Controversial carbon sequestration fertilizer project to receive $1.559 billion from feds

Businesses can both affect and be affected by climate change. A growing chorus of environmental advocates is supporting legislation that would require publicly traded companies to disclose their climate-related risks. (Shutterstock.com photo)

The U.S. Department of Energy announced Monday that it has made a conditional commitment for a loan guarantee of up to $1.559 billion to Wabash Valley Resources, LLC for a West Terre Haute fertilizer development.

“The project will have the potential to be the world’s first, carbon-negative ammonia production facility — underscoring the Biden-Harris Administration’s continued commitment to ensuring the United States leads the world in clean energy manufacturing,” a DOE news release said.

Wabash Valley Resources (WVR) would be the first domestic producer located in the Corn Belt to produce low-carbon ammonia for local farmers and co-ops in the region.

WVR intends to pipe and inject 1.67 million tons of carbon dioxide annually a mile below the earth’s surface as part of its plan to produce “low-carbon-intensity” anhydrous ammonia fertilizer at a former coal gasification plant in Vigo County. Its permit allows it to build wells in Vermillion and Vigo counties.

Dan Williams, WVR’s chief operating officer, said, “This close to a-decade-long development phase has been made possible through the dedicated efforts of the Department of Energy, the building trades unions, and our strategic partners. WVR is thrilled to be at the forefront of a new industrial era that harmonizes environmental, social, and economic benefits, and we cannot thank our partners enough.”

The $1.559 billion would be part of a total investment of $2.4 billion that WVR would secure for the project through private investment.

But the project hasn’t come without criticism. Residents have mobilized against it, citing potential consequences like pipe ruptures and water contamination. Many have been skeptical of the company’s intentions and its use of public incentives.

Citizens Action Coalition Executive Director Kerwin Olson called the announcement “incredibly disappointing,” adding that DOE’s Loan Program Office “is putting the American taxpayer on the hook for this exceptionally dangerous and risky project.”

“Thanks to officials on both sides of the aisle at the State and Federal level,  this proposed project is the poster-child of shifting the economic and environmental risks onto the back of the public to enrich the few at the expense of the many,” Olson said in a statement to the Capital Chronicle.

“The impacted community would be exposed to significant threats to their environment, their health and safety, and especially their water,” he continued, noting permit violations by an Illinois sequestration facility. “… There is simply nothing clean about this proposed project. From cradle to grave, this project will increase toxic emissions, CO2 emissions, and is a false solution to climate change. (It’s) an economic and ecological disaster.”

WVR aims to produce 500,000 metric tons of anhydrous ammonia annually.

The company says its product would be cost-competitive compared to existing ammonia imports, helping to drive down costs for local consumers and providing a stable, domestic fertilizer source. The market for ammonia can be volatile, subjecting farmers to price fluctuations. For instance, the Russian invasion of Ukraine significantly increased ammonia costs for U.S. farmers.

By using carbon sequestration, WVR would also be part of the country’s efforts to reduce agricultural industry emissions. The federal news release said ammonia-based fertilizer is a crucial element of the U.S. agricultural system, but its production is a significant contributor to climate change. Globally, ammonia manufacturing accounts for 1% to 2% of all CO₂ emissions.

“Creating a large new source of anhydrous ammonia in Indiana would be of enormous benefit to Hoosier farmers. And, manufacturing fertilizer with a low carbon rating is even more powerful,” said Don Villwock, former president of Indiana Farm Bureau and a farmer in Edwardsport.

The facility would also support hundreds of union jobs in West Terre Haute, according to the release.

The Indiana Capital Chronicle is an independent, not-for-profit news organization that covers state government, policy and elections.