There have been many questions about what will happen to legacy energy infrastructure as the world transitions from fossil fuels to cleaner alternatives. That uncertainty has weighed on energy infrastructure companies like Kinder Morgan (KMI -0.86%). It's why the company trades at a low valuation (8.3 times forward earnings versus 18.2 times for the S&P 500) and high dividend yield (6.3% compared to 1.7% for the S&P 500). 

However, as Kinder Morgan's latest capital project completions showcase, it can transition with the rest of the world. The company should have the fuel to continue paying its big-time dividend for years to come. That makes it look like an attractive long-term income investment.

An early mover in renewable diesel

Kinder Morgan recently completed its Southern and Northern California renewable diesel (RD) hub projects. The first-of-their-kind projects will allow it to ship RD by pipeline to markets in the state: 

A slide showing Kinder Morgan's renewable diesel investments in California.

Image source: Kinder Morgan investor relations presentation.

As that slide shows, the company invested about $73 million to convert existing refined product terminals to handle RD. Kinder Morgan's hubs will efficiently transport the lower emissions fuel from refineries in Los Angeles and San Francisco by its SFPP pipeline system to other markets in those regions. It has customer contracts for its entire RD capacity at those hubs. Those agreements will supply the company with steady cash flow. 

This investment shows that Kinder Morgan can repurpose existing infrastructure to support lower carbon fuels. It suggests the company should be able to extend the life of much of its legacy infrastructure with some modifications. It can also make new investments by expanding its existing infrastructure or building new projects to support future flows of lower-carbon energy.  

Finding ways to support the fuels of the future

RD is one of many lower carbon opportunities Kinder Morgan is pursuing that will leverage its existing infrastructure and expertise. The company is also investing heavily in renewable natural gas (RNG). Over the past year, it spent about $800 million across several acquisitions to build a platform for producing RNG. In addition, it's investing up to $300 million more over the next two years to build additional RNG production capacity. These investments could see the company produce 7 billion cubic feet of RNG annually by the end of next year. The pipeline-quality gas can flow through the company's extensive natural gas network.

Kinder Morgan also recently approved its first carbon capture and sequestration (CCS) investment. It's moving forward with a project to capture carbon dioxide from two natural gas treating facilities in Southern Colorado. It will deliver the captured gas to its Cortez pipeline, which transports carbon dioxide from naturally occurring resources to the Permian Basin for enhanced oil recovery. Again, this investment will utilize existing infrastructure to help produce lower carbon fuels. It's likely the first of many opportunities in the potentially massive CCS market. 

An earlier stage opportunity Kinder Morgan is pursuing is hydrogen, a low-carbon fuel that could eventually replace natural gas. The company is currently exploring ways to blend and transport the lower carbon fuel using its existing infrastructure. It's also researching the possibility of storing hydrogen in repurposed underground natural gas storage facilities. Given the company's extensive natural gas infrastructure, it could become a leader in transporting and storing hydrogen.

The future is coming into clearer focus

The market isn't yet confident that energy infrastructure companies like Kinder Morgan can transition to support lower carbon fuels. That's weighing on their value and pushing up their dividend yields. However, as Kinder Morgan is starting to showcase, it can repurpose existing assets to support lower carbon fuels. With more projects under construction and many opportunities in the pipeline, it should have the power to sustain its big-time payout. That makes it an income stock investors can hold for the long haul.