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Black Eagle is an industry town. The community sprang up to support the nearby copper smelter, operated for the longest time by the Anaconda Copper Mining Company. Banners along the main drag still depict the massive smokestack that defined the industrial skyline for decades until its demolition in 1981.

The copper smelter is long gone, shuttered just before the stack fell. Fewer than 1,000 people live in the community today. But residents of Black Eagle, which is not part of Great Falls but is adjacent to its northeast corner, still have industry neighbors in the Calumet oil refinery.

Living downwind of the refinery makes the distinct scent of the operation a regular part of life.

“In the summer, you don’t leave your windows open, because you never know,” said Jim Helgeson, a former Great Falls Transit general manager who has lived in Black Eagle for 50 years.

Helgeson is no stranger to this industrial corridor. His parents immigrated from Norway to Great Falls and worked for the Anaconda Company, the predominant industrial operation to the east of Black Eagle. That shuttered in 1980 under the ownership of Atlantic Richfield Company. 

These days, it’s the Calumet oil refinery to the west that is undergoing change.

“It’s definitely growing in square footage down there over the last few years,” Helgeson said. “With that, we kind of expected that the smell was going to increase.”

That growth is accelerating at the refinery. Calumet formed a subsidiary, Montana Renewables, which has taken over a substantial portion of the refinery for a biofuels plant and already produces about 10,000 barrels daily. In the coming years, the company will more than double that production, funded by a $1.6 billion loan guarantee from the federal government.

The loan came from a program of former President Joe Biden’s Inflation Reduction Act, which funneled billions of dollars to projects that could help achieve climate goals. The biofuels operation in Great Falls can take agricultural products like canola oil, rendered cow fat (beef tallow) and camelina oil and process them into products called renewable diesel and sustainable aviation fuel.

The Biden administration was especially bullish on sustainable aviation fuel, it would significantly lower greenhouse gas emissions in the airline industry. The administration launched a “” to incentivize its production and reach a goal of a 50% reduction in greenhouse gas emissions compared to conventional jet fuel.

But climate benefits down the supply chain could come at the expense of increased air emissions at the Great Falls site. Although Montana Renewables touts its environmental benefits, projections from the company suggest that the biofuels plant could emit more air pollutants than the site emitted as a crude oil refinery.

Despite these projections, Montana Renewables is seeking to make the plant fully exempt from property taxes by qualifying the entire facility as “pollution control equipment.”

“This is a major industrial facility that is expected, by its own estimates, to emit significant amounts of air pollutants that will impact the health of the surrounding communities,” said Jim Duffy, a Great Falls resident and former official at the California Air Resources Board, a primary industry regulator in that state.

The fuels produced at Montana Renewables have the potential to reduce emissions relative to petroleum-based alternatives when burned in a diesel truck or airplane. But the full environmental impact of the entire biofuels lifecycle, from seeds in the ground to airplane exhaust, isn’t yet fully known for this small but growing industry.

At the production stage here in Great Falls, however, that growth could mean the emission of more harmful pollutants just upwind of Black Eagle.

GROWTH INDUSTRY

Calumet has consistently scaled up operations at the Great Falls refinery. The Indiana company purchased the facility in 2012 from the Montana Refining Company and quickly expanded its output of products made from Canadian crude oil. 

By 2016, production grew from about 10,000 barrels of fuel and asphalt per day to a capacity of 25,000 through a $400 million project. Hundreds of workers imported for that project because there was so little parking around the facility. Great Falls grew closely around the 100-year-old refinery, which is sandwiched between the Missouri River and the busy, eponymous Smelter Avenue. There’s a Walmart and a restaurant across the street and a middle school just up the road.

That growth in 2016 is dwarfed in cost by the multi-year expansion currently underway to convert the refinery into a leading biofuels production plant. Montana Renewables formed in 2021 and began producing fuel from agricultural-based materials, like canola oil and soybean oil. The creation of the subsidiary formed two different operations at the plant: Calumet, remaining in the petroleum refining business, and Montana Renewables, the growing biofuels producer.

Montana Renewables has its work will “significantly advance national efforts to address climate change” and reduce transportation emissions. In addition to the ability to transition away from crude oil as raw materials, the fuels are beneficial because they are “drop-in,” meaning they can be used in current airplane and diesel engines. Importantly, sustainable aviation fuel still needs to be blended with conventional jet fuel for use.

“You’ve got to think about the integration of the energy industry at large, in that you need a consumer who has a large demand for the fuel that you’re going to produce,” John Coates, director of the Energy and Biosciences Institute at the University of California Berkeley, told �ԹϺ���. “The easiest way to do that is to have a drop-in fuel.”

Calumet secured private financing to get Montana Renewables up and running, according to regulatory filings. In 2024, the announced a $1.6 billion loan guarantee to Montana Renewables, which will fund the next phase of the expansion. That will bring the production of renewable diesel and sustainable aviation fuel from about 10,000 barrels per day to a target of 21,500 barrels per day, or 330 million gallons per year. It’s expected to be completed by late 2027.

The company hopes to leverage regional ag producers to supply the plant-based raw materials for biofuel production. In written statements and comments to MTFP, the company said that it will provide a steady market for crop producers. So far, Montana Renewables is importing most of those raw materials from out of state.

“Our success is tied to Montana agriculture producers, and we are looking forward to creating new markets for crops here in Montana, supporting economic growth in our local ag sector,” a company spokesperson for Montana Renewables told MTFP in a statement.

That story of biofuel production for the benefit of ag producers drew bipartisan political support from Republicans like U.S. Sen. Steve Daines and Gov. Greg Gianforte, and Democrats like former U.S. Sen Jon Tester. The project is viewed locally as an economic boost for Great Falls, and the company has promised to add as many as 40 permanent jobs as part of the venture.

But with potential benefits come potential costs, which can be measured both in tax dollars and in tons of pollution.

EMISSIONS AT THE SOURCE

To receive the loan guarantee from the federal government, Montana Renewables was subject to a lengthy environmental assessment. That included a projection of the maximum air emissions for several pollutants once the full biofuels plant expansion was completed.

The estimates show that the biofuels plant could emit more sulfur dioxide, nitrous oxides, carbon monoxide and particulate matter than the facility did as a dedicated petroleum refinery. 

The emissions from Montana Renewables could outpace those of the Calumet petroleum refinery even while producing less. In 2020, Calumet reported producing 26,742 barrels (daily) of asphalt and fuels made from crude oil. Estimates for target biofuel production at Montana Renewables range from 21,500 to 24,000.

In an interview with MTFP, Calumet/Montana Renewables Senior Vice President Kollin Schade said that the estimated emissions represent a maximum that the plant may not reach during routine operation.

“As we know, the actual emissions are always much lower than the potential to emit,” he said.

Past emissions data show mixed results relative to projections. In 2014, Calumet that would result from its first expansion of the crude oil refinery. Actual emissions data show that the plant stayed within those projections for many pollutants, but it exceeded those projections by 2016 for pollutants like carbon monoxide and particulate matter. Those exceedances still fell within permitted limits.

When asked if Montana Renewables’ emissions would surpass those of the petroleum refinery even if it did not meet the operational maximum, Schade declined to answer directly. 

“All I can say is we’re going to stay at the level of whatever the permitted numbers are that we get from the EPA and the DEQ,” Schade said. “Those are the numbers that are viable to maintain the environmental quality of the air content around the refinery.”

While the pollution estimates are intended to represent the emissions of the plant running at full capacity, they aren’t the same as permitted limits, which can have much higher ceilings than actual emissions. For example, the Montana Renewables and Calumet site is to emit up to 1,515 tons of sulfur dioxide annually, but its estimated actual emissions are a fraction of the permitted limit.

The emissions estimates could force the facility to transition from a “minor” to a “major” emitter under an EPA program known as . The program is intended to track and permit increases in air pollution from major emitters and has thresholds for certain pollutants that trigger a facility to graduate from minor to major. Montana Renewables indicated in its environmental report that it expected to apply for major status under the program, which requires permitting and additional emissions projections for approval.

Even while Montana Renewables scales up, the Calumet crude oil refinery remains in operation. Though it downsized to make room for its subsidiary, the petroleum side of the plant emitted more carbon monoxide and volatile organic compounds in 2023 than it did in the six years before the change, according to emissions reports from the company. And production in 2023 was less than half of the Calumet petroleum refinery’s output at its peak.

Speaking with MTFP, Schade said he believes Montana Renewables is beneficial for the environment and the community.

“From my perspective, it’s a net positive all the way around,” he said. “Employment, agriculture, emissions, the whole bit. I think it’s a win-win-win all the way around.”

BEARING THE TAX BURDEN

In May 2022, the Great Falls City Commission considered a tax break for the Montana Renewables plant. At the time, Calumet had recently settled a multi-year tax protest that reduced the refinery’s property tax bill from $16.9 million to $11 million over three years.

The tax break before the commission was estimated to cost the city nearly $2.8 million in tax revenue over 10 years. Bob Kelly, Great Falls’ mayor at the time, during the commission meeting that the city must strike a balance between supporting its growing industries and protecting tax proceeds from the city’s largest taxpayer.

“When any entity…decides to do a tax protest and have your valuations redone, that causes great consternation in a revenue source for us, because we are fairly dependent upon a substantial amount of money to flow out of that expansion,” Kelly said.

The premise was that the benefit would last 10 years and incentivize growth and investment in the tax base. After that decade, tax proceeds from the fully expanded plant could flow to the city. The commission unanimously approved the break for Montana Renewables.

Months after that decision, in December 2022, Montana Renewables filed an application to make its entire plant exempt from property taxes in perpetuity. The company asked state regulators to make the biofuel facility, which it valued at $562 million, tax-exempt by qualifying the entire operation as “pollution control equipment.”

The pollution control tax exemption, enshrined in , applies to “portions” of equipment or machinery that prevent the creation of air or water pollutants. These are often specific devices added to refinery equipment to curb emissions, trap pollutants or otherwise reduce chemicals being emitted. But Montana Renewables has argued that because it uses ag-based raw materials and its products can reduce greenhouse gas emissions when used as fuel, the entire plant should be considered one cohesive pollution control system.

“…The MRL [Montana Renewables] facility is a fully integrated facility, which provides identifiable and substantial environmental benefits that can be achieved only by operation of the biomass conversion plant and all of its equipment together as one emissions-reducing unit,” the company said in an appeal to state regulators.

In 2023, the Montana Department of Environmental Quality denied a full exemption under the pollution control equipment provision but certified more than $25 million worth of equipment for the benefit — a small portion relative to the entire plant’s value.

In documents and memos for the application, DEQ explained that the statute is aimed at specific devices that reduce emissions at industrial facilities that would otherwise pollute more. It wasn’t the intent of the statute to grant tax exemptions to any facility that reduces the use of fossil fuels elsewhere in the supply chain, the state engineers wrote.

“For instance, under this argument, an owner or operator of a wind-generating facility could argue its facility should be designated as pollution control equipment because the facility avoids emissions that might otherwise occur through fossil fuel electricity generation,” a DEQ engineer wrote in a 2023 memo to the company.

Montana Renewables has appealed DEQ’s determination and maintains that the entire plant qualifies for the exemption. The appeal remains pending, and a hearing is set for August before the Montana Tax Appeal Board in Helena.

Duffy, the former California Air Resources Board regulator, called Montana Renewables’ logic absurd. He has submitted several comments to the DEQ to oppose a full exemption. Like the agency’s initial determination, Duffy said the exemption shouldn’t consider potential benefits down the supply chain, such as in airplane emissions.

“The legislation and administrative rules do not include any language to indicate that emissions impacts that occur either upstream or downstream from the facility should be considered,” he told MTFP.

Duffy also rejected the premise that Montana Renewables could be granted a blanket tax exemption as a pollution control system while the company’s own estimates predict a rise in air emissions. He first compared Montana Renewables’ projected emissions with data from the EPA’s National Emissions Inventory.

In an appeal document to the state Tax Appeal Board, Montana Renewables sought to demonstrate its environmental benefits and wrote that the emissions of several pollutants “are all dramatically lower” than those of the petroleum refinery. The comparison represented the biofuels plant at its current state, prior to the billion-dollar expansion.

However, the tax exemption the company seeks would apply to the fully expanded plant. The company didn’t note its own projections, which estimate the opposite of what was written in the appeal document — that emissions on the biofuels side could surpass those of the petroleum refinery.

Schade, the Montana Renewables senior vice president, said that he expects the appeal to conclude in the near future. 

While Montana Renewables pursues a tax exemption, it is also applying for or already receiving a menagerie of other tax incentives. The plant currently gets a 50% tax break from both Cascade County and Great Falls under an expanding industry benefit that lasts 10 years. 

In December, the plant applied for a 50% property tax break from the state under a benefit for energy production facilities. A brought by Great Falls legislator Steve Fitzpatrick in 2023 added producers of renewable diesel and sustainable aviation fuels to the eligible list of beneficiaries, and committee testimony specifically referenced the Montana Renewables project. If approved, that tax break would last 15 years.

Montana Renewables also stands to receive federal of up to $1.75 per gallon of sustainable aviation fuel delivered.

In its latest to the U.S. Securities and Exchange Commission, Calumet noted that for Montana Renewables, “a significant component of our product margin consists of a variety of government subsidies, incentives and mandates.”

For the petroleum refinery side of the business, Calumet recently received an 80% tax break on $6.1 million of equipment under a state law that benefits new industrial equipment.

And just a few years after settling its last tax protest, Calumet initiated another multi-year tax protest with the state that could potentially reduce the company’s tax liability. That case remains ongoing. Local governments have had to budget around these protested tax proceeds. On May 6, Great Falls Finance Director Melissa Kinzler told the city commission that the city didn’t receive nearly $1.2 million in protested taxes from the refinery for 2024 and expects an additional $360,000 to be withheld for the current fiscal year. 

A full tax exemption for Montana Renewables would create a substantial hole in local government budgets. The company’s tax bill for 2024 was nearly $5.8 million, which includes $1.8 million for Great Falls, $1.1 million for Cascade County and $1.5 million for public schools. 

Montana Renewables and Calumet Montana Refining are taxed separately, but together are the county’s largest taxpayers. From 2015 to 2024, the company formally challenged its property valuation to the state in seven of those nine years.

FARM TO FUEL

Montana Renewables aims to leverage area ag producers to supply products it can turn into sustainable aviation fuels and renewable diesel. That has been the company’s cornerstone message.

“When you look at the feedstocks, whether it’s canola oil or camelina, whatever it is, we’re looking to boost our local agricultural involvement with this process overall,” Schade told MTFP. “And we really look at this as a massive benefit for Great Falls, for Montana and really the local community.”

Cyndi Johnson farms canola and other crops east of Conrad. She said there isn’t as much demand these days for what she calls “Montana traditional grains” like high-quality wheat and barley. She recently pivoted to growing more canola and is excited about the prospect of the biofuels plant opening up a new market.

“The only way to survive in this day and age is to diversify,” said Johnson, who is also board chair at the Montana Farm Bureau Federation. “And Montana Renewables is giving us that opportunity for diversity.”

Production of renewable diesel and sustainable aviation fuels is a fast-growing industry, and Calumet is not the only oil and gas company making the switch. Phillips 66 converted an entire petroleum refinery in Rodeo, California, to a biofuels plant and now produces of renewable diesel daily from ag-based materials.

As these facilities expand, experts are questioning the environmental impacts of diverting cropland for fuel production instead of food. Coates, who directs the Energy and Biosciences Institute at UC Berkeley, said that there’s a real need for transitional fuels to move away from petroleum-based products. But ag-based fuels introduce new factors to consider.

“There’s still the question of land resources, as well as fertilizers and irrigation that all go into this,” he said. “Just because something can be converted to a biofuel doesn’t necessarily mean that it should be, because the environmental footprint of growing that feedstock in the first place might be greater than you might expect.”

Daniel Kammen, a professor of energy also at UC Berkeley, said that a truly sustainable agricultural feedstock wouldn’t compete with crops for human consumption. He pointed to the rise of ethanol production in the late 2000s, which .

“Very simple statement,” Kammen said. “A biofuel is only as clean as the source if the biomass doesn’t compete with anything. Period, full stop.”

Montana Renewables Plant Manager Ron Colwell that point in 2022 at a Great Falls City Commission meeting, saying that camelina would be a preferred feedstock because it “doesn’t generally compete as a major food product.”

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The Montana Renewables plant has adaptable equipment that can make biofuels from beef tallow, distillers’ corn oil, canola oil, used cooking oil and camelina oil. Schade said that this variety allows flexibility for sourcing raw materials and guards against fluctuating prices for any one of those products.

“Just about any seed oil that you can even imagine out there, we will try and bring into the refinery and try to process it,” he said.

A company from December indicated that some of those products are coming from farms in Minnesota and the Pacific Northwest. Camelina production is growing in northcentral Montana and got a boost with the in Great Falls in 2022. The company specializes in camelina crops for use as biofuel feedstock.

There’s a need for more robust seed crushing plants, which process crops into seed oil, that will open up the market for regional ag producers. Schade said the company is actively looking to support those plants moving into northcentral Montana.

Johnson, who says much of her canola crop is sold to ag product producers like Nutrien and Columbia Grain, disagrees with the idea that her crop would compete for food sources. She said that she and other farmers are following the markets to keep their operations viable.

“I’ve heard some people say that’s going to make less for human consumption,” she said. “That’s not true at all. The people who are growing canola now, who did not grow canola 10 years ago, are growing it because there’s a demand for the oil.”

CLEARED FOR LIFTOFF

While the Trump administration has dismantled some parts of former President Biden’s energy agenda, the Sustainable Aviation Fuel Grand Challenge remains in place as a program involving multiple federal agencies, including the Department of Energy and the U.S. Department of Transportation.

An Energy Department spokesperson told MTFP in an email that growing the use of sustainable aviation fuels aligns with Trump’s to “unleash American energy dominance.”

“Both the Trump Administration and this program aim to increase the production of affordable domestically produced fuels, create more export opportunities and fuel choices, support American farmers, and lower energy costs,” the spokesperson wrote. 

The government’s includes production benchmarks to hit 3 billion gallons of sustainable aviation fuel by 2030 and 35 billion gallons by 2050, which would represent 100% adoption by the airline industry. Federal tax credits are part of the incentives offered under the plan, and certain states have their own incentive structures. A prominent example at the state level is California’s Low Carbon Fuel Standard, which Duffy helped to develop.

For Montana Renewables, the enthusiasm from the federal government is a tailwind for the plant’s expansion.

“The DOE, the EPA, they’ve all come out with policies supporting renewable feedstocks [raw materials],” Schade said. “They got into their mathematical equations, and those folks are sharp, and they can see that if you’re looking globally, and you’re trying to reduce certain emissions, the renewable energies are the way to go.”

A federal report on sustainable aviation fuel, which appears to from government websites, underscored the potential for airline emissions reductions (an archived version of the report is ). It also briefly mentions localized environmental impacts, suggesting that biorefineries “could negatively impact air quality in local communities” through the production and shipping of sustainable aviation fuel.

“Socially vulnerable populations have already felt these impacts due to the similar and more polluting operations of traditional petroleum refineries producing fossil jet fuel,” the report said. “The implementation of emissions control technologies and utilization of low-emission vehicles could reduce these impacts.”

Helgeson, the longtime Black Eagle resident, knows firsthand about dealing with legacy industrial pollution. The Anaconda Company’s smokestack for decades with little or no environmental regulation. Almost 30 years after the plant closed, EPA studies found lead and arsenic in the yards of Black Eagle residents. Seventeen years after that, to remove lead-laced soils from those residential yards. That work continues this year.

On the west side of town, the refinery smell persists.

“We’re cleaning it up on one end of town and having it come in from the other,” Helgeson said.

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