Bipartisan Bill Aims to Accelerate Carbon Capture Deployment

July 12, 2017/ George Peridas / Climate, Conservation, Lands, Natural Resources Defense Fund, North America, Resources

Published by the Natural Resources Defense Fund

[Edited on Jul 12, 2017]

We can only avoid the worst effects of climate change if we take swift and decisive action. The world has taken some important steps already, but we had been asleep at the wheel for many decades, releasing vast amounts of carbon into the atmosphere. Now it’s crunch time.

Analyses show that if we are to maintain a 66% chance of limiting average warming to 1.5°C, we can only afford 4 more years at current greenhouse gas emission levels. For 2°C, we have 19 more years at current emission levels. What degree of warming is “safe”? For years, 2°C was quoted as the default figure in order to avoid the worst effects of climate change, but it has become clear that such an amount of warming is anything but safe or pleasant, and that 1.5°C or even lower would be far more prudent. Read more here if you want to decide for yourself.

What does this mean in practice? That we have to redouble efforts to reduce energy demand and use energy more efficiently, and to switch from fossil fuels to renewable energy. But the world still relies heavily on fossil fuels. We have invested trillions in infrastructure that simply emits too much carbon pollution, and is unlikely to be scrapped soon enough to avoid blowing our carbon budget. We also need to find ways to reduce or eliminate carbon pollution from large sources that use fossil fuels, such as power plants and refineries, and cement, chemical and ethanol production plants. Carbon capture and storage is a set of technologies that can do that. It will not make fossil fuels “clean”, but it can dramatically reduce carbon emissions.

Several CCS projects in various industrial sectors are operational around the world today, and more are under construction or development. Many of these are in North America (see list below). To contribute meaningfully to mitigating climate change, the world needs to build lots more of these. Why has not this happened yet? In simple terms, because the right policies are not yet in place that will lead to further cost reductions in the technology.

Senators Heitkamp, Capito, Whitehouse, Barrasso, Kaine and Graham are taking action to accelerate the use of CCS technologies by introducing a bill that expands an existing tax incentive (under section 45Q of the Tax Code). The bill, titled the FUTURE (Furthering carbon capture, Utilization, Technology, Underground storage, and Reduced Emissions) Act, has remarkable support from both sides of the aisle, totaling 25 sponsors and co-sponsors, an impressive full quarter of the U.S. Senate. The bill would replenish the existing and dwindling pool of tax credits available for CCS technology, increase their value and the possible claim period, broaden eligibility for who can claim them, and make them more usable in a commercial context. These issues have hindered broader development of CCS projects to date. The bill marks the beginning of an important effort to take those barriers down and pave the way for more projects to be planned, financed and constructed, ultimately putting more CO2 in the ground instead of the atmosphere.

The recipe has been successful with many pollution reduction technologies, as well as solar and wind energy. Initial government support drives costs down, until the technologies can compete on their own and achieve broad deployment. In addition to the climate benefits, broadening deployment of CCS technologies in the U.S. would create additional jobs domestically and export opportunities abroad.

Oil fields are among the most readily usable geologic depositories for captured carbon dioxide. When carbon dioxide is injected in oil fields, additional oil is produced in a process known as CO2-enhanced oil recovery (CO2-EOR). The U.S. pioneered the technique in the early 1970s, and today CO2-EOR accounts for about 4% of national oil production. Tens of billions of barrels of oil remain stranded in U.S. oilfields, and for now can only be accessed if CO2 is injected. Aside from the climate benefit of storing CO2 in those oil fields, there is some additional environmental benefit that could come from this bill. Producing oil from fields that have already been developed and drilled offers a less disruptive and problematic option that expanding drilling in offshore or protected areas, or from sourcing highly environmentally destructive and carbon intensive oil from Canadian tar sands. This does not mean that we should not be moving away from the use of oil as fast as possible or that oil production in general does not have significant environmental impacts that need to be addressed, but when faced with a choice, CO2-EOR offers a better one.

Some have claimed that the produced oil negates the climate benefits of injecting CO2 in the first place. It is worth remembering that oil is globally traded and priced, and that production and consumption are not the same thing. Unless CO2-EOR expands to such a degree that it affects the global supply-demand dynamic for oil – something that we consider very unlikely given its modest share—producing oil through this technique will simply displace oil from other sources, and not result in a net increase in carbon emissions.

Thank you, Senators, for your leadership on this important issue and for a rare display of bipartisanship and common sense.

Existing Integrated CCS Projects in North America

1972: Terrell gas processing plant in Texas – A natural gas processing facility (along with several others) began supplying CO2 in West Texas through the first large-scale, long-distance CO₂ pipeline to an oilfield.

1982: Koch Nitrogen Company Enid Fertilizer plant in Oklahoma – This fertilizer production plant supplies CO₂ to oil fields in southern Oklahoma.

1986: Exxon Shute Creek Gas Processing Facility in Wyoming – This natural gas processing plant serves ExxonMobil, Chevron and Anadarko Petroleum CO₂ pipeline systems to oil fields in Wyoming and Colorado  and is the largest commercial carbon capture facility in the world at 7 million tons of capacity annually.

2000: Dakota Gasification’s Great Plains Synfuels Plant in North Dakota – This coal gasification plant produces synthetic natural gas, fertilizer and other byproducts. It has supplied over 30 million tons of CO₂ to Cenovus and Apache-operated EOR fields in southern Saskatchewan as of 2015.

2003: Core Energy/South Chester Gas Processing Plant in Michigan – CO2 is captured by Core Energy from natural gas processing for EOR in northern Michigan, with over 2 million MT captured to date.

2009: Chaparral/Conestoga Energy Partners’ Arkalon Bioethanol plant in Kansas – The first ethanol plant to deploy carbon capture, it supplies 170,000 tons of CO₂ per year to Chaparral Energy, which uses it for EOR in Texas oil fields.

2010: Occidental Petroleum’s Century Plant in Texas – The CO₂ stream from this natural gas processing facility is compressed and transported for use in the Permian Basin.

2012: Air Products Port Arthur Steam Methane Reformer Project in Texas – Two hydrogen production units at this refinery produce a million tons of CO₂ annually for use in Texas oilfields.

2012: Conestoga Energy Partners/PetroSantander Bonanza Bioethanol plant in Kansas – This ethanol plant captured and supplies roughly 100,000 tons of CO₂ per year to a Kansas EOR field.

2013: ConocoPhillips Lost Cabin plant in Wyoming – The CO₂ stream from this natural gas processing facility is compressed and transported to the Bell Creek oil field in Montana via Denbury Resources’ Greencore pipeline.

2013: Chaparral/CVR Energy Coffeyville Gasification Plant in Kansas – The CO₂ stream (approximately 850,000 tons per year) from a nitrogen fertilizer production process based on gasification of petroleum coke is captured, compressed and transported to a Chaparral-operated oil field in northeastern Oklahoma.

2013: Antrim Gas Plant in Michigan – CO₂ from a gas processing plant owned by DTE Energy is captured at a rate of approximately 1,000 tons per day and injected into a nearby oil field operated by Core Energy in the Northern Reef Trend of the Michigan Basin.

2014: SaskPower Boundary Dam project in Saskatchewan, Canada – SaskPower commenced operation of the first commercial-scale retrofit of an existing coal-fired power plant with carbon capture technology, selling CO₂ locally for EOR in Saskatchewan.

2015: Shell Quest project in Alberta, Canada – Shell began operations on a bitumen upgrader complex that captures approximately one millions tons of CO₂ annually from hydrogen production units and injects it into a deep saline formation.

2017: NRG Petra Nova project in Texas – NRG commenced operations on the Petra Nova project in January, 2017. It is the first American retrofit of a coal-fired power plant with CCUS and the world’s largest post-combustion capture project. It captures up to 90% of the CO₂ from a 240 MW slipstream of flue gas from the existing WA Parish plant. The CO₂ is transported to an oil field nearby.

2017: ADM Illinois Industrial Carbon Capture & Storage Project – Archer Daniels Midland began capture from an ethanol production facility in April, 2017, sequestering it in a nearby deep saline formation. The project can capture up to 1.1 million tons of CO₂ per year.