Carbon Capture and Storage at Hydrogen Plants: Policy Issues and Challenges
Annie BoekPeddicord
SMA 521
December 7, 2011
Hydrogen plants are among several types of industrial plants that can use carbon capture and storage (CCS) technology to reduce carbon dioxide (CO2) emissions. Policies related to the development of CCS as a climate change mitigation technology are limited and practical only at the federal and state levels. Existing policy mechanisms focus primarily on project funding, incentives, and regulation related to emissions and construction. However, absent comprehensive climate legislation and the existence of a price on carbon, there is no driver for CCS.
At the federal level, legislation that addresses CCS has included providing funding to CCS projects, supporting CCS research, and offering tax breaks and incentives for the use of carbon capture technology.The most significant piece of legislation passed relevant to CCS was the American Recovery and Reinvestment Act (ARRA) of 2009, whichprovided $1.4 billion in funding for CO2 capture for storage or beneficial use[1], such as enhanced oil recovery (EOR)[2]. The Department of Energy selected the projects and is responsible for administering the awards.
A review of bills introduced in the 112th Congress provides further insight into therole of CCS in federal legislation. The 112th Congress proposed ten non-redundant bills containing the term “carbon capture” and ten non-redundant bills containing the term “carbon sequestration”[3]. Proposed legislation included providing incentives to encourage the development and implementation of carbon capture technology, authorizing a program to demonstrate the commercial application of integrated systems for long-term geological storage of carbon dioxide, and providing tax credits for CCS at coal-fired plants. Only one of thesebills was passed; it provides for loans to be used for the construction, acquisition, or improvement of fossil-fueled electric generating plants (new or existing) that utilize carbon sequestration systems[4].
The federal government does have a role in regulating CCS activities through the Environmental Protection Agency (EPA), whichis responsible for ensuring that geologic storage activities are conducted safely and effectively.This includes the development ofgreenhouse gas (GHG) reporting mechanisms for geologic storage under the Clean Air Act (EPA 40 CFR Part 98), administration of the Underground Injection Control (UIC) program which regulates the underground storage of CO2 and other fluids under the Safe Drinking Water Act (SDWA), and evaluating risks to human health and the environment[5].The regulation with the greatest impact is the new Class VI rule, designed to protect underground sources of drinking water. The rule develops a new classof wells(Class VI wells) under the authority of the SDWA’s UIC Program. The Class VI rule builds on existing UIC Program requirements, but addresses CO2 injection for long-term storage to ensure wells used for geologic sequestration are appropriately sited, constructed, tested, monitored, funded, and closed[6].
Federal initiatives currently focus on laying the foundation to make CCS a viable climate mitigation technology throughresearch, development and deployment of CCS technologies, regulation development to address the safety, efficacy, and environmental soundness of CO2 injection and storage, and assessing the country’s capacity to store CO2 underground[7].However, without a carbon price and appropriate financial incentives for new technologies, there is no stable framework for investment in low-carbon technologies such as CCS[8].
States may step in and enact policies to facilitate the deployment of CCS technologies in the absence of policies at the federal level. State actions can include providingincentives for CO2 capture and storage, adopting CO2 EOR as a recognized CCS activity to facilitate new projects and pave the way for deeper, more permanent injection and storage in the future, encouraging first movers, and addressing policies to remove impediments to the implementation of projects that could create a source of CO2 for CCS field demonstrations and solutions[9].
At the state level, Washington State is one of the few states that has passed legislation regarding CCS. Washington Climate Change Legislation ESSB 6001 adopts the emissions-reduction goals and policy recommendations in Governor Chris Gregoire’s “Climate Change Challenge” executive order 07-02, issued Feb. 7, 2007[10]. It requires the Department of Ecology and the Energy Facility Site Evaluation Council (EFSEC) to develop rules for the geologic sequestration of CO2[11].
ESSB 6001 sets an Emissions Performance Standard (EPS) that limits the electric utilities’ ability to sign new or renewed long-term contracts with power plants whose GHG emissions exceed those of a modern natural gas-fueled power plant. New facilities can meet the standard through CCS but not by purchasing offsets[12]. Through legislation such as this, states may be able to drive broader deployment of CCS technologies and potentially influence the creation of stronger policies at the federal level.
Key challenges for the broader deployment of CCS technology are its high cost and the uncertainty surrounding climate policy. Many projects are being planned in the private sector in anticipation of requirements to reduce GHG emissions, but ongoing policy uncertainty about the value of GHG emissions reductions is a significant economic challenge to these projects[13].
A climate policy designed to reduce national GHG emissions is the most important step for commercial deployment of low-carbon technologies such as CCS, because it will create a stable, long-term framework for private investments[14].Because of the high cost of CCS and the uncertainty surrounding a national climate policy, the commercial viability of CCS projects remains uncertain. While many see the eventual creation of a national climate policy as inevitable, uncertainty regarding when and how it will come about make private investors hesitant to pursue CCS technology to reduce emissions. Ultimately, a price on carbon will be the most significant driver for CCS technology.
[1] accessed December 5, 2011.
[2] Enhanced Oil Recovery (EOR) is a process by which CO2 is injected into the ground to pump additional oil out of reservoirs.
[3] Search conducted using THOMAS database, accessed December 4, 2011.
[4] accessed December 4, 2011.
[5] accessed December 3, 2011.
[6] accessed December 1, 2011.
[7] accessed December 4, 2011
[8] accessed December 4, 2011
[9] accessed December 3, 2011
[10]Stormon, John, “Geologic Sequestration of Carbon dioxide Permitting in Washington State” (presented at Fundamentals of Carbon Capture and Storage, presented by Carbon Tech Alliance, Richland, WA, June 14-15, 2011).
[11]Stormon, “Geologic Sequestration.”
[12]Stormon, “Geologic Sequestration.”
[13] accessed December 4, 2011
[14] accessed December 4, 2011