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Opportunities for American Leadership Through Infrastructure Investments and Energy Innovation
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By Fatima Maria Ahmad

Leaders of both parties agree that we need to invest in American infrastructure, in part to create opportunities for new American jobs. In energy policy, there is also bipartisan consensus on the multiple benefits of carbon capture, use and storage technology, in particular for using manmade carbon dioxide for enhanced oil recovery (CO2-EOR). As Congress debates tax reform and infrastructure investments, it should consider the perspective of state leaders, who have outlined opportunities for the federal government to invest in carbon capture projects and CO2 pipelines to improve U.S. infrastructure and create jobs.

Over the past few years, the Western Governors Association, Southern States Energy Board  and National Association of Regulatory Utility Commissioners have all adopted resolutions supporting CO2-EOR and federal incentives for carbon capture. Under the leadership of Wyoming Governor Matt Mead and Montana Governor Steve Bullock, a State CO2-EOR Deployment Work Group was formed with officials from 12 states: Arkansas, Colorado, Indiana, Kentucky, Mississippi, Montana, Ohio, Oklahoma, Pennsylvania, Texas, Utah  and Wyoming. This work group has issued two notable reports in the past five months.

A December 2016 work group report highlighted federal and state policies that could accelerate carbon capture deployment. On the federal level, these policy drivers include the Section 45Q tax credit to incentivize CO2-EOR, which promotes energy independence, economic growth  and reduces greenhouse gas emissions. The federal policies also include allowing carbon capture project developers to use Private Activity Bonds. These bonds, which are often used for infrastructure such as airports and water and sewer projects, can spur private development because they are exempt from federal tax and often have longer repayment periods than commercial debt. This April, Senators Rob Portman (R-OH) and Michael Bennet (D-CO) and Representatives Carlos Curbelo (R-FL) and Marc Veasey (D-TX) introduced the Carbon Capture Improvement Act, which would allow state and local governments to issue PABs for carbon capture projects.

A February 2017 state work group white paper on CO2 pipelines recommends that federal policymakers facilitate the development of long-distance, large-volume trunk pipelines to connect sources of manmade CO2 with EOR fields. The white paper recommends that the federal government help with up-front financing of increased capacity for priority CO2 pipelines. “Super-sizing” the pipelines would help achieve economies of scale and lower overall costs per shipper when later sources of CO2 connect to the pipeline. Ultimately, all CO2 shippers would be better off  and the federal government would be repaid through pipeline tariffs. An example of this hub and cluster approach to CO2 transportation can be found north of the border. In Canada, the province of Alberta is paying for the upfront additional capacity of the Alberta Carbon Trunk Line, a 240 km pipeline that will connect multiple industrial sources of CO2 to EOR fields, storing an estimated 14.6 million tonnes of CO2 annually.

This year may be a turning point for carbon capture. The NRG Petra Nova project, the first U.S. retrofit of a coal-fired power plant with carbon capture technology, started operations in January. Petra Nova, which is the largest project of its kind in the world, captures CO2 from a 240 MW slipstream from the existing W.A. Parish plant near Houston, Texas. The captured CO2 is used to produce oil from a nearby oil field. Approximately 1.6 million tons of CO2 will be captured annually. Environmental groups support the use of manmade CO2 for EOR because lifecycle analysis demonstrates that there is a net storage of CO2 and a net benefit for the climate.

Regarding the scalability of CO2-EOR, analysis from a recent National Coal Council report indicates that 55.6 billion barrels of oil could be produced using state of the art technology and 105.5 billion barrels of oil could be produced using next generation technology.

More recently, Archer Daniels Midland began operating its Illinois Industrial Carbon Capture and Storage project – the world’s first commercial-scale carbon capture project on ethanol. More than 1 million tons of CO2 will be captured and stored in Mount Simon sandstone. Carbon capture on biofuels could one day lead to negative emissions as the bioenergy crops absorb greenhouse gases as they grow. 

In light of these project milestones and the strong expressions of state support for carbon capture projects and CO2 pipelines, there is a clear opportunity for federal policymakers to invest in carbon capture infrastructure to maintain American leadership in this important area of energy innovation.

Fatima Maria Ahmad is a Solutions Fellow at the Center for Climate and Energy Solutions (C2ES).

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