The California Carbon Capture and Storage Review Panel released its final recommendations last week after nine months of fact-finding and deliberations. The Panel was sponsored by the California Energy Commission, the California Public Utilities Commission, and the California Air Resources Board (“CARB”), with participation from the California Department of Conservation and the California State Water Board. The Panel was formed to review the statutory and regulatory barriers to the use of carbon capture and storage (“CCS”) as a strategy to combat climate change. CCS is a technology with potential to reduce carbon dioxide emissions from power plants and industrial sources on a large scale by capturing the emissions and sequestering them in geologic formations underground.

The Panel’s recommendations focus on:

  • ensuring that CCS can play a role in meeting California’s greenhouse gas emission (“GHG”) reduction requirements (e.g., the Panel recommends that CARB consider and integrate CCS into its GHG rules);
  • addressing regulatory and permitting barriers for CCS projects (e.g., the Panel recommends establishing a coordinated permitting system with the California Energy Commission as the lead agency);
  • addressing key legal issues and uncertainties (e.g., the Panel recommends that the legislature declare surface owners to be the owners of subsurface pore space that could be used for carbon dioxide storage); and
  • ensuring the safe, equitable, and cost-effective use of CCS in California (e.g., the Panel recommends that the legislature establish that any cost allocation mechanisms for CCS projects be spread as broadly as possible across all Californians).

The Panel was comprised of experts from industry, trade groups, academia, and environmental organizations. Stoel Rives’ Jerry Fish served on the Panel’s Technical Advisory Committee along with representatives from the relevant state agencies and other expert consultants. With assistance from other members of Stoel’s CCS team, he contributed white papers on carbon dioxide pipelines, pore space rights, and enhanced oil recovery issues and advised on the Panel on a variety of property, liability, and regulatory issues for CCS. For more information on CCS or the Panel’s work, please contact:

Read the Panel’s key findings and recommendations after the jump or download the full background report and final recommendations report from the California Climate Change Portal.

Key Findings (see pages 3-4 of Findings and Recommendations by the California Carbon Capture and Storage Review Panel, December 2010):

1.     There is a public benefit from long-term geologic storage of CO2 as a strategy for reducing GHG emissions to the atmosphere as required by California laws and policies.

2.     Technology currently exists for the safe and effective capture, transport, and geological storage of CO2 from power plants and other large industrial facilities.

3.     High costs, inadequate economic drivers, remaining uncertainties in the regulatory and legal frameworks for CO2 storage, and uncertainties regarding public acceptance are barriers to the near-term deployment of commercial-scale CCS projects in California.

4.     There is a need for clear rules under AB 32 regarding the treatment of CO2 emission reductions from CCS projects involving capped and uncapped emission sources.

5.     Multiple state and federal agencies are currently responsible for permitting CCS projects in California.

6.     There is a need for clear, efficient, and consistent regulatory requirements and authority for permitting all phases of CCS projects in California, including CO2 capture, transport, and storage.

7.     Standards are needed to ensure the safe and effective operation of geologic storage projects.

8.     Consistent requirements are needed for monitoring, measuring, verifying, and reporting injected CO2, and releases, if any, and for GHG accounting protocols necessary to comply with federal and state laws and policies to reduce CO2 emissions.

9.     There is a need to establish clear financial responsibility for the stewardship of geologic storage sites during the (a) operating phase; (b) post-injection (pre-closure) monitoring phase; and (c) post-closure phase.

10. The right to use subsurface pore space for geologic storage needs to be clarified.

11. There is a need to address any potential environmental justice aspects of CCS projects.

12. There is a need for increased public understanding of CCS benefits and risks.

13. Absent new initiatives, economic barriers to early CCS deployment will delay the technological learning needed to drive down the costs of CCS.

Key Recommendations (see pages 4-5 of Findings and Recommendations by the California Carbon Capture and Storage Review Panel, December 2010):

To ensure that CCS can play a role in meeting California’s requirements for GHG emission reductions:

1.   The State should recognize appropriately regulated CCS as a measure that can safely and effectively reduce atmospheric emissions of CO2 from relevant stationary sources, including power plants and other industrial sources. To that end, and conditioned on compliance with all applicable federal and state requirements, ARB should: (a) for capped sources under AB 32, recognize CO2 sequestered by CCS projects as having not been emitted to the atmosphere (with the result that an allowance is not required to be held for each ton of CO2 that is captured and geologically stored) and define accounting protocols for sequestered CO2 and (b) for uncapped sources under AB 32, decide whether offset protocols for CCS projects within the State should be adopted.

To address regulatory and permitting issues related to CCS projects:

2.      The State should evaluate current EPA regulations and determine which, if any, State agency should seek “primacy” for permitting Class VI wells under the UIC program.

3.      The State should designate the California Energy Commission (Energy Commission) as the lead agency under the California Environmental Quality Act (“CEQA”) for preventing significant environmental impacts in CCS projects (both new and retrofit projects).

4.      The State should clarify that the State Fire Marshall is indeed the lead agency for regulating the safety and operation of intrastate CO2 pipelines.

5.      The Energy Commission should consult with the responsible permitting agencies in carrying out its responsibilities as the CEQA lead agency for CCS projects. Specifically, the Energy Commission should:

a.       Designate the Division of Oil, Gas and Geothermal Resources (DOGGR) to be the responsible agency for activities related to the subsurface.

b.      Coordinate the development of performance standards for CCS sites that would include design requirements and other operational measurements consistent with the goals of protecting the groundwater and preventing emissions of CO2 to the atmosphere.

c.       Designate the California Air Resources Board as the responsible agency for air-related aspects of CO2 monitoring, reporting, and verification (MRV) requirements.

d.      Designate the State Fire Marshall as the responsible agency for CO2 pipelines.

e.       Designate the State Water Board as the responsible agency for impacts to water quality.

f.       Designate other agencies as appropriate.

To address key legal issues and uncertainties related to CCS projects:

6.   The State should consider legislation establishing an industry-funded trust fund to manage and be responsible for geologic site operations in the post-closure stewardship phase. In addition, California should proactively participate in federal legislative efforts to enact similar post-closure stewardship programs under federal law.

7.   The State legislature should declare that the surface owner is the owner of the subsurface “pore space” needed to store CO2. The legislature should further establish procedures for aggregating and adjudicating the use of, and compensation for, pore space for CCS projects.

8.   The State should consider whether legislation is needed to extend to CO2 transportation infrastructure for CCS projects the current authority for acquiring the rights of way for the siting of transportation infrastructure for natural gas storage projects.

To ensure the safe, equitable, and cost-effective use of CCS in California:

9.   It should be State policy that the burdens and benefits of CCS be shared equally among all Californians. Toward this end, the permitting authority shall endeavor to reduce, as much as possible, any disparate impacts to residents of any particular geographic area or any particular socioeconomic class.

10.                       The Panel endorses the need for a well-thought-out and well-funded public outreach program to ensure that the risks and benefits of CCS technology are effectively communicated to the public.

11.                       The State legislature should establish that any cost allocation mechanisms for CCS projects should be spread as broadly as possible across all Californians.

12.                       The State should evaluate a variety of different types of incentives for early CCS projects in California and consider implementing those that are most cost-effective.