Recommended Modifications to the 45Q Tax Credit for Carbon Dioxide Sequestration
The National Enhanced Oil Recovery Initiative (NEORI) recommends that Congress consider implementing a revenue-positive federal production tax credit to support deployment of commercial carbon dioxide (CO2) capture and pipeline projects. A new, more robust federal incentive is needed to increase the supply of man-made or anthropogenic CO2 that the oil industry can purchase for use in enhanced oil recovery (EOR) to increase domestic production from existing oil fields.
NEORI also recommends that Congress undertake immediate modification of the existing Section 45Q Tax Credit for Carbon Dioxide Sequestration, through legislative action and/or working with the Department of the Treasury to revise Internal Revenue Service program guidance.
To avoid stalling important commercial CO2 capture projects under development, there is an urgent need to improve the functionality and financial certainty of this federal incentive to enable its effective commercial use. To make 45Q immediately accessible to US companies, Congress should pursue the following changes to the program:
- Designate the owner of the CO2 capture facility as the primary taxpayer;
- Establish a registration, credit allocation, and certification process;
- Change the recapture provision to ensure that any regulations issued after the disposal or use of CO2 shall not enable the federal government to recapture credits that were awarded according to regulations that existed at that time; and
- Authorize limited transferability of the credit within the CO2 chain of custody, from the primary taxpayer to the entity responsible for disposing of the CO2.
The consensus recommendations below detail the specific 45Q program modifications requested, and the section-by-section summary provides further explanation and context.
Background and Rationale
Section 45Q makes available a per-ton credit for CO2 disposed of in secure geologic storage. The program provides $10 per metric ton for CO2 stored through EOR operations and $20 per metric ton for CO2 stored in deep saline formations. However, due to unforeseen issues in the original statute (§ 115 of the Energy Improvement and Extension Act of 2008), the 45Q program lacks sufficient transparency and certainty for companies to be able to use the credit to secure private financing for projects.
Large-scale expansion of commercial EOR using industrially-sourced CO2 later in this decade requires that critical industrial capture projects begin construction now and enter commercial operation within the next few years. If Congress makes modest, functional improvements this year to 45Q that result in little or no additional fiscal cost, the program currently authorized at 75 million metric tons of CO2 stored can help several significant EOR projects nationwide secure private sector financing and move forward to commercial operation.
1. 26 USC §45Q provides a tax credit for carbon dioxide sequestration. Section 45Q was enacted by § 115 of the Energy Improvement and Extension Act of 2008.
Learn about the new international coalition aimed reducing short-lived climate pollutants, a framework for carbon capture and storage, and how federal agencies are incorporating climate adaptation into their decision making, the start of a clean energy standard conversation, and more in C2ES's February 2012 newsletter.
Carbon Dioxide Enhanced Oil Recovery: A Critical Domestic Energy, Economic, and Environmental Opportunity
Carbon Dioxide Enhanced Oil Recovery: A Critical Domestic Energy, Economic, and Environmental Opportunity
Amidst economic uncertainty, fiscal crisis and political division over energy policy, carbon dioxide enhanced oil recovery (CO2-EOR) offers a safe and commercially proven method of domestic oil production that can help the United States simultaneously address three urgent national priorities:
- Increasing our nation’s energy security by reducing dependence on foreign oil, often imported from unstable and hostile regimes;
- Supporting job creation, increasing tax revenue, and reducing our trade deficit by keeping dollars now spent on oil imports here at home and at work in the U.S. economy; and
- Protecting the environment by capturing and storing CO2 from industrial facilities and power plants, while getting more American crude from areas already developed for oil and gas production.
A largely unheralded example of American ingenuity, CO2-EOR was pioneered in West Texas in 1972 as a way to sustain oil production in otherwise declining oil fields. It works by injecting CO2 obtained from natural or man-made sources into existing oil fields to free up additional crude oil trapped in rock formations. In this way, CO2- EOR can significantly extend the lifespan and revitalize production of mature oil fields in the United States.
Today, over 3,900 miles (Dooley, et al., 2009) of pipelines in the United States annually transport approximately 65 million tons of CO2 (Melzer, 2012) that the oil industry purchases for use in EOR, producing 281,000 barrels of domestic oil per day, or six percent of U.S. crude oil production (ARI, 2011). The EOR industry has captured, transported, and injected large volumes of CO2 for oil recovery over four decades with no major accidents, serious injuries or fatalities reported.
America has the potential to expand CO2-EOR significantly. Advanced Resources International (ARI) estimates that an additional 26-61 billion barrels of oil could economically be recovered with today’s EOR technologies, potentially more than doubling current U.S. proven reserves. Moreover, “next generation” EOR technology could yield substantially greater gains, potentially increasing recoverable domestic oil from EOR to 67-137 billion barrels, and storing 20-45 billion metric tons of CO2 that would otherwise be released into the atmosphere (ARI, 2011).
The National Enhanced Oil Recovery Initiative (NEORI) was formed to help realize CO2-EOR’s full potential as a national energy security, economic and environmental strategy. Organized and staffed by the Center for Climate and Energy Solutions (C2ES) and the Great Plains Institute (GPI), the Initiative brought together a broad and unusual coalition of executives from the electric power, coal, ethanol, chemical, and oil and gas industries; state officials, legislators and regulators; and environmental and labor representatives.
NEORI was launched on July 17, 2011, in Washington, D.C., with bipartisan support from four U.S. Senators and a member of Congress. Project participants met on three occasions to define the scope and expectations of the project, provide feedback on technical matters, and offer policy guidance. They gathered in Washington, D.C., with the launch of the project on July 17, 2011; in Traverse City, MI, on September 21-22; and in Houston, TX, on November 1-2. The latter two meetings included field visits to commercial EOR operations and to a CO2 capture facility.
NEORI participants also formed subgroups focused on developing policy recommendations, analysis and modeling, and communications and outreach materials. The subgroups held conference calls over several months, often on a weekly basis, to develop, refine, and reach consensus on recommendations and work products.
This report presents NEORI participants’ consensus recommendations for targeted federal and state incentives to expand CO2-EOR. If implemented, these recommendations would significantly increase U.S. domestic oil production while generating net new tax revenues for the federal government and states struggling to fill budget gaps and jumpstart our nation’s economy.
Rationale for Incentives to Support CO2-EOR
The Challenge: Limited Supply of Man-Made CO2 for Use in EOR
Today’s supply of CO2 available for purchase by the oil industry is simply inadequate to achieve the tens of billions of barrels of additional domestic oil production possible through EOR. In a fortunate, if ironic, twist of fate, a key to increasing America’s domestic energy security lies in capturing and productively utilizing a portion of our nation’s industrial CO2 emissions, thereby meeting a critical domestic energy challenge, while also helping to solve a global environmental problem.
Expanding the supply of CO2 available for EOR depends upon wide-scale deployment of carbon capture and compression equipment at a broad range of industrial sources, including natural gas processing; ethanol fermentation; fertilizer, industrial gas and chemicals production; gasification of various feedstocks; coal, natural gas and biomass-fueled power generation; and the manufacture of cement and steel. In addition, a substantial build-out of the existing CO2 pipeline network will be required to deliver CO2 from industrial facilities where it is produced to existing oil fields where it is needed.
The Solution: Reducing the Cost of Capturing and Transporting Man-Made CO2
NEORI’s federal and state incentive recommendations aim to bring down the cost of man-made, or anthropogenic, CO2 capture and transport over time to a level that private capital can finance without additional government support and based solely on crude oil prices and the economics of commercial EOR operations.
The EOR industry currently purchases CO2 on the open market. Market prices support using anthropogenic CO2 only in those cases where the costs of capture from a particular industrial source are low, and the amount of CO2 produced justifies private financing of pipeline infrastructure.
However, CO2 capture technologies for some applications, notably electric power generation and some other industrial processes, are not yet fully commercialized and remain expensive to deploy, even at today’s oil prices. Also, the costs of building trunk pipelines to deliver CO2, especially from smaller industrial sources, often exceed the scope of what individual EOR projects can privately finance without the addition of incremental incentives recommended in this report.
Overview of Recommendations:
Federal Production Tax Credit for CO2-EOR: A Revenue-Positive Policy for Domestic Energy Security
NEORI’s centerpiece recommendation is a competitively awarded, revenue-positive federal production tax credit for capturing and transporting CO2 to stimulate CO2- EOR expansion. Crucially, this federal tax credit would more than pay for itself. Indeed, analysis of the incentive outlined below indicates that federal revenues from existing tax treatment of additional incremental oil production would exceed the fiscal cost of the incentive itself by $100 billion over 40 years. Further, modeling shows that this incentive program, properly designed, would become revenue-positive within the ten-year timeframe typically used by Congressional budget score-keepers.
Analysis undertaken by NEORI suggests that this tax credit would result in the production of an additional 9 billion barrels of American oil over 40 years, quadrupling CO2-EOR production and displacing U.S. oil imports. At the same time, the proposed incentive would save the United States roughly $610 billion in expenditures on imported oil, while storing approximately 4 billion tons of CO2 captured from industrial and power plant sources, thereby reducing total U.S. CO2 emissions in the process.
Focusing Incentives on Industrial Suppliers of CO2, not the Oil Industry
With oil at around $100 per barrel, world-class experience and expertise in the U.S. oil industry, and private capital available to invest, why are new financial incentives needed to expand CO2-EOR? To be sure, EOR represents an American can-do commercial success story, and the U.S. oil industry does not need or seek additional financial incentives to sustain EOR production at present levels.
While the business model of the U.S. EOR industry has worked profitably for decades utilizing existing sources of natural and man-made CO2, the principal constraint on the EOR industry’s ability to expand domestic oil production is the lack of sufficient additional CO2 at current market prices. Therefore, NEORI recommends that incentives be primarily directed to capture and pipeline projects serving industrial facilities and power plants, rather than to EOR operators.
This approach will enable a variety of industry sectors to market new sources of CO2 to the oil industry and develop the technological and operational experience that will drive innovation and cost reduction in CO2 capture, compression, and transport over time. In addition to increasing CO2 supply for the oil industry, these projects will benefit participating industries by helping them to reduce their carbon footprint in response to emerging and expected state and federal regulatory requirements and by making them more competitive in a global marketplace that increasingly values lower-carbon products and services. Finally, the deployment of CO2 capture and pipelines for use in EOR will establish a national infrastructure that can eventually be utilized by many industries for long-term carbon capture and storage (CCS) in geologic formations beyond oil and gas fields.
Complement Federal Policies with State Incentives
States also have an important role to play in fostering CO2-EOR deployment by implementing incentive policies that can complement the federal production tax credit recommended in this report. A number of states have already taken the lead, filling the current vacuum left by the absence of adequate federal policy. Therefore, this report identifies existing state policies that NEORI members believe should serve as models for policy-makers in other states to adopt and tailor to their particular needs.
Multiple Benefits of CO2-EOR Can Marshall Broad Support for Policy Change
The federal and state policy recommendations in this report will, if implemented, create a virtuous circle of linked and growing benefits to the American people: expanding CO2 supply, increasing domestic oil production and associated job creation, expanding federal and state revenues, and declining CO2 emissions. Thus, at a time when our nation’s energy policy is mired in regional, partisan and ideological debate, CO2-EOR can help lay the groundwork for a different policy path forward, one that weaves together a broad coalition of Americans united by common interests.
Agricultural industries and communities can benefit from selling CO2 to meet the growing demand for CO2 to boost domestic oil production.
The agriculture sector can supply high purity, manmade CO2 to access domestic oil resources in existing oil fields.
Agriculture industry opportunities for capturing CO2 to spur EOR expansion include:
- Ethanol production: The capture of biogenic emissions from ethanol production is technologically straightforward given the pure stream of CO2 produced in the fermentation process. Many ethanol plants sell CO2 to the food and beverage industry, but CO2-EOR represents a much larger market.
- Domestic fertilizer production: CO2 capture from fertilizer production is fully commercial and relies on the same proven technology platform used in compressing and dehydrating natural gas.
- Gasification of biomass with fossil fuels: CO2 capture from gasification of biomass, by itself or with fossil feedstocks for production of electricity and liquid fuels, holds promise for increasing both domestic energy production and reducing carbon emissions.
Agricultural industries present an important, early opportunity to provide CO2 for EOR because of the relatively low cost of capturing CO2 from these types of facilities
Build-out of pipeline infrastructure is required to support expansion of CO2-EOR.
CO2 pipelines have operated in the US for decades and there are currently over 3,900 miles of CO2 pipelines. Additional infrastructure is required to expand domestic oil production by gathering CO2 from sources such as ethanol and fertilizer facilities and transporting the CO2 to EOR operations by pipeline.
Integrating CO2-EOR with agricultural industries provides an opportunity for lowering the carbon intensity of agricultural products.
The environmental benefits of CO2-EOR provides agricultural industries a commercially proven option for complying with emerging and expected state, regional and international lowcarbon fuels policies. For example, capturing CO2 from ethanol plants and permanently storing it in EOR formations significantly lowers the carbon intensity of the ethanol plant operation, and potentially commands higher prices in states with Low Carbon Fuel Standards and other policies that create incentives for lower carbon intensity fuels.
Agricultural industries are working to advance and integrate technologies that can contribute to expanding CO2-EOR.
For example, ADM’s Illinois Industrial Carbon Capture and Sequestration (ICCS) Project will be a commercial-scale example of a CO2 capture and storage project at an ethanol facility and builds on ADM’s experience with a smaller-scale project. ADM will capture one million tons of CO2 per year at their ethanol production plant using dehydration and compression for transport, injection and geologic storage in the Mt. Simon Sandstone Formation. The ICCS project is carried out in partnership with the U.S. Department of Energy’s National Energy Technology Laboratory.
Another example is Chaparral Energy, which has CO2-EOR projects in Kansas, Oklahoma and Texas. Since 1982, the Chaparral and Merit Enid Fertilizer Project has captured and transported CO2 from an ammonia nitrogen fertilizer plant in Enid, Oklahoma to EOR fields in southern Oklahoma. Every year, about 600,000 tons of CO2are captured and injected, demonstrating the longevity of manmade CO2-EOR projects. Looking ahead to 2013, Chaparral will begin capturing about 850,000 tons of CO2 per year from an ammonia nitrogen fertilizer plant in Coffeyville, Kansas, and will transport the CO2 via pipeline approximately 70 miles to an EOR field for CO2-EOR recovery and simultaneous carbon storage. This project will be the largest CO2 capture and injection operation in N. America involving CO2 emissions from a fertilizer facility.
Where does the CO2 come from and where does it go? Today, most of the CO2 used in EOR operations is from natural underground ‘domes’ of CO2. With the natural supply of CO2 limited, man-made CO2 from the captured CO2 emissions of power plants and industrial facilities can be used to boost oil production through EOR.
Once CO2 is captured, it is compressed and transported by pipeline to oil fields. During EOR operations, CO2is injected into the oil formation where it mixes with the oil and helps move the oil through the formation and to the production wells. CO2 that emerges with the oil is separated and re-injected into the formation. CO2-EOR projects resemble a closed-loop system where the CO2 is injected, produces oil, is stored in the formation, or is recycled back into the injection well.
Is CO2-EOR safe? CO2 is non-flammable and nonexplosive. It is not defined as a hazardous substance, but a Class L, highly volatile, nonflammable/nontoxic material (CFRg, CFRe, Appendix B, Table 4). (WRI, 2008)
Operating for 40 years, CO2 pipelines have an excellent safety record with no serious injuries or fatalities ever reported. Today there are over 3,900 miles of pipeline transporting CO2 for EOR use at wells producing 281,000 (MIT 2011) barrels of oil per day. The industry has operated for decades under existing policy and regulatory oversight at the local, state and federal level.
Geologic storage of CO2 is also regulated under existing policies and regulations. CO2 is contained by a series of physical and chemical trapping mechanisms over time. Most formations that hold oil for thousands of years also have the ability to contain CO2. As an example, research by the University of Texas Bureau of Economic Geology’s Gulf Coast Carbon Center on the SACROC oil field, where CO2 has been injected for EOR since 1972, has found no evidence of CO2 leakage (TBEG). Experience from this decades-old CO2-EOR project and current commercial-scale CO2-EOR projects today shows that CO2-EOR can be performed in a manner that is safe for both human health and the environment.
- World Resources Institute, “Guidelines for Carbon Dioxide Capture, Transport, and Storage,” 2008.
- MIT Energy Initiative, “Role of Enhanced Oil Recovery in Accelerating the Deployment of Carbon Capture and Sequestration,” 2011.
- See the SACROC Research Project website for a complete list of studies. www.beg.utexas.edu/gccc/sacroc.php
Does Increasing CO2-EOR Create Jobs? Yes. Workers will be needed across the full CO2-EOR value chain: from building and operating CO2 capture systems at power plants and other industrial facilities, to constructing new pipeline networks to transport CO2, to retrofitting and giving new life to existing oil fields.
- The Kemper County Integrated Gasification Combined Cycle project in Mississippi, a new plant currently under construction, will create around 300 permanent jobs from power plant and supply chain operations. Employment during construction is expected to peak at 1,150 and average 500 jobs over a 3.5 year construction period. (DOE, 2010)
- FutureGen 2.0 proposes to retrofit an existing coal-fueled power plant in Meredosia, Illinois with advanced oxy-combustion technology. The project expects to create approximately 1,000 construction jobs in Illinois from upgrading the power plant, building the CO2 pipeline and storage facility, as well as visitor, research, and training facilities. (FutureGen)
- The 2010 Midwest CO2 Pipeline Feasibility Study included an analysis of job creation prepared by Northern Illinois University (NIU) on a proposed Midwest pipeline – which would transport manmade CO2 captured from coal gasification plants in Illinois, Indiana, and Kentucky to the Gulf Coast. NIU stated the pipeline construction would create over 3,500 local jobs over a four year construction period and over 2,000 jobs from indirect economic activity. (Lewis and Bergeron, 2009)
- The Wyoming Grieve Field project (Fladager, 2011), a small-scale CO2-EOR project that has been approved for construction, will generate more than 50 construction jobs to revitalize and return an aging oil field to service. It will also add five to ten operations jobs and produce 12 to 24 million barrels of additional oil that will inject millions of dollars into Wyoming’s economy through taxes, royalties, and local purchasing.
Does Increasing CO2-EOR Stimulate the Economy? Yes. CO2-EOR will create and preserve high-quality jobs and enable states and local governments to realize additional revenue, inject millions of dollars into local businesses, and reduce oil imports and trade imbalances.
Recent estimates by the U.S. Carbon Sequestration Council (Carter, 2011) show that expanded CO2-EOR could provide up to $12 trillion, equal to about 80 percent of the U.S. national debt, in economic benefits to the U.S. over the next three decades, based on the “multiplier effects” of oil production on economic activities. The multiplier effect is the tendency for newly generated wealth to transfer hands and be spent several times.
A report by the University of Texas Bureau of Economic Geology’s (TBEG) Gulf Coast Carbon Center (TBEG, 2004) quantifies the total economic activity of oil production for Texas to be 2.9 times the value of the oil produced. In other words, almost two dollars of additional economic activity is created for every dollar of oil produced. Moreover, TBEG estimates 19 jobs for every $1 million of oil produced annually.
Advanced Resources International (ARI, 2010) estimates that an increase in oil production from CO2-EOR could reduce net crude oil imports by half and provide up to $210 billion in increased state and federal revenues by 2030. ARI also estimates that a robust EOR policy could reduce the U.S. foreign trade deficit by $11 to $15 billion dollars (2007 dollars) in 2020 and $120 to $150 billion by 2030. Cumulatively, this reduction in oil imports would keep $600 billion here at home, generating additional economic activity, jobs and revenues, rather than flowing out of the U.S. economy to other countries.
- U.S. Department of Energy (DOE) in cooperation with U.S. Army Corps of Engineers. “Final Environmental Impact Study.” Chapter 4 Environmental Consequences. May 2010. http://www.netl.doe.gov/technologies/coalpower/cctc/EIS/kemper_pdf/Final/09_Chapter%204.pdf
- FutureGen Alliance. www.futuregenalliance.org/pdf/FutureGenFacts.pdf
- Lewis, J. & Bergeron, L. Regional Development Institute, NIU.“Economic Impacts of a Midwest CO2 Pipeline: Construction, Easement and Operational Impacts.” Under agreement with Denbury Resources. October 30, 2009.
- Fladager, Gary. “New enhanced oil recovery planned for Natrona County.” Casper Journal. 19 July 2011. http://www.casperjournal.com/news/article_f40db9a0-2406-5097-bc7d-d435a8ddf23d.html
- Carter, L.D., Enhanced Oil Recovery & CCS. United States Carbon Sequestration Council. 14 January 2011. http://www.uscsc.org/Files/Admin/Educational_Papers/Enhanced%20Oil%20Recovery%20and%20CCS-Jan%202011.pdf
- CO2 Enhanced Oil Recovery Resource Potential in Texas – Potential Positive Economic Impacts, Texas Bureau of Economic Geology (TBEG), April 2004.
- Advanced Resources International (ARI), White Paper: U.S. Oil Production Potential from Accelerated Deployment of Carbon Capture and Storage, 2010.
How does EOR reduce CO2 emissions? Using CO2 captured from power plants and industrial sources to enhance oil production has the potential to help the U.S. reduce its emissions by improving the CO2 intensity of the industrial and power generation sectors. Over the life of a project, for every 2.5 barrels of oil produced, it is estimated that EOR can safely prevent one metric ton of CO2 from entering the atmosphere.3
A current estimate of CO2 use for EOR is 72 million metric tons per year; 55 million metric ton of CO2 come from natural sources and 17 million metric tons come from anthropogenic sources. But the potential for EOR to contribute to CO2 reduction goals is great, as supplies of natural CO2 are constrained. The volume that could be captured and sequestered from industrial facilities and power plants to support “next generation” EOR could be 20- 45 billion metric tons of CO2. This is equal to the total U.S. CO2 production from fossil fuel electricity generation for 10 to 20 years. (ARI, 2011)
Will CO2-EOR harm groundwater resources? EOR is governed by federal regulations that require the protection of underground sources of drinking water, under the EPA’s Underground Injection Control (UIC) program. Many states have obtained authority from EPA to administer the UIC program and have laws that meet or exceed EPA’s requirements. Permits issued by the EPA or states require that EOR operators manage their site in a manner that will prevent CO2 (and other formation fluids) from migrating out of the subsurface confining formation and into drinking water aquifers. ( 40 CFR §144.12)
The University of Texas Bureau of Economic Geology’s (TBEG) Gulf Coast Carbon Center has studied the longest running EOR site in the world at the Scurry Area Canyon Reef Operators in Scurry County, Texas (SACROC). SACROC has been operating since 1972 and has injected over 175 million tons of CO2. TBEG has found no evidence that CO2 has escaped the EOR site and contaminated groundwater resources. (TBEG)
Furthermore, the International Energy Agency’s Greenhouse Gas Programme (GHGP) Weyburn-Midale CO2Monitoring and Storage project is the site of the world’s largest CO2 monitoring project. Since 2000 more than 30 internationally recognized research organizations have conducted scientific assessments of the integrity of the geological storage system, monitored CO2 in the deep subsurface, and tested for any evidence of anthropogenic CO2 at the surface.None of the studies have detected anthropogenic CO2 in the soils or groundwater. (Cenovus, 2011)
What is the land use impact? CO2-EOR largely takes place at existing oil fields and CO2 is transported through underground pipelines thus reducing land use impacts.
- Advanced Resources International (ARI). (June 20, 2011). Improving Domestic Energy Security and Lowering CO2 Emissions with “Next Generation” CO2-Enhanced Oil Recovery.
- 40 CFR §144.12
- See the SACROC Research Project website for a complete list of studies.
- Cenovus Energy, Site Assessment Weyburn Unit SW30-5- 13W2, November 2011.
How does CO2-EOR work?
CO2-EOR works most commonly by injecting CO2 into already developed oil fields where it mixes with and “releases” additional oil from the formation, thereby freeing it to move to production wells. CO2 is separated from the produced oil in above-ground equipment and re-injected in a closed-loop system many times over the life of an EOR operation.
A commercial technology established in North America in 1972, CO2-EOR could more than double economically recoverable U.S. oil reserves.
Increasing EOR production by using captured CO2 is a compelling and largely unheralded example of American private sector innovation that supports several urgent national priorities:
- Increase U.S. oil production from already developed fields with reduced risk and impact compared to conventional oil production;
- Strengthen America’s national security by reducing our dependence on unstable and/or hostile regimes for our oil supply;
- Create new, high-paying American jobs, and retain and attract private sector investment in our economy;
- Reduce trade deficits by keeping petroleum expenditures at home and at work in the U.S. economy;
- Achieve significant net carbon reductions by expanding opportunities for oil, natural gas, coal, ethanol and other industries to invest in commercially proven technologies to lower the CO2-intensity of their products.
Challenge: the U.S. needs to capture more CO2 to increase domestic oil production. CO2-EOR projects use CO2 to access and mobilize oil that otherwise would not be produced using conventional technologies. One study states that with an increase in CO2 supply and by applying existing best practices, CO2-EOR has the potential to add as much as 61 billion barrels of oil to U.S. domestic oil production.
CO2 capture projects and pipeline infrastructure are needed to meet this demand. Significant amounts of CO2 captured and transported from power plants and industrial sources are urgently needed to boost U.S. oil production through CO2-EOR.
Support for CO2-EOR is critical to achievement of energy security, economic, and environmental benefits. The development of CO2 capture projects, build-out of CO2 pipeline infrastructure and improvements to existing oil field infrastructure is required to provide the level of CO2 needed to expand the US CO2-EOR industry.
This requires private investment, and federal and state policies and incentives to support additional deployment of CO2 capture projects and infrastructure. These projects will provide jobs and economic benefits for local and state governments. At a time when federal and state officials are struggling to reduce deficits, tax revenues generated from new projects can offset the additional cost of state and federal incentives and even increase government revenue over time.
The National EOR Initiative is committed to building a pathway to a secure and low-carbon energy future through expansion of CO2-EOR. At its launch, the Initiative received bipartisan support from several members of Congress who are monitoring the Initiative’s progress and will receive final recommendations for legislative consideration.
EOR Initiative Timeline:
- July 2011: Launch of National EOR Initiative and inaugural meeting.
- August 2011 - January 2012: Ongoing work of industry, government and environmental leaders participating in EOR Initiative.
- February 2012: Release recommendations.
- ARI, Improving Domestic Energy Security and Lowering CO2 Emissions with “Next Generation” CO2-Enhanced Oil Recovery (CO2-EOR), June 20, 2011, DOE/NETL-2011/1504.
Learn about the Climate Leadership Conference, Australia's new carbon pricing mechanism, the Make an Impact energy conservation challenge, and more in C2ES's January 2012 newsletter.
Climate change is the global innovation challenge of our time. That was the theme of a Green Innovators in Business Network “Solutions Lab” in Cambridge, MA, last month co-hosted by C2ES, EDF, Innocentive, and others. Dr. Andrew Hargadon, a leading expert in technology management and author of “The Business of Innovating,” articulated for participants the enormous scale of innovation needed to achieve a clean energy economy. “Low-carbon innovation” is about dealing with new problems—carbon emissions, skyrocketing energy costs—that emerge from traditional solutions for making our economy work, such as for transporting goods or lighting our buildings. Transforming energy-consuming activities to emit less carbon requires that we deploy new technologies that will work with conventional behaviors, and develop entirely new behaviors.