do to get through to the banks that the economics in the Bakken are great,” he said. “And we are the solution for clean energy in the future.”

Ness said North Dakota Petroleum Council would be interested in any conversations about the situation.

“We need to understand what we can do to get through to the banks that the economics are great,” he said. “We are the solution for clean energy in the future.”

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