CCS and the long haul

When carbon capture and sequestration is discussed, the phrase “in perpetuity” tends to come up. This cannot be literal, but what we conceptualize as forever is at least a very long time, and someone needs to be liable (or at least responsible) for potential damages related to geological sequestration (GS).

I recently attended an EPA public workshop on Underground Injection Control (UIC) regulations for carbon sequestration. The Agency is in the midst of writing regs pertaining to GS of carbon, and they were looking for input. It was made perfectly clear that no comments were to be attributed to participants during the main session, so there’s going to be a lot of anonymity in this post.

I went to a breakout session on financial assurance of long-term site care and monitoring (LTCM). Although the discussion was meant to focus on EPA regulations under the Safe Drinking Water Act, it spread to broader themes of long-term liability and responsibility. Specifically, the conversation quickly turned to state indemnification (Note: EPA has no authority under the UIC regime to transfer liability away from the owner/operator of a site; it would take an act of Congress to do so).

The main argument for indemnification in GS is that uncertainty reigns at this point, and the damages associated with a major release or leak are sufficiently large as to deter investment in sites. One of the speakers countered this idea, stating that there are surely some firms that would be willing to take on this liability — it all depends on whom you want in the GS business. In response, a participant memorably noted that to store carbon “in perpetuity”, we need an institution to last as long. He suggested the Catholic Church, as it has significantly split only once in the past 2000 years or so. Joking aside, his point was that corporations are too short-lived to take on liability stretching far into the future. However, he claimed that a nation would be the next-best option.

Indemnification is by no means new to the U.S. government.

CCS on the Hill: FutureGen, Regulation, and Public Perception

I went to a hearing on the Hill last Thursday pertaining to regulatory aspects of carbon capture, transport, and sequestration. The hearings were for the benefit of two bills (S. 2144 and S. 2323) making their way through the Senate Committee on Energy and Natural Resources, but were also conveniently held the day after the DOE announced it was backing out of the FutureGen project (at least in its current manifestation).

Indeed, the big attraction for many in attendance was the presence of James Slutz, Deputy Assistant Secretary in the DOE Office of Natural Gas and Petroleum. In a bold move, he started off asserting that “DOE has assumed the lead in CCS technology”. When pressed by Sen. Barrasso to explain how eroded confidence in public-private partnerships can be rejuvenated after the DOE FutureGen pullout, Slutz simply replied that “when a project doubles in cost, it’s time to rework the agreement”, that the project was “no longer in the interest of the American people”, and that market-based plants would be more successful. Aside from the fact that a large proportion of the cost overruns are related to inflation and delays, this statement also completely ignores the point of public-private demonstration partnerships. There is an enormous amount of risk involved in this type of project and, as such, it would not be viable as a purely private endeavor. FutureGen was not designed to be profitable, it was designed to demonstrate commercial-scale technology.