A Global CCS Institute Community blog post features an in-depth conversation with Eileen Claussen and Judi Greenwald of C2ES (read parts one and two) on the promise of carbon capture, utilization, and storage and CO2-EOR. Below is an excerpt:
“This [NEORI’s] approach shifts the CCS problem from a largely public cost, into one where the private sector has incentive to invest. How do NEORI’s participants prioritize these benefits?
Eileen Claussen: NEORI’s participants agree that energy security, domestic investment, and environmental protection are important. But different participants would prioritize these goals differently. We all agree on the solution – incentivizing the use of captured CO2 in enhanced oil recovery – but we don’t necessarily agree on which reasons for doing that are most important. For some, the highest priority is increasing our nation’s energy security by reducing dependence on foreign oil, including oil that is imported from unstable and hostile nations. CO2-EOR potential in the United States equals 26-61 billion barrels of oil with existing technology. With next-generation techniques, the potential rises to 67 to around 140 billion barrels. Current US proven reserves are estimated to be 20 billion barrels, so we are talking about at least doubling US. oil potential. That’s huge.
For others, the highest priority that CO2-EOR addresses is creating economic opportunity. If we do this right, it will create jobs, boost tax revenues, and reduce the US trade deficit. We can put dollars we now spend on oil imports to work right here in the US economy.
How much money are we talking about? One estimate, from Advanced Resources International, projects that the reduction in oil imports associated with CO2-EOR would add up, year by year, to US$600 billion by 2030. (For further details on economic impacts, NEORI: Economic Benefits of CO2-EOR.)
And for still others, the priority addressed by CO2-EOR is protecting the environment. Capturing and storing CO2 from industrial facilities and power plants will reduce US greenhouse gas emissions, while getting more American crude from areas already developed for oil and gas production. By fully developing American reserves that are amenable to this practice, we could reduce CO2 emissions by 10-19 billion tons, an amount equal to 10-20 years of emissions from personal vehicle use in this country.
And the bonus is that it can help us further the commercial deployment of the CCS industry in this country – not just with coal and natural gas power plants, but with other domestic industries such as natural gas processing, ethanol and ammonia production, and steel and cement manufacturing. Driving innovation in CCS technology will allow us both to take advantage of our nation’s vast fossil fuel resources and achieve much larger CO2 emission reductions.
I have worked on the climate issue for many years now, and I assure you this is a big deal. Reducing US CO2 emissions by up to 19 billion tons while also advancing CCS technology would be a major achievement.
Can you put this in context? Relative to the other climate and energy solutions on the table, from renewables, to EVs, to greener buildings, how does CO2-EOR stack up?
Judi Greenwald: Of the many solutions to our climate and energy challenges we are working on here at C2ES, CO2-EOR is perhaps the option with the greatest near to mid- term potential, but the one about which policy makers know the least. CO2-EOR is an important strategy for deploying CCS, which will be needed to keep coal (and natural gas) as part of our electricity generation portfolio while reducing CO2 emissions across economic sectors. But public and policymaker awareness of the potential of CO2-EOR is limited, despite its diverse benefits. CO2-EOR offers the opportunity to enhance national security, decrease foreign trade deficits, and create domestic jobs and economic opportunity. What’s more, tax incentives given for CO2-EOR are likely to pay for themselves as federal and state governments receive revenues from increased EOR oil production.
What’s the problem with the current federal treatment of CO2 and how does NEORI propose to change them?
Eileen Claussen: Today, the major hurdle preventing the growth of EOR is there’s not enough readily-available CO2. And this is why our organization joined with the Great Plains Institute to convene the NEORI.
NEORI’s centerpiece recommendation is a competitively awarded, revenue-positive federal production tax credit for capturing and transporting CO2 to stimulate CO2-EOR expansion. This federal tax credit would more than pay for itself because it will lead to additional oil production subject to existing tax treatment (see below a chart forecasting cost of such an incentive, along with the increased tax revenues generated by increased oil output). The new incentive will enable a variety of industry sectors to market new sources of CO2 to the oil industry, and to reduce their carbon footprints. It will drive innovation and cost reduction in CO2 capture and compression, and help build out a national CO2 pipeline system.
For the near term and until the broader credit is in place, NEORI also recommends specific ‘good government’ changes to improve the workability of the existing carbon capture and storage credit known as Section 45Q.
Of course, states also have an important role to play in fostering CO2-EOR deployment. This is why NEORI identifies existing state policies that should serve as models for policymakers in other states to adopt and tailor to their particular needs. These policies include cost recovery for CCS power projects, long-term off-take agreements for CCS power, severance tax reductions for oil produced by CO2-EOR, and others.