Carbon Sequestration: Investments Are Booming - Seite 2

Regions entered this space in 2021, closing the first deal in late 2022. That project could see its first carbon injection as soon as 2027.

"It takes time - up to several years - to obtain permitting and get everything in place to begin the carbon injection process," noted Collier. "From a financial perspective, we're able to structure annual rental payments until the injection process begins, then defining the amounts of payments going forward based on volume of CO₂ injected."

The interest has grown significantly, and the team is currently working across the wealth management and commercial banking sectors to help connect landowners and business operators to reap the benefits of carbon sequestration.

Carbon Capture Gaining Traction on the Gulf Coast

Louisiana State University is getting in on the action around carbon capture. The U.S. Department of Energy has awarded nearly $5 million to an LSU-led consortium to study the feasibility of building a carbon capture hub in Louisiana.

The school began offering a first-of-its-kind concentration in carbon capture, utilization and storage through its Craft and Hawkins Department of Petroleum Engineering in the fall of 2022.

"This is a new industry that is seeing a lot of traction on the Gulf Coast in recent years," said Stephanie Coln, Private Wealth Management leader for Regions in Louisiana, who recently worked with a client who owns several large tracts of land. "Through our extensive networks, we had a company very interested in the carbon capture process and were able to negotiate financial terms benefitting both the client and the company."

An ideal location for carbon sequestration is large, contiguous acreage, typically 2,000-plus, within close proximately to CO₂ emitters or existing CO₂ pipelines. It's also beneficial if little or no existing active oil and gas wells or leases are present.

"With these projects, the client retains full control over the decision making throughout the process," noted Collier, adding that Regions' role is to market the client's land to CCUS operators and negotiate all terms and provisions of CCUS contracts.

Carbon Sequestration: Exploring the Tax Benefits

There is a tax benefit to carbon sequestration, as well.

The U.S. federal government provides tax credits to taxpayers that capture carbon dioxide in qualified processes, in accordance with rules laid out in Section 45Q of the Internal Revenue Code.