The Center for Climate and Energy Solutions seeks to inform the design and implementation of federal policies that will significantly reduce greenhouse gas emissions. Drawing from its extensive peer-reviewed published works, in-house policy analyses, and tracking of current legislative proposals, the Center provides research, analysis, and recommendations to policymakers in Congress and the Executive Branch. Read More
When I founded a new nonprofit organization 15 years ago, the United States and the world urgently needed practical solutions to our energy and climate challenges. That need has only grown more urgent.
Earlier today, I announced my plans to step aside as the President of the Center for Climate and Energy Solutions (C2ES) once my successor is on board. As I look back, I find we have come a long way. That said, any honest assessment of our progress to date in addressing one of this century’s paramount challenges must conclude that we have much, much further to go.
When our organization, then named the Pew Center for Global Climate Change, first launched in 1998, 63 percent of the world’s electricity generation came from fossil fuels. Incredibly, that number is even higher today – 67 percent. The concentration of carbon dioxide in the atmosphere, the main driver of climate change, is also higher than it was then – in fact, at its highest level in more than 2 million years.
Scientists around the globe have just reaffirmed with greater certainty than ever that human activity is warming the planet and threatening to irreversibly alter our climate. Climate change is no longer a future possibility. It is a here-and-now reality. It’s leading to more frequent and intense heat waves, higher sea levels, and more severe droughts, wildfires, and downpours.
We at C2ES have believed from the start that the most effective, efficient way to reduce greenhouse gas emissions and spur the innovation needed to achieve a low-carbon economy is to put a price on carbon. It’s a path that a growing number of countries, states, and even cities are taking.
With all the fuss around the EPA’s proposed carbon dioxide standard for new power plants, you would be forgiven for missing the following line: “EPA projects that this proposed rule will result in negligible CO2 emission changes, quantified benefits, and costs by 2022.” That’s right, the standard will likely have little to no effect before the date by which EPA will be required by law to revise it.
Why? As I recently told the National Journal, because the most credible projections have natural gas so inexpensive for the next several years that very few power companies are planning to build new coal plants – compared with the 150 natural gas power plants in the works. Pulling the proposed standard wouldn’t change that reality. In fact, the one coal plant being built today includes carbon capture and storage (CCS), and is expected to meet the tough carbon standard EPA has proposed. A handful of additional coal plants with CCS may move forward in the next several years, as well.
So what’s all the fuss about?
Environmental Law Institute: President Obama’s Climate Action Plan in the Near Term: Expectations, Risks, and Opportunities
Elliot Diringer joins Dan Utech of the Obama Administration and Jennifer Smokelin of Reed Smith LLP to discuss the president’s Climate Action Plan. They will identify possible shortcomings and areas of emphasis. The panelists will also share their concerns about how the plan will be implemented and their views on risks and opportunities for businesses.
David W. Wagner, Associate, Reed Smith LLP (moderator)
Elliot Diringer, Executive Vice President, Center for Climate and Energy Solutions
Jennifer A. Smokelin, Counsel, Reed Smith LLP
Dan Utech, Deputy Director for Energy and Climate Change, White House Domestic Policy Council
September 30, 2013
12:00 PM to 1:15 PM ET
Environmental Law Institute
2000 L Street NW, Suite 620
Washington, DC 20036
See a video of the ELI panel on Obama's Climate Action Plan.
The U.S. Department of Energy (DOE) oversees federal efforts to advance the deployment carbon capture and storage (CCS) technology. In addition to working on the research and development of CCS component technologies, DOE has provided financial support to multiple commercial-scale CCS projects in the power and industrial sectors. This brief examines DOE’s support for CCS through the American Recovery and Reinvestment Act of 2009 and through its annual budget.
Congressional Testimony of Judi Greenwald on the Future of Coal: Carbon Capture, Utilization and Storage
Testimony of Judi Greenwald, Vice President for Technology and Innovation
Center for Climate and Energy Solutions
Subcommittee on Energy
Committee on Science, Space, and Technology
U.S. House of Representatives
July 25, 2013
Click here to view video of the testimony.
Hearing on The Future of Coal: Utilizing America's Abundant Energy Resources
Carbon Capture, Utilization and Storage
Madam Chairman, Rep. Swalwell, and members of the Subcommittee, thank you for the opportunity to testify on carbon capture, utilization, and storage. My name is Judi Greenwald, and I am Vice President for Technology and Innovation at the Center for Climate and Energy Solutions (C2ES – formerly known as the Pew Center on Global Climate Change).
My testimony today will focus on the most important climate and energy solution that no one knows about. I will emphasize two main points:
- Carbon capture and storage (CCS) is a critical technology for solving climate change, while allowing continued reliance on fossil fuels.
- Carbon dioxide enhanced oil recovery (CO2-EOR) can advance CCS, while boosting domestic oil production and generating net federal revenue.
C2ES is an independent, nonprofit, nonpartisan organization dedicated to advancing practical and effective policies and actions to address our global climate change and energy challenges. We perform multifaceted research and analysis of the scientific, technological, economic, and policy aspects of these issues. Our work is informed by our Business Environmental Leadership Council (BELC), a group of 34 major companies, most in the Fortune 500, that work with C2ES on climate change and energy risks, challenges, and solutions. The views I am expressing, however, are those of C2ES alone.
C2ES has been analyzing CCS for over a decade and has recently focused on how CO2-EOR can advance CCS. With the Great Plains Institute, C2ES co-convenes the National Enhanced Oil Recovery Initiative, or NEORI, a coalition of businesses, environmental NGOs, labor representatives, and state officials advocating for incentives to use captured CO2 in EOR. You can find more information on NEORI at www.neori.org. I would like to submit NEORI’s CO2-EOR analysis and consensus recommendations for the record. In addition, C2ES serves as the advisor and facilitator to the Sequestration Working Group of the North America 2050 Initiative, a collaborative of states and provinces exploring options for CCS regulations and incentives. C2ES recently completed a summary of state-level regulations and incentives that can be found at www.na2050.org/sequestration.
C2ES also has authored research and publications related to CCS and CO2-EOR. For example, C2ES developed a comprehensive framework for calculating CO2 emissions from CCS based on input from experts in industry, academia, and the environmental community. C2ES also publishes a CCS Climate TechBook, a brief report that explains in layman’s terms how CCS technology works, why its development is needed to address climate change, and how it might be advanced.
CCS is a critically important technology
The United States and the rest of the world are getting 80 percent of our energy from coal, oil and gas, and our dependence on, and overall use of, these fossil fuels globally is growing rapidly. Under a business-as-usual scenario, the Energy Information Administration expects fossil fuels will continue to provide more than 65 percent of U.S. electricity in 2040 – with 35 percent coming from coal-fired generation. Globally, coal consumption is expected to increase nearly 60 percent over the next two decades, led by developing countries like China and India, which together will comprise 62 percent of the total global coal demand in 2035. This poses an enormous challenge, because the CO2 emissions from the combustion of these fossil fuels are the major contributor to global climate change. While we can and should become more energy-efficient and shift our energy mix toward inherently zero-emitting sources like nuclear power and renewables, it will be difficult to do that fast enough and at a reasonable enough cost to avoid the worst climate impacts.
Hence the critical need for CCS, a suite of technologies that captures CO2 and stores it deep underground in geological formations. CCS can capture up to 90 percent of emissions from stationary sources, such as power plants and industrial facilities, thereby allowing coal and natural gas to remain part of our energy mix. The International Energy Agency (IEA) and others have demonstrated through detailed technology and economic scenario analyses that CCS is likely an essential component of an affordable and effective response to global climate change. In fact, IEA estimates that CCS could provide one-sixth of the requisite GHG emissions reductions by 2050.
What is needed to advance CCS?
CCS has been established and commercialized for the capture of CO2 from some industrial processes such as natural gas processing, chemical, fertilizer and ethanol production, and the gasification of coal. The use of man-made CO2 in EOR has been practiced for several decades. However, CCS in other contexts – for example, coal- and natural gas-powered electricity generation – is a relatively expensive technology that is just reaching maturity. Further R&D is important, but the key challenge for CCS is to get a sufficient number of commercial-scale projects up and running to demonstrate the emerging technologies at scale and bring down their costs. The first large-scale commercial CCS power projects are under construction. Yet, it is still unclear whether more commercial-scale CCS projects will be built after these initial projects are completed. After the collapse of climate legislation in the United States in 2010, a number of CCS projects were cancelled.
CCS is being increasingly thought of as carbon capture utilization and storage, or CCUS. Instead of seeing CO2 as a waste, utilizing and selling captured CO2, primarily for EOR, improves the economics of CCS projects and is an important market driver. Almost all of the existing or planned CO2 capture projects in the United States have been developed with the intention of marketing captured CO2 for use in EOR. Still, in many cases, additional drivers are needed. Those projects operating or underway today are being financed though some combination of U.S. Department of Energy (DOE) grants, utility cost recovery from ratepayers, private finance, sales of CO2 for EOR, other revenue streams from chemical production, and existing tax credits.
DOE’s role in CCS development has been and will remain critical. DOE is working with the private sector on the leading innovative CCS projects in the United States today. This collaboration is beginning to yield results. In late 2012, the DOE-supported Air Products’ Port Arthur CCS project, where CO2 is captured from refinery-based hydrogen production and sent for use in EOR, began operations. Through its Industrial Carbon Capture and Storage (ICCS) Program and with funding from the American Recovery and Reinvestment Act of 2009 (ARRA), DOE agreed to fund $284 million of the Port Arthur project’s $430 million total investment cost. The Port Arthur project is expected to capture up to 1 million tons of CO2 per year and enable EOR production of 1.6 million to 3.1 million barrels of domestic oil a year in East Texas.
DOE is also working on applying CCS to the power sector. Southern Company’s coal-fueled Kemper County energy facility in Mississippi is now under construction and will be the first commercial-scale CCS power project in the United States. DOE selected the Kemper project to receive more than $290 million through its Clean Coal Power Initiative (CCPI). A later round of the CCPI made possible through ARRA funding selected three additional coal-fired CCS power projects for funding. They are Summit Power’s Texas Clean Energy Project (TCEP), NRG Energy’s Washington Parish Project, and SCS Energy’s Hydrogen Energy California project. TCEP is nearing financial close and, when completed, will capture 90 percent of its emissions and supply approximately 2.5 million tons of CO2 for use in EOR.
Given the high costs and uncertainties of CCS investment for the private sector and the urgent need for CCS, it is extremely important that the federal government continue to support CCS research, development, demonstration, and deployment. Beyond DOE’s pivotal role, other forms of federal financial support, such as tax credits, should be reformed and expanded. States too can play a key role in advancing CCS through incentives and well-informed regulation.
Background on CO2-EOR
CO2-EOR is a means of commercial oil production that could play a key role in the development of CCS and in increasing our domestic energy security. CO2-EOR has the potential to increase American oil production by tens of billions of barrels, while displacing imported oil and safely storing billions of tons of CO2 underground.
How does CO2-EOR work? Even after conventional primary and secondary oil recovery, most of the oil in a typical oil field is left in the ground. When injected deep underground, CO2 can make it possible to recover more oil and extend an oil field’s life. The best available evidence indicates that by using best EOR industry practice and existing rules governing underground injection, the overwhelming majority of the injected CO2 remains underground, incidentally and safely storing CO2. Commercial injection of CO2 for EOR is regulated under EPA’s Underground Injection Control Program, and under current federal greenhouse gas reporting rules for air emissions, EOR operators may document this incidental CO2 storage through additional monitoring, reporting, and verification requirements to qualify as geologic sequestration. There is a range of views as to what additional state or federal rules are needed to ensure that CO2 is stored permanently.
The United States has been a global leader in CO2-EOR for 40 years. We currently obtain six percent of our domestic oil production through this method. While most CO2-EOR activity occurs in the Permian Basin of Texas, there are also projects in the Gulf Coast, the Rocky Mountains, Oklahoma, and even Michigan. Estimates of the potential for CO2-EOR to increase oil production and store CO2 have been increasing in recent years. According to the National Energy Technology Lab, using existing techniques, CO2-EOR could double or triple U.S. oil reserves and store 10 to 20 billion tons of CO2, which is equivalent to between five and 10 years of emissions from all U.S. coal-fired power plants. More advanced techniques could yield much higher oil production and CO2 storage.
The key role of CO2-EOR in advancing CCS
For those CO2 capture technologies that have not reached full commercialization, especially in electric power generation, selling captured CO2 for use in EOR can provide a revenue stream that helps reduce the financial risks and uncertainty of investing in emerging technology. About 75 percent of the CO2 used in EOR currently comes from naturally occurring CO2 reservoirs. The rest comes from man-made CO2 sources. Somewhat oddly, the EOR market lacks sufficient CO2. By expanding carbon capture from man-made sources, we can increase domestic oil production, promote economic development, create jobs, reduce CO2 emissions, and drive innovation in CCS technology.
It is because of these multiple benefits that we have been able to bring together the National Enhanced Oil Recovery Initiative, or NEORI, a diverse coalition favoring the reform and expansion of existing tax incentives to use captured CO2 in EOR. Among the members of NEORI are Arch Coal, Summit Power, Tenaska, the Natural Resources Defense Council, AFL-CIO, and The Wyoming Outdoor Council. Some of NEORI’s participants are primarily interested in job creation, others in increasing domestic oil production, and others in protecting the environment. But all agree that advancing the capture of man-made CO2 for use in EOR makes sense. NEORI has been briefing members on both sides of the aisle in both houses of Congress on its proposals.
EOR operators in some regions are willing to pay upwards of $30 per ton for CO2. At the same time, industrial facilities and power plants are emitting billions of tons of CO2 into the atmosphere as a waste. CO2-EOR therefore offers the opportunity to transform this waste into a marketable commodity and transform an environmental problem into an energy production solution.
In a few cases, revenue from selling CO2 for enhanced oil recovery is sufficient to pay for CO2 capture and transport. Thanks to the efforts of the private sector and DOE, many CO2 capture technologies are already commercially proven, and only a modest incentive is needed to help close the gap between the market price of CO2 and the costs to capture and transport it. In the case of emerging technologies, however, companies need a larger incentive to help shoulder the additional financial and operational risk of deploying new, pioneering capture projects for the first few times at a commercial scale.
By combining private EOR operators’ willingness to pay for CO2 with a tax incentive, society leverages its public investment. Perhaps most importantly, according to our analysis, such tax incentives would more than pay for themselves by driving increased domestic oil production and associated taxable oil revenues. Increased CO2-EOR production will generate federal revenue that more than pays for the cost of new incentives within a 10-year timeframe. Under existing tax treatment, CO2-EOR directly yields revenues from three main sources: corporate income taxes, individual income taxes on royalties from production on private land, and royalties from production on federal land. Our analysis indicates that federal revenues from incremental CO2-EOR production would exceed the fiscal cost of new incentives by more than $100 billion over 40 years.
CCS is a critical technology for reconciling our continued dependence on fossil fuels with the imperative to protect the global climate. Our best hope at the moment for CCS advancement is carbon capture, utilization, and storage, or CCUS. The best example of CO2 utilization we know of is enhanced oil recovery (CO2-EOR). Solving our climate and energy problems will require a portfolio of technologies, and all must be pursued vigorously. But we are focusing here today on CO2-EOR, because it is the most important climate and energy solution that no one knows about.
In 2009, the Obama Administration convened the Interagency Climate Change Adaptation Task Force, and the President signed Executive Order 13514, directing agencies to improve energy and water efficiency, better manage waste and pollution, and reduce greenhouse gas emissions. In addition, the Order requested that agencies identify vulnerabilities and put together a climate adaptation plan by June 2012. The plans were released in February 2013 and began implementation for FY 2013. These Adaptation Plans are often part of an agency’s broader Sustainability Plan and will be updated each year.
Highlighted Adaptation Plans
Other Federal Agency Adaptation Resources
Other federal agencies have published climate change adaptation plans as directed by Executive Order 13514. These agencies are either smaller or have provided fewer details in their adaptation plans; links to the plans are below:
In his speech on Tuesday laying out a national climate action plan, President Obama called on federal agencies to lead by example in taking actions to reduce their emissions of greenhouse gases.
In a new report today, the Center for Climate and Energy Solutions (C2ES) highlights one area where the federal government is making progress, and can achieve much more. It’s called Leading by Example 2.0: How Information and Communication Technologies Help Federal Agencies Meet Sustainability Goals.
Faced with declining budgets, federal agencies are looking for innovative ways to cut costs while meeting a growing list of sustainability mandates. Expanding the use of information and communication technologies (ICT) – metering and energy management systems for buildings, GPS-based tools for fleets, teleconferencing, e-training, teleworking, and cloud-based data storage – offer agencies new ways to reduce their energy use, cut greenhouse gas emissions and enhance productivity.
We estimate widespread deployment of ICT could help reduce greenhouse gas emissions by 12 percent, roughly half the amount called for under a 2009 executive order, and could save an estimated $5 billion in energy costs through 2020.
In his State of the Union address, President Obama promised stronger action on climate change. Today he followed up with a credible and comprehensive plan. The real issue now is how vigorously he follows through.
From a policy perspective, the president’s plan lacks the sweep, cohesion and ambition that might be possible through new legislation. With Congress unwilling to act, the president instead is offering an amalgam of actions across the federal government, relying on executive powers alone.
Taken together, the actions represent the broadest climate strategy put forward by any U.S. president, addressing the need to both cut carbon emissions and strengthen climate resilience. While many of the specific items are relatively small-bore, and quite a few are actions already underway, the plan also includes new initiatives that can significantly advance the U.S. climate effort.
Statement of Eileen Claussen
President, Center for Climate and Energy Solutions
June 25, 2013
President Obama is laying out a credible, comprehensive strategy to use the tools at his disposal to strengthen the U.S. response to climate change. His plan recognizes that the costs of climate change are real and rising, and that to minimize them we must both cut our carbon output and strengthen our climate resilience. Putting these critical issues before the American public is itself a step forward. But it will require continued presidential leadership to translate the plan’s good intentions into concrete policy.
The most cost-effective way to reduce greenhouse gas emissions is for Congress to enact an economy-wide price on carbon. As long as Congress is unwilling to act, the president is right to use his powers under the Clean Air Act to curb emissions from power plants, by far the largest unregulated source of U.S. carbon emissions. Many companies are prepared to work with the administration on pragmatic approaches that cut emissions while keeping U.S. electricity affordable and reliable. Companies want regulatory certainty and know that continued inaction exposes them to increasing climate risks.
In crafting the power plant rules, EPA should consult widely with utilities and with the states, which ultimately must implement them. We strongly encourage EPA to devise a flexible strategy that allows a variety of state-level policies, including market-based approaches, and allows utilities to cut emissions at the lowest possible cost.
With extreme weather and other climate impacts being felt across the country, the president also is right to place equal emphasis on strengthening America’s climate resilience. His plan will help communities and businesses apply the lessons learned from Hurricane Sandy and other extreme events to better cope with future climate risks.
Implementing the president’s plan will be extremely challenging. But a clear majority of the American public favors stronger climate action, and with a plan in place, the administration must now follow through with a true sense of urgency. We look forward to working with the administration as it moves forward.
Contact: Laura Rehrmann, 703-516-0621, firstname.lastname@example.org
The Center for Climate and Energy Solutions (C2ES) is an independent, nonprofit, nonpartisan organization promoting strong policy and action to address the twin challenges of energy and climate change. Launched in November 2011, C2ES is the successor to the Pew Center on Global Climate Change. Learn more at www.c2es.org.