Category: Carbon Capture

Texas and Louisiana Move Towards State Primacy For Carbon Capture Projects

Carbon capture, use, and sequestration (CCUS) projects are regarded as a viable means to reach the ambitious goal of net zero carbon dioxide (CO2) emissions by 2050. Many claim that CCUS provides the only means to achieve that goal.

CCUS captures CO2 at its source, such as a petrochemical facility or a power plant using coal or natural gas. Captured CO2 has been used for enhanced oil recovery (EOR) projects for decades, without major incident. Alternatively, captured CO2 may be injected for permanent sequestration thousands of feet underground in deep rock formations.

The benefits of sequestering CO2 would seem obvious. At the very least, CCUS will reduce the amount of CO2 in the atmosphere and create millions in investments and thousands of good jobs. However, many environmental groups oppose CCUS because it allows the continued use of fossil fuels and slows the growth of renewable energy, such as wind and solar. Additionally, under the Biden Administration, claims are now being made that CCUS creates a disproportionate impact on minority, indigenous, and poor communities.

For the most part, CCUS projects must be approved by EPA and the state in which the project is located. Dual permitting is inefficient and hinders the prompt permitting of sequestration projects. However, EPA may grant a state “primacy,” which will allow the state in which the project is located to become the sole permitting and enforcement authority. This is beneficial to the proponent of the project as only one permit application needs to be filed and one permit obtained.

According to EPA’s web-site, Wyoming and North Dakota are the only two states to achieve primacy over carbon sequestration (Class VI wells) permitting and enforcement. However, Texas and Texas are moving towards obtaining primacy so that projects can more easily move forward.

In 2021, the Texas Legislature passed House Bill 1284, which gave the Railroad Commission sole jurisdiction over CCS projects. In August 2022, the RRC approved bringing the Texas regulations closer in line with federal standards. It is expected that these changes will help to expedite EPA’s processing of Texas’ forthcoming primacy application. EPA’s web-site identifies Texas as being engaged in “pre-application activities.”

Louisiana is farther along in the process. Louisiana submitted its primacy application in September 2021. EPA published a proposed rule in May 2023, which would grant primacy to Louisiana for the Class VI program. A sixty-day public comment period was established and a public hearing was held in Baton Rouge. Over 17,000 on-line comments have been received and dozens spoke at the public hearing. After reviewing the comments, it is expected that EPA will issue a final rule granting primacy by the end of the year.

Louisiana has also made several important statutory revisions to its state program. For example, each application for a Class VI injection permit must include a NEPA-like environmental analysis, which addresses whether environmental effects have been avoided to the maximum extent possible and whether a cost-benefit analysis shows that the social and economic benefits of the proposed activities outweigh the environmental impact costs. Additionally, the length of time to obtain a certificate of completion of injection operations, which serves to transfer liability to the state, has been lengthened from ten years to fifty years.

Obtaining primacy should foster more efficient and timely permitting, unlocking the potential for economic growth and reaching climate goals. Hopefully, EPA will act promptly on primacy applications so all states may receive the benefits.

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.