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Today’s interview is with Justin Loyka, Wyoming Energy Program Director, The Nature Conservancy.
The Future
Wyoming has historically been coal country. How do you see the future of Wyoming's energy identity shifting in the next decade?
Justin Loyka - In addition to being the nation’s leading coal producer, Wyoming has traditionally been a major oil & gas exporter as well. Governor Mark Gordon has been very clear about his vision of an “All-of-the-above” energy future for the state, but that phrase can mean a lot of different things in different places. In Wyoming, a state whose economy and revenue are massively reliant on the energy industries, a decline in coal mining revenues will mean that new industries need to grow and thrive quickly to avoid economic pain for the state.
Folks are very excited about nuclear opportunities and that industry enjoys strong support in Wyoming. Projects throughout the nuclear value-chain, from mining, to enrichment, and generation at all scales, are in early stages across the state. The most visible and furthest along is the Terrapower natrium reactor being constructed in the coal-town of Kemmerer, Wyoming.
Solar and wind are also growing, with wind energy already making up one third of the state’s generation capacity, and many new projects are in development. But these industries are misunderstood and face significant headwinds in Wyoming.
In all likelihood, Wyoming’s energy identity will be centered around its oil & gas industry in the coming decade, with coal fading, nuclear and solar nascent, and wind a reluctant addition. Wyoming has a large workforce and a long history of successful oil and gas development and this mature industry is unlikely to be supplanted by upstarts so quickly. Critically, the benefits of this industry are well understood from the statehouse to the kitchen table.
This creates an opportunity for carbon removal in Wyoming. The state’s excellent sequestration geology is well known (and well-defined). The regulatory picture for storage is as developed as anywhere in the world, and adjacency to the oil & gas industry is a plus for building projects in Wyoming, if not for CDR buyers. But Wyomingites need to understand the benefits of CDR and hear it from their neighbors, not a coastal start-up’s media room.
DAC Facilities
Are there any pilot DAC facilities or upcoming projects in Wyoming that could serve as blueprints for broader adoption?
Justin Loyka - I hope so. There are at least 4-5 CDR companies working in Wyoming right now, but most projects are very early stage so I will let their developers take the lead in talking about them.
The most high profile carbon removal project in Wyoming was the now-defunct Project Bison. While that’s obviously not a blueprint, I do think there are a lot of things to be learned from it. Whether talking about energy procurement, how to meet early, small-scale, sequestration needs, or community relationships, I think Carbon Capture Inc. learned a lot of really good lessons in Wyoming. My colleague Monika Leininger and I try to capture some of those lessons in a white paper, which we plan to release later this month.
There are also at least three projects that are focused on creating carbon sequestration hubs in Wyoming. Those projects all have a few things in common. They are further along on the sequestration side, one actually started drilling Class VI wells for sequestration this winter. They are looking to diversify their sources of carbon, instead of relying on a single provider. And they are all looking at multiple delivery methods, like local point-source capture, DAC, train-transported carbon, and pipeline access. Things are still early, but it does seem like a model is emerging.
I also think that Charm Industrial’s operations in Colorado, and Cowboy Clean Fuels in Wyoming’s Powder River Basin, are worth emulating, especially in their marketing. Their business models are very different, but both companies spotlight their relationship to legacy industries like oil & gas production and forestry. They also focus messaging on benefits they provide that aren’t climate-related, whether that’s good paying jobs, wildfire mitigation, or renewable gas production. This is the best way to gain acceptance in rural communities.
New Employment Opportunities
How can TNC help ensure that coal workers in Wyoming are given a clear pathway to employment in new sectors like DAC or other new energy technologies?
Justin Loyka - It’s important to be transparent about the challenge that Wyoming coal towns are facing. The coal resource here is absolutely enormous, and customers came from all over the nation and world to buy coal for 50+ years, which made for a very lucrative economy and lots of high paying jobs. With coal falling out of favor, Wyoming doesn’t have anything else with this geographic advantage to fall back on.
The most important thing for Wyoming to do right now is to lay the groundwork for new development and diversification. That means building infrastructure like high-bandwidth fiber, transmission lines, substations, housing, and investing in workforce training to prepare our communities for whatever opportunities arise. TNC is helping with this process by working with planners to identify the best locations for projects and by advocating for reinvestment in existing assets, like coal mine sites, that may be shutting down. We also work directly with companies to help them identify opportunities in Wyoming and learn how to adapt their projects to Wyoming’s unique culture (and wildlife habitat).
Hopefully, Wyoming can accomplish this in a timeframe that allows for a smoother transition, instead of having the bottom drop out the way so many communities in Appalachia have.
Success Stories
Can you share any success stories of coal communities in other regions that have successfully transitioned to a diversified economy?
Justin Loyka - I think you can find examples of good ideas being implemented all over the world, but there are a lot more bad examples than good road maps to follow, which is why this is a tough problem. The story of many coal communities in the United States could be put into a textbook to describe the Resource Curse.
Close to home for me is the example being set in Kemmerer, Wyoming. Terrapower has been building their first-of-a-kind natrium facility there for a couple of years now, and the construction, permanent, and associated service jobs will all be very impactful to that small coal community. But most importantly, we are already seeing other industries, like ammonia production, carbon sequestration, and data centers, starting to look at Kemmerer because of Terrapower. That type of clustering is where true diversification lies, but it takes that initial champion, which is hard to find.
Another great example of community-minded thinking can be found in Craig, Colorado. Their local utility has set a timeline for closure of the coal-fired generating station and, by extension, the nearby mine. But the utility also agreed to pay the community for lost tax revenues due to early closures, or offset them with investment in new energy projects. This promises the community a future and incentivizes both independent power producers and the utility to look hard at Craig for new projects. This outcome clearly benefited from regulatory pressure, but it was crucial that the utility understood the impact their business has on the community and valued continuing that social contract.
Policy
What types of state or federal policies are most urgently needed to support Wyoming becoming a carbon removal leader?
Justin Loyka - Wyoming has a fairly mature regulatory space for geologic carbon sequestration. That said, there are still a few policy changes that would help the CDR industry take off in our state.
Some of these policies have to do with state lines. It seems likely that Wyoming will eventually tax CO2 sequestration, and will probably tax CO2 imported to Wyoming at a higher rate. Establishing those regulations as soon as possible will help give the private sector the certainty they need to evaluate capture projects and transport networks needed to bring CO2 to Wyoming’s sequestration hubs.
Geologic storage in the vicinity of state boundaries is also fraught in the current environment. If the plume from a Class VI well crosses into a different state with different regulations it’s, at the very least, complicated for a sequestration project. Interstate compacts or direction from the federal government will be needed for clarity. There are a lot of really smart people working on these issues, especially at the University of Wyoming, but the sooner these get addressed, the sooner Wyoming’s carbon management economy can take off.
Another issue I worry about, from Wyoming’s perspective, is protectionism in compliance markets. While a Wyoming or US compliance market seems unlikely in the foreseeable future, other states and nations are standing them up. But in some cases, those governments are including clauses that make it mandatory for a percentage of the carbon removal to come from projects inside their state borders. While I can see the logic, CO2 in the atmosphere is a global problem and shutting out good projects that aren’t in your state seems like a bad plan if your objective is to bootstrap a nascent industry to scale with your market.
Wyoming has the needed resources, is looking for new markets to serve, and has a long history of exporting energy and related services. But if it’s shut out of carbon compliance markets, that’s one more reason for the state to dig its heels in and resist transition. A better model, to my mind, is the one that Japan is exploring. In that market, a percentage of CO2 removal credits have to come from projects that include Japanese companies. This ensures that Japan captures some of the economic value from creating the compliance market, but doesn’t constrain projects geographically.
Public Perception
If you could see one major shift in public perception tomorrow that would most benefit Wyoming's clean energy transition, what would it be?
Justin Loyka - It would be wonderful to see folks across the political spectrum appreciate new technology for what it can offer while also acknowledging the trade-offs inherent in any enormous infrastructure project. I know that’s a really big ask, but I think the characterization of so many new technologies as primarily focused on climate change is not leading to ideal outcomes. Now, that’s not exactly a hot take, and I want to acknowledge that there was a period where the support of climate advocates was critical to advancing these technologies. But we’re past that time, and I think it’s really unfortunate that solar, wind, batteries, and anything that mentions carbon is perceived as a left-wing pipedream by half the country. When really, they’re likely to be the bedrock technologies of a new age of energy abundance and human prosperity, if we embrace them. With the total amount of energy demand growing, we should be welcoming all technologies and the different applications they enable.
Challenges
What's the biggest challenge facing CDR’s nature-based/ science-based solutions, and what is required to scale and solve them in 2025?
Justin Loyka - I’m not an expert on the nature-based solutions side, so I won’t comment there. On the technological solutions side, lots of people are talking about how voluntary markets aren’t growing as fast as desirable, and the issues around accessing energy are well trod as well.
Those are probably the largest challenges, but I think scaling from laboratory- and pilot-scale to commercial-scale deployments is a problem many companies are just starting to grapple with. A lot of companies in this space have done a brilliant job of creating novel technologies, but building large infrastructure is an entirely different set of challenges.
I think a lot of companies assume that building that initial tech is the biggest hurdle, but after that stage, a lot more things are out of their control. Permitting timelines, supply chains, the capital needed for large projects, all of these things are harder for technological CDR than in, say software, where so much of start-up culture is based. And the folks that know how to navigate those spaces, build projects, and have deep pockets: oil & gas companies. Which, naturally, makes buyers uncomfortable. I think this is going to be a critical challenge for advocates of this industry, the start-ups running into a crowded voluntary market, and buyers, to navigate in the next 10 years.
It will take some flexibility from buyers, but I think that close partnerships, or even acquisitions or technology licensing, with organizations in the legacy industries are likely to be the most successful ways forward. Though it’s important to caveat that opinion by acknowledging that successful hardtech start-ups are still relatively uncommon, and every field will end up with different models. But accessing those knowledge banks, not to mention those company’s capital and ability to take a long view, will be critically important for an industry currently facing serious headwinds.
I wouldn’t be working for TNC if I didn’t think that the solutions lie in sitting down with folks you don’t see eye-to-eye with, finding common ground, and building solutions that try to bring economic prosperity to communities and protect the natural world and its environmental services. It sounds idealistic when put into a single sentence like that, but it’s the basis for so many of our success stories, it's a tried and true method. And solutions that don’t bring everyone along are inherently brittle. So, to sum up, don’t abandon traditional energy communities as technology changes, bring your projects to them and help keep proud blue-collar communities intact. I believe this is a crucial strategy for ensuring the energy transition brings prosperity to all.
