Following on the heels of last week's passage by the Senate of the energy bill, the House is poised to do the same tomorrow (December 18th). The President has signaled that he intends to sign the bill now that the national RPS and tax provisions have been struck. Much has been written about what the bill would in terms of increasing CAFÉ standards, and those are indeed notable. We focus our comments here on what the bill says about CCS.

The Bottom Line for CCS

Our reading of HR 6 suggests that Congress:

  • Envisions that CCS will be focused on academia, R&D and demonstration-scale projects for the foreseeable future -- i.e., at least through 2012.
  • Wants all demonstration projects to comply with the UIC, while leaving the regulatory status of commercial projects unclear. State roles are not precluded.
  • Wants liability protection for federal lands; the situation on private lands remains unclear.
  • Views "sequestration property rights" as having a non-negative value.
  • Is open to the notion of sequestration occurring in all manner of geologic structures, including, for example, unmineable coal seams.
  • Nothing in the legislation grants EPA additional regulatory authority by, for example, amending the Safe Drinking Water Act.

And finally, all of this is subject to appropriations, and if past is prologue, Congress does not necessarily fund the energy programs which it authorizes.

The Details

Title VII of the Senate-passed version of HR 6 (attached) addresses CCS.

Subtitle A

Subtitle A of title VII is the "Department of Energy Carbon Capture and Sequestration Research, Development, and Demonstration Act of 2007." Among other things, subtitle A directs DOE to (i) conduct additional fundamental research on CCS; and (ii) further promote the ongoing efforts of the regional sequestration partnerships regarding field trials. Those data, in turn, are to be provided to the "States, the Environmental Protection Agency, and other appropriate entities to support development of a regulatory framework for commercial-scale sequestration operations that ensure the protection of human health and the environment" (sec. 702). This language is interesting because it does not signal which agency should have primary regulatory authority.

DOE is also required to support seven "large-scale" demonstration projects. "Large-scale" means the injection of 1M tons of industrial CO2 annually or of a scale that demonstrates the ability to inject and sequester several million metric tons of industrial CO2 for a large number of years.

DOE must provide a status report on these section 702 activities in 2011. Appropriations are authorized through 2012. It will be interesting to see, however, if funding is actually provided.

Section 703 separately requires DOE to establish a program to further demonstrate capture technologies, ideally in conjunction with the large-scale demonstration projects under section 702. Interesting aspects of this section 703 program include the following: (i) a variety of sources, not just utilities, must be examined; (ii) the CO2 must be "purified" to "allow safe transport and sequestration"; and (iii) the percentage of capture should be "high". Appropriations are authorized through 2013, but again it remains unclear whether any of this will get funded.

Sections 704 and 705 deal with various National Academy of Science studies pertaining to CCS.

Section 706 stipulates that actions carried out under the subtitle must comply with the UIC program of the Safe Drinking Water Act. This provision would appear to be consistent with EPA's draft injection guidance, which likewise applies to demonstration projects, but leaves open for now how commercial projects are to be regulated. Section 707 authorizes EPA to conduct a research program to address public health, safety and environmental impacts that may be associated with CCS.

Subtitle B

Subtitle B of title VII provides that the Secretary of the Interior, operating through the USGS, shall develop a methodology for conducting a nationwide storage assessment (sec. 711). The assessment must be supported with actual drilling data (well logs, cores, fluids, etc.).

Section 713 requires DOI to prepare an inventory of "the quantity of carbon dioxide stored with Federal mineral leaseholds."

Section 714 requires DOI to prepare a recommended framework for manage geological sequestration on public lands. Interestingly enough, the framework is supposed to ensures that the federal government "receives fair market value for the use of public land or an interest in public land for geological sequestration." Liability issues also must be addressed, with reference to the experience of CO2-EOR operations on federal lands. The framework also must comply with the UIC program.