Waxman-Markey: Breaking the Deadlock on CCS

The press seems to cover Carbon Capture & Storage (CCS) as a matter of routine these days - local, national and international. For someone who hasn't looked at the technology in detail, it can be hard to decipher its potential role, status and readiness. Things get even more confusing when policy debates enter the picture. Fortunately, reality is simpler.

Although it is often portrayed as a novel technology, few realize that CCS is something that has been tried before. Nature stored CO2 and other fluids in the subsurface well before we thought of it, often for millions to hundreds of millions of years (the age of oil fields). We have been operating a few CCS projects for a number of years now. Other closely related industrial activities such as natural gas storage and enhanced oil recovery have been ongoing for decades. The IPCC and MIT completed comprehensive studies that summarize the status of the technology a couple of years ago.

So where does it stand? The truth is that CCS technology is ready to begin deployment at large, commercial scale today. Why are there no commercial coal-fired power plants (the sector with the largest emissions and in most urgent need of CCS, but certainly not the only possible application) in operation today that capture and store their carbon, you might ask? Well, "it's the economy, stupid"... It makes no sense to invest in such a plant if there are no limits in carbon emissions in place or a price associated with venting your CO2 to the atmosphere. What muddies the waters sometimes is the reluctance of some in the coal and electric utility industries to phase out construction of conventional coal plants and replace them with plants that capture and sequester their emissions. They have argued, conveniently, that the technology is not proven and that, until it is, we should not cap emissions as it would mean a blow to the coal sector and the hence the economy. Other industry leaders, however, have been saying for some time now that the technology is available to reduce emissions today if the economic and legal issues are rectified. Companies like BP, Hydrogen Energy, NRG, and Tenaska have stated so clearly. They were effectively joined in January by the entirety of the U.S. Climate Action Partnership (USCAP), which included very specific recommendations to address the barriers to CCS deployment and coal plants. The bulk of those requirements have now been included in the Waxman-Markey Energy & Climate discussion draft. Let's take a closer look.

Sections 111-113 deal with the legal needs and barriers to CCS, andfill regulatory and other gaps on the logistics of permitting CCS projects. Section 111 calls for a study of legal and regulatory barriers to CCS that could be addressed by Federal agencies in the immediate term, so that these agencies can get going. Next, as you might be aware, EPA is in the midst of a Safe Drinking Water Act rulemaking right now for geologic sequestration of CO2 using underground wells for the purposes of protecting underground sources of drinking water. Section 112 directs EPA to issue a unified regulatory framework for CCS that safeguards human health and the environment, and also prevents atmospheric releases from subsurface reservoirs including hydrocarbon reservoirs. It also establishes authority for financial responsibility provisions for injection sites, for which EPA has limited authority currently.  In other words, this section expands EPA's authority to fill current gaps or ambiguities. The next section, Section 113 calls for a report to be produced by an EPA-convened task force that studies legal and statutory issues relating to CCS and produces consensus recommendations if possible. DOE, with FERC's assistance, is to produce a study on CO2 pipeline needs and barriers. 

Then we move on to economic and technological issues. Section 114 mirrors a bill that Rep. Boucher introduced last year (the Carbon Capture and Storage Early Deployment Act - see our testimony), and sets up a Carbon Storage Research Corporation that is tasked with the research and development of new CCS technologies, as well as a limited number of early demonstrations. The Corporation is funded through a small "wires charge" on existing fossil generation. A 10-year carbon assessment program is to be established to generate between $1-1.1bn of revenue annually and used to fund early commercial scale demonstrations of capture or storage.

Section 115, however, goes a step further and contains a funding mechanism for commercial CCS plants, which are unlikely to be economical under the lower carbon prices in the early years of a carbon cap. The section establishes a program for the broad commercial deployment of CCS-equipped power plants and certain other industrial sources. 85% of funds are reserved for power plants above 250MW that derive at least 50% of fuel input from coal and/or pet coke. 15% of funds are reserved for industrial sources emitting over 250,000 tons of CO2 per year and excludes producers of fossil-based transportation fuel. Payments are awarded according to a declining fixed feed in approach, based on tons of CO2 captured, that rewards higher payments for higher rates of capture as determined by EPA (payment rates yet to be determined but to be set based on reduced cost of compliance, capture technology, and other factors). The payment period is not yet specified, nor is the total capacity deployed. This mechanism avoids the risk involved in handing out allowances whose value would vary, thus making the incentive more bankable and predictable. If the funding levels are set right, this section would address the biggest stumbling block for CCS plants and bridge the economic gap. What about safeguarding against new conventional coal, though?

This where Section 116 comes in, which sets performance standards for new coal-fired power plants, effective from January 1st 2009 for facilities that have not received their permits. Those plants have to emit less than 1,100 pounds of CO2 per MWh if permitted after 2015, 800 pounds of CO2 per MWh or lower (if EPA so determines) if permitted after 2020. For plants permitted between 2009-2015 they will have to comply with 1,100 pounds of CO2 per MWh (just over the emissions rate of a modern natural gas plant) within 4 years if modest amounts of CCS plants are operational in the U.S. and internationally (2.5GW or 5 mn tons sequestered per year in the U.S.; or 5GW and 10mn tons sequestered globally per year, provided there are 2mn tons at least sequestered in the U.S.). This section therefore ensures that we do not continue on the dangerous path of constructing new coal plants that do not capture and sequester their emissions.

The Waxman-Markey draft therefore ensures the phase out of the most serious threat to meeting emission reduction limits - conventional coal-fired power plants - and provides a financial mechanism to move us to the next generation of plants that capture and dispose of their carbon. It also addresses outstanding legal issues and barriers. For those who claim that CCS needs another 15 years of research before it can be deployed, the race is on. The incentives will flow to those who are ready to claim them first, and our assessment is that major contracts would be signed within months of enactment.

What remains? Important details (such as the exact funding levels) need to be filled in of course. There is also work to be done on the issue of subsurface (pore) property rights to clarify ownership and dominance of estates - but states have to do that. Federal and State regulators also have to build staff and expertise on CCS, which means being appropriately funded. Overall though, the draft seems poised to finally break the deadlock in CCS and setting the stage for deployment at a scale that would make a meaningful dent in CO2 emissions. Chairmen Waxman and Markey deserve praise for their thoughtful treatment of the subject.

 Now, there are a number of "FAQs" that arise around a topic like this. Each deserves a blog of its own, but let me at least provide some links and initial thoughts here.

If you are concerned about the safety of CCS, I urge you to read the IPCC and MIT reports that I mention above, as well as a series of other publications by the IEA and others. A bibliography can be found here, along with powerpoints from two public workshops that we co-hosted on the subject a few weeks ago.

If you are wondering why we need CCS when cleaner, truly sustainable solutions such as energy efficiency and renewables are available, the answer is urgency of action on climate change, the dominant role of coal in our electricity production today (close to 50% of supply) and politics. We simply cannot afford to take low carbon options off the table if we are to reduce emissions sufficiently in time to prevent dangerous climate change. Yes, other solutions are preferable to CCS, and should exploited first. NRDC has steadily advocated this, and the draft bill contains provisions that ensure the deployment of those technologies too (see David Doniger's blog).

Finally, CCS does not legitimize coal use nor does it make coal "clean". It simply disposes of its CO2 when otherwise it would have been emitted to the atmosphere. Despite millions of dollars being spent by industry outfits to perpetuate the myth of "clean" coal, we are far from it on a number of fronts: dangerous, abusive and poorly regulated mining practices, coal combustion waste management (the coal ash spill in Tennessee is still fresh in our memories) and emission of conventional pollutants like SOx and NOx and mercury from smokestacks. The toll from coal is heavy. And CO2 scrubbing is no absolution. But it is a necessity if we are to stop global warming. (For an analysis of these issues, read David Hawkins' recent Congressional testimony)

About the Authors

George Peridas

Senior Scientist, Climate & Clean Air program

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