It’s no small development, economist Loren Scott says, that Gov. Jeff Landry has ordered a temporary halt on new applications for carbon capture injection wells in Louisiana.
“There are a significant number of major projects—we’re talking about tens of millions, hundreds of millions of dollars—that are very closely tied to the CCS issue,” Scott says. “There’s a lot of jobs and there’s a lot of tax revenue [on the line]. … There’s a lot at stake here from an economic standpoint.”
Landry’s executive order, issued Wednesday, places a moratorium on new Class VI well applications and directs state agencies to tighten oversight of existing proposals and set clearer permitting guidelines. The governor is framing the move as a means of balancing economic growth with mounting public concern over environmental risk and the perception of limited local input and transparency in the burgeoning CCS sector.
Also at issue is the sheer amount of time it takes to review applications. Since Louisiana obtained Class VI primacy in late 2023, applications for 33 carbon sequestration projects have been filed, with each estimated to require some 2,000 hours of review.
Scott, who recently released his latest Louisiana Economic Forecast, says the state currently has about $120 billion in industrial projects announced but not yet finalized—many of which depend on CCS infrastructure to move forward. The governor’s moratorium, he says, introduces uncertainty at a critical time.
“Some of these companies are making products that will go to countries that are still demanding a certain level of ‘green’ component to their products,” Scott says. “If they can’t sequester some of their carbon, that’s going to make some of their products not be able to go into those markets, which in some cases is going to cause the project to not be viable anymore.”
Scott’s concern is that even a short-term pause could shake investor confidence and spur companies to look elsewhere—namely, to Texas.
He’s not alone in holding that view. After Landry issued his order on Wednesday, a number of top industry lobbying groups, including the American Petroleum Institute, the Louisiana Association of Business and Industry, and the Louisiana Mid-Continent Oil and Gas Association, issued statements expressing concern that the order could disincentivize investment in Louisiana and allow Texas to scoop up projects that would have otherwise materialized in the Bayou State.
Scott puts it bluntly:
“We are always in competition with Texas,” he says. “If Texas has a policy that’s more favorable to these Class VI wells and carbon sequestration—I mean, they’ve got so much going for them over us already. They have better K-12, they have better highways, they have better taxation. In many cases, they have better higher ed. They’re so far ahead of us in so many ways. Something like this, you’d have to guess, is going to trigger some of these companies to start looking at Texas.”
Greg Upton, executive director of LSU’s Center for Energy Studies, says no other state has placed a moratorium of this ilk to the best of his knowledge. It’s worth noting, however, that Louisiana is one of only five states to have obtained Class VI primacy, with the others being Arizona, North Dakota, West Virginia and Wyoming. Class VI primacy refers to a state’s authority, granted by the EPA, to issue and regulate permits for carbon capture injection wells.
“[Other states] couldn’t do something like this if they don’t have primacy. … But no, I’m not aware of any other state that’s done this before,” Upton says.
