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White House Offers Menu of Policy Fixes to Boost Carbon Capture

June 30, 2021, 7:01 PM

The federal government could get carbon capture projects up and running faster if it issued new rules, tweaked its permitting requirements, and supported the industry with its buying power, the White House Council on Environmental Quality said Wednesday in a report to Congress.

The report offers a menu of policy options for lawmakers to mull as they consider ways of promoting carbon capture, utilization, and sequestration (CCUS) technologies, which remove carbon from the air. Carbon capture is among the rare low-carbon technologies in President Joe Biden’s clean-energy plan that has bipartisan backing.

Even though the policy ideas come from the White House, they aren’t necessarily prescriptive, a White House official told Bloomberg Law.

“It should be interpreted as, ‘Here are the areas in which the administration plans to act. Here is how they might act in those areas. That is subject to refinement and change as the agencies carried out the more detailed process that’s necessary under their statutes,’” said the official, who spoke on condition of anonymity.

Some critics say carbon capture technology doesn’t make fiscal sense. They point to the recent mothballing of NRG Energy Inc.'s Petra Nova near Houston, which has been the only U.S. carbon capture and use facility at a coal-fired power plant, as a warning sign.

Regulation or Guidance

The CEQ report was mandated by a provision tucked into a 2020 appropriations bill (H.R. 133), which told the agency to write a report that identifies existing permitting rules governing CCUS, along with best practices to move projects forward more efficiently.

One fix suggested in the report is a new regulation or guidance document, possibly from the Transportation Department, governing the construction and safe operation of pipelines for CCUS. That could help the nation build a broader network of pipeline infrastructure, which the report said will likely be needed to achieve the Biden administration’s climate goals.

The U.S.'s 5,200-mile long pipeline network “is insufficient in the context of a CCUS industry designed to contribute meaningfully to net-zero emissions goals across all industrial sectors,” CEQ wrote.

Another suggestion is new regulations from the Interior and Agriculture Departments to clarify ownership on federal lands for CCUS activities. Royalty rate reduction credits “could potentially create worthwhile financial incentives, but a number of legal, procedural, and long-term monitoring guidance questions still need to be clarified,” CEQ wrote.

Regulations that clarify CCUS activities offshore could also help spur the industry, according to the report. In the meantime, the EPA and Interior could jointly develop requirements using their existing authorities in complementary ways offshore, CEQ said.

Programmatic EIS

The report further suggested the use of a common environmental impact statement, known as a programmatic EIS, that would cover issues across the CCUS sector generally. Such a document could shorten the time required to develop an environmental assessment, CEQ said.

But it would have to be carefully written to avoid the wrath of environmental groups, which at times have criticized programmatic EISes as tools that let agencies dodge detailed, project-level analysis.

To that end, the report also noted that individual CCUS projects are “by their nature complex—marrying carbon capture with transportation and sequestration—and therefore the applicable local, state, and federal permits and reviews will depend on the characteristics of the particular project.”

A separate White House official said the administration “certainly would not see it as a way to ease the environmental or public health responsibilities of project developers. It would mostly be to generate more clarity about how we’re thinking about the broad contours of what might be required.”

Purchasing Power

Other ideas listed in the report include the use of the federal government’s procurement power to “support early markets for CO2 utilization” and the public availability of lifecycle analyses of different types of utilization options.

The report further suggested more study of local criteria air pollutants resulting from carbon capture retrofits at industrial facilities. That work would allow for more informed decision-making for future projects, which CEQ called “critical to address potential cumulative effects and other environmental justice concerns.”

About 45 CCUS facilities are either in operation or in development in the U.S. today, according to the report.

The Biden administration has repeatedly signaled strong support for CCUS. Energy Secretary Jennifer Granholm told Bloomberg TV on June 25 that the bipartisan infrastructure framework announced the previous day includes “significant” money for carbon capture demonstration projects.

“We need both renewables and carbon management strategies in order to get to our goals,” Granholm told a House subcommittee in May. The technology is also a “huge jobs opportunity” for struggling communities across the nation, including coal communities, Granholm said.

To contact the reporter on this story: Stephen Lee in Washington at stephenlee@bloombergindustry.com

To contact the editor responsible for this story: Chuck McCutcheon at cmccutcheon@bloombergindustry.com

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