The Gulf Coast Captures Carbon and Investors

Legal delays in the Midwest prompt investors to shift focus to faster-moving projects in the U.S. South

4 Jun 2025

The US Gulf Coast is emerging as the country’s primary corridor for carbon pipeline development, as delays and regulatory pushback in the Midwest prompt investors to redirect capital toward the South.

Efforts to build carbon dioxide (CO₂) pipelines in states such as Iowa and South Dakota have slowed significantly in recent months. Local opposition, permit denials and legal uncertainty have led to increased costs and lengthy delays for developers seeking to transport CO₂ from ethanol plants to underground storage sites.

In contrast, the Gulf Coast offers a more favourable operating environment. The region benefits from established pipeline infrastructure, clearer regulatory frameworks and fewer political obstacles, all of which have enabled developers to accelerate construction timelines and reduce risk.

Occidental Petroleum is spearheading one of the region’s most prominent projects. In Texas, the company is developing a large-scale direct air capture facility that will connect to an expanding CO₂ transport and storage network. Supported by federal subsidies and long-term contracts, the project is positioned as a model for turning carbon removal into a commercially viable industry.

Elsewhere, Tallgrass is adapting existing natural gas pipelines in Wyoming to transport CO₂, reducing capital expenditure and avoiding the regulatory bottlenecks seen in the Midwest.

Analysts have described the trend as a flight to quality, as investors increasingly favour regions where construction is faster, regulatory conditions are stable and legal challenges are limited. Transport costs in the Gulf Coast are estimated to be less than half of those projected for contested northern routes.

“This shift isn’t just about location, it’s about predictability,” said one industry analyst. “In the Gulf, companies can move quickly without getting bogged down in lawsuits and opposition.”

With permitting approvals advancing and new partnerships forming, the Gulf Coast is set to play a central role in the buildout of US carbon infrastructure. As policymakers push to scale climate technologies, the region’s logistical advantages and regulatory certainty are attracting both capital and momentum.