Building Momentum: 2017 CCUS Policy Update

Fatima Maria Ahmad

C2ES Solutions Fellow

November 2, 2017

Agenda

2

•About C2ES

•Climate Benefits of Carbon Capture

•The National Enhanced Oil Recovery Initiative (NEORI)

• Federal Policy

• State Policy

•Independent, nonpartisan, nonprofit organization

•Mission: To forge practical solutions to reduce greenhouse gas emissions, expand clean energy, and strengthen resilience to climate impacts.

•A key objective is a national market-based program to reduce emissions cost-effectively.

•Brings city, state, and national policymakers together with businesses and other stakeholders.

•Ranks regularly among the top environmental think tanks in the world.

About Center for Climate and Energy Solutions

3

Business Environmental Leadership Council (BELC)

Climate Benefits of Carbon Capture

5

•Carbon capture is an essential technology

• IPCC Analysis: – More than half of the models failed to limit warming to 2C without CCS.– For those that could, climate change mitigation costs rose 138%.

• IEA Analysis: CCS can provide 13% of cumulative emissions reductions needed by 2050.

Climate Benefits of Carbon Capture

6

•Carbon capture is an essential technology

• Only practical solution to achieve deep decarbonization in the industrial sector.– 21% of U.S. GHG emissions– 18% of U.S. CO2 emissions

Photo by U.S. Department of Energy

Climate Benefits of Carbon Capture

7

• Lifecycle Analysis of CO2-EOR

• Clean Air Task Force analysis– Includes emissions from the oil.– Net storage benefit of 0.19 metric tons of CO2 per barrel of oil produced.– In other words, EOR using power plant CO2 results in a 37 percent reduction in

the life cycle emissions from oil.

• Negative Emissions: Bioenergy with Carbon Capture and Storage (BECCS)– First step is carbon capture on ethanol plants.

Coal Producers• Arch Coal• Cloud Peak Energy• Peabody Energy

Electric Power Generators• Great River Energy• NRG Energy• Summit Power Group• Tenaska Energy

Industrial CO2 Suppliers and Technology Vendors

• Air Products• Archer Daniels Midland• GE Oil & Gas• Jupiter Oxygen• Linde• Praxair

Project Developers• Lake Charles Methanol

Environmental NGOs• Center for Carbon Removal• Clean Air Task Force• Natural Resources Defense Council

Labor Unions• AFL-CIO• International Brotherhood of

Boilermakers• International Brotherhood of

Electrical Workers• SMART Transportation Division• United Mine Workers of America• Utility Workers Union of America

Oil Companies• Occidental Petroleum • Core Energy

Observers• Chaparral Energy• Interstate Oil and Gas Compact

Commission• Enhanced Oil Recovery Institute,

University of Wyoming• Mitsubishi Heavy Industries of

America• Tellus Operating Group

NEORI Participants

8

Federal Policy: 45Q – The FUTURE Act (S. 1535)

•The Furthering carbon capture, Utilization, Technology, Underground storage, and Reduced Emissions Act

• In July 2017, the FUTURE Act was introduced by Senators Heitkamp (D-ND), Capito (R-WV), Whitehouse (D-RI) and Barrasso (R-WY).

•The FUTURE Act currently has a total of 25 cosponsors:

• Kaine (D-VA), Graham (R-SC), Schatz (D-HI), Blunt (R-MO), Booker (D-NJ), Portman (R-OH), Tester (D-MT), Cochran (R-MS), Casey (D-PA), Klobuchar (D-MN), Durbin (D-IL), Franken (D-MN), Brown (D-OH), Warner (D-VA), Donnelly (D-IN), Manchin (D-WV), Duckworth (D-IL), Peters (D-MI), Coons (D-DE), Bennet (D-CO), and King (I-ME).

Federal Policy: 45Q - The Carbon Capture Act

• In September 2017, House Agriculture Committee Chairman Mike Conaway (R-TX-11) introduced H.R. 3761 with 29 bipartisan co-sponsors.

•H.R. 3761 currently has a total of 43 cosponsors:

• Robert Brady (D-PA), Costello (R-PA), McKinley (R-WV), Cramer (R-ND), Tim Murphy (R-PA), Evan Jenkins (R-WV), Collin Peterson (D-MN), Tipton (R-CO), Costa (D-CA), Rodney Davis (R-IL), Gene Green (D-TX), Tom Cole (R-OK), Sinema (D-AZ), Hurd (R-TX), Barr (R-KY), Sanford Bishop (D-GA), Moolenaar (R-MI), Doyle (D-PA), Stefanik (R-NY), Huizenga (R-MI), Barton (R-TX), Pearce (R-NM), Bost (R-IL), Bill Johnson (R-OH), Veasey (D-TX), Aderholt (R-AL), Kaptur (D-OH), Curbelo (R-FL), Richard Hudson (R-NC), Harper (R-MS), Mike Rogers (R-AL), Farenthold (R-TX), Gianforte (R-MT), Higgins (R-LA), Sewell (D-AL), Guthrie (R-KY), Upton (R-MI), Kelly (R-MS), Abraham (R-LA), Walberg (R-MI), Bergman (R-MI), and Lamborn (R-CO).

Federal Policy: Section 45Q legislation

House: Carbon Capture Act H.R. 3761

• Specifications• Keeps existing 45Q in place for current

projects• Credit for EOR storage and saline storage

increases to $35 per metric ton. There is only one credit.

• Ramps credit for 10 years• Reduces facility eligibility threshold from

500,000 to 100,000 tons of annual CO2 capture for all facilities– was 150,000 in last year’s bill

• Includes stronger transferability provision in last year’s Senate bill

• Authorizes program for projects that commence construction within 7 years

• Credit can be claimed for 15 years once placed in service

• Provides eligibility for new forms of CO2 utilization beyond EOR at $35 per ton

• Adds language to allow carbon monoxide capture and direct air capture to get the credit

• Credit authorization language is changed to allow all projects that “have never received 45Q tax credit before” to qualify

Senate: FUTURE Act S. 1535

• Specifications• Keeps existing 45Q in place for current

projects• Credit for EOR storage increases to $35

per metric ton and $50 for saline storage• Ramps credit over 10 years• Reduces 500,000 ton threshold to

100,000 for industrial and 25,000 threshold for non-EOR utilization. Retains 500,000 threshold for electric generating units

• Includes stronger transferability provision from last year’s bill

• Authorizes program for projects that commence construction within 7 years

• Credit can be claimed for 12 years once placed in service

• Provides eligibility for new forms of CO2 utilization beyond EOR at $35 per ton

• Adds language to allow carbon monoxide capture and direct air capture to get the credit

• Credit authorization language is changed to allow electric power projects that “have never received 45Q tax credit before” to qualify

Federal Policy: Private Activity Bonds

12

• S. 843: In April 2017, Sens. Portman (R-OH) and Bennet (D-CO) introduced the Carbon Capture Improvement Act to amend the IRS Code to provide for the issuance of tax exempt PABs to help finance equipment for carbon capture facilities.

• 3 cosponsors: Portman (R-OH), Bennet (D-CO), and Heitkamp (D-ND)

•H.R. 2011: In April 2017, Reps. Carlos Curbelo (R-FL) and Marc Veasey (D-TX) introduced a companion bill in the House.

• Six other co-sponsors: Cartwright (D-PA), Love (R-UT), Christopher Smith (R-NJ), Ros-Lehtinen (R-FL), Sinema (D-AZ), and Zeldin (R-NY)

Federal Policy: Master Limited Partnerships

13

• S. 2005: In October 2017, Sens. Coons (D-DE) and Moran (R-KS) introduced the Master Limited Partnerships Parity Act to open up the use of Master Limited Partnerships for clean energy technologies, including carbon capture.

•H.R. 4118: Reps. Poe (R-TX) and Thompson (D-CA) introduced a companion bill in the House.

State Policy: Resolutions on CO2-EOR

Year Organization Resolution Highlight(s)

2015 Western Governors’ Association Recognized economic and environmental benefits of CO2-EOR; called on Congress to extend and strengthen 45Q tax credit.

2015 Southern States Energy Board Emphasized need for federal incentives and state policy measures.

2016 National Association of Regulatory Utility Commissioners

Highlighted the economic, energy production and carbon mitigation benefits of CO2-EOR, and the importance of state and federal action.

14

State Policy: Western Governors’ Association

15

State Policy: California

16Infographic by California Energy Commission

Construction Materials• Cement and concrete• Asphalt• Aggregate• Timber/super hardwood

Fuel• Synthetic (methanol, butanol,• natural gas, syngas, etc.)• Micro-algae fuel• Macro-algae fuel

New materials• Carbon fiber• Carbon nanotubes

and fullerenes• Graphene

Industrial gas & fluids• Enhanced oil recovery• Enhanced coal bed

methane recovery• Enhanced water recovery• Semiconductor fabrication• Power cycles

Polymers• Polyurethene foams• Polycarbonate (glass replacement)• Acrylonitrile butadiene styrene• Many more

Agriculture & food• Algae-based food or

animal feed• Microbial fertilizer• Biochar, bio-pesticides,

bio-cosmetics

Chemicals• Preservatives (formic acid)• Medicinal• Antifreeze (ethylene glycol)• Carbon black• Many more

Source: CO2-based products market analysis by McKinsey and Company and CO2 Sciences

CO2 Utilization

17

•Research into potential re-uses of CO2 is ongoing.

AhmadF@C2ES.ORG