Incentive to capture carbon emissions would spur needed technology
If carbon dioxide were a valuable commodity instead of a waste product, there would be a lot more incentive to capture it.
It turns out some oil producers already find carbon dioxide so useful, they’re willing to pay for it. In fact, they pay upwards of $30 per ton of CO2, which they then inject underground to coax oil from declining wells.
U.S. oil producers have been practicing carbon dioxide enhanced oil recovery (CO2-EOR) for four decades. Historically, they’ve relied mostly on CO2 from naturally occurring underground reservoirs. A better idea is to use man-made carbon emissions that would otherwise go into the atmosphere and contribute to climate change.
Encouraging more CO2-EOR, using man-made sources of carbon dioxide, is a key goal of The Expanding Carbon Capture through Enhanced Oil Recovery Act of 2014, introduced May 1 by Sen. Jay Rockefeller (D-WV). The bill would expand an existing federal tax incentive to capture carbon dioxide from power plants and industrial facilities for productive use in CO2-EOR.
The bill adopts many of the consensus recommendations of the National Enhanced Oil Recovery Initiative (NEORI), a broad and unusual coalition of industry executives, environmental groups, labor representatives, and state officials convened by C2ES and the Great Plains Institute.
According to NEORI’s analysis, expanding the existing federal tax incentive for CO2-EOR could, over the next 40 years:
- Boost domestic oil production by more than 8 billion barrels, eliminating billions in spending on imported oil.
- More than pay for itself within 10 years, and potentially raise more than $85 billion.
- Safely store underground over the long term 4 billion tons of man-made carbon dioxide that would otherwise be released into the atmosphere.
Most importantly, the Rockefeller bill would encourage deploying and investing in the carbon capture and storage (CCS) technology we need to address climate change while coal and natural gas remain part of our energy mix.
Combusting fossil fuels (coal and natural gas) for electric power is responsible for around 38 percent of annual U.S. carbon emissions. While emissions from the electric power sector have fallen in recent years, primarily due to the substitution of natural gas for coal, the use of fossil fuels is expected to continue well into the future.
In its latest Annual Energy Outlook, the Energy Information Administration (EIA) projects in its business-as-usual scenario that fossil fuels will continue to generate more than 65 percent of U.S. electricity through 2040. Globally, the EIA projects that coal- and natural gas-fired electricity generation will increase 60 percent and more than 90 percent, respectively, over the same time frame – making the need for carbon capture and storage evident and urgent.
CCS can reduce carbon dioxide emissions from coal and natural gas-burning power plants and various industrial facilities by up to 90 percent.
Twelve commercial-scale CCS projects are operating around the world today. The world’s first two commercial-scale CCS projects at power plants are under construction in Saskatchewan and Mississippi. More projects are needed, though, to build on these first-generation efforts. And cost remains one the biggest barriers for greater deployment.
The International Energy Agency estimates that around 100 commercial-scale CCS projects are needed by 2020 to meet the 2050 objective of limiting the global temperature rise to 2 degrees Celsius.
If we are going to hit that target, faster progress is needed. The combination of a federal tax incentive and revenue from selling CO2 for use in enhanced oil recovery can help overcome the cost of adopting CCS and help get more commercial-scale CCS projects in development.
About 5 percent of U.S. domestic oil production already comes from CO2-EOR. Estimates suggest that between 21 billion and 64 billion barrels of U.S. oil are economically recoverable through CO2-EOR. To get it, we could capture, and then store, about 9 billion to 16 billion tons of CO2 from man-made sources. That’s the equivalent of five to 10 years of U.S. transportation emissions.
CO2-EOR can play a key role in addressing our climate and energy challenges. And it can be a revenue-generating solution to our fiscal challenges.
Given the diverse and broad constituencies interested in promoting CO2-EOR, the Rockefeller bill deserves congressional support.