Carbon Capture. Use and Sequestration Is Set for Massive Growth

To reach President Biden’s ambitious goal of net zero carbon dioxide (CO2) emissions by 2050, the United States will likely have to capture and permanently sequester significant quantities of CO2. It is no surprise, then, that the Biden Administration has taken steps to enhance and support carbon capture, use, and sequestration (CCUS) efforts.

CCUS generally refers to a set of technologies that capture CO2 at its source, such as a petrochemical facility or a power plant using coal or natural gas. In some instances, CO2 is used in industrial processes or as a feedstock for production of useful commercial products. Captured CO2 has long been used for enhanced oil recovery (EOR) projects. Alternatively, CO2 may be compressed, transported (usually through pipelines), and then injected for permanent sequestration thousands of feet underground in deep rock formations.

EPA reports that 35.1 million metric tons (MMT) of CO2 was used in EOR in 2021, with about 5 MMT used in the food and beverage industry. Only about 7 MMT were sequestered in 2021. Cumulatively, only about 39 MMT have been sequestered since the greenhouse gas reporting rules have been in place. 

However, recent initiatives should increase these numbers dramatically. The Inflation Reduction Act significantly raised the 45Q tax credit for sequestration, expanded the definition of qualified entities, and allowed credits to be directly monetized in certain circumstances. The Bipartisan Infrastructure Bill provided billions to develop large-scale commercial projects and supporting infrastructure.

Creating incentives is important, but these CCUS projects face very involved and laborious permitting requirements. A permit is required to inject CO2 as a Class VI well. The Class VI permitting rules include multiple regulatory requirements designed to safely inject and sequester CO2, some of which are not required for other classes of injection wells. For example, other classes of injection wells have a regulatorily fixed area of review while Class VI have an area of review delineated using computational modeling which projects the extent of the lateral and vertical migration of the CO2 plume. 

Additionally, because the Underground Injection Control (UIC) Program is a federal program, EPA is the permitting authority but many states have their own permitting programs. As a result, an applicant must submit a permit application to EPA and the state. However, to address this problem, a state may seek primacy from EPA to administer the UIC Program in the state. Louisiana and Texas are seeking primacy and, once obtained, only one application will need to be filed. 

Pipelines carrying CO2 may cross wetlands or waters of the United States, requiring permits from the Corps of Engineers. Interestingly, some environmental groups are opposed to carbon sequestration as a tool to address climate change because it fosters the continued use of fossil fuels and, according to some groups, allows fossil fuel users to ‘greenwash’ their environmental accomplishments. Ironically, some groups are using environmental justice principles, another priority of the Biden Administration, as grounds to oppose the placement of CO2 pipelines.

The Biden Administration, industrial concerns, and CCUS companies are all motivated to increase the amount of CO2 that is used or sequestered. The convergence of these interests will likely spark growth in the CCUS industry and assist in reducing the amount of CO2 that is emitted to the atmosphere.

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