Navigating Regulations for Geologic Sequestration of Carbon Dioxide
- Jan 27, 2021 5:14 pm GMTJan 27, 2021 12:22 pm GMT
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Geologic sequestration, a solution growing in popularity, can reduce carbon dioxide (CO₂) emissions from the atmosphere and mitigate climate change. The process injects CO₂ captured from an industrial or energy-related source into a deep subsurface rock formation for long-term storage.
While geologic sequestration plays a critical role in the carbon capture and storage process, it requires a significant investment and can be accompanied by technical and regulatory challenges. Section 45Q of the U.S. tax code helps make carbon capture technology a more economically attractive proposition. Congress enacted 45Q in 2010 to incentivize the construction and deployment of carbon capture and sequestration projects. These incentives were expanded in the December 2020 COVID-19 tax relief package, which included an extension of this tax credit through 2025 and additional funding for demonstrable projects.
Section 45Q makes industrial CO₂ producers and their investors eligible for a tax credit of up to $50 per metric ton of CO₂ for geologic sequestration. Utilities and bioenergy producers are two of the primary industries moving to capitalize on these opportunities. To receive this tax credit, facility construction must commence by Dec. 21, 2025, and meet regulations set by the U.S. Environmental Protection Agency (EPA).
Class VI Regulation Criteria
Deep well injection for hazardous and nonhazardous waste disposal is relatively common with well-established industry practices; however, the geologic sequestration of CO₂ involves different technical issues, projects of greater scale and less familiar injection regulations. These injection wells have a range of uses, from storing CO₂ to enhancing oil production and mining, and the EPA breaks down injection well regulations into six groups or classes with similar functions, construction and operating features. Class VI regulations were established for wells used to inject CO₂ into deep rock formation for long-term storage.
Injection well construction is based on the type and depth of the fluid being injected. For example, wells that inject hazardous wastes or CO₂ into deep, isolated formations have sophisticated construction. These wells are designed to provide multiple layers of protective casing and cement. Regardless of the injection well class, the construction and permitting is overseen by either a state or tribal agency of one of the EPA’s regional offices.
Class VI well requirements are designed to protect underground sources of drinking water. These requirements address siting, construction, operation, testing, monitoring and closure. They also address the unique nature of CO₂ for geologic sequestration, including the relative buoyancy of CO₂, subsurface mobility, corrosivity in the presence of water and large injection volumes anticipated at geologic sequestration projects. The EPA has developed guidance documents to support the Class VI regulations.
The EPA has also developed specific criteria for Class VI wells, including:
- Comprehensive monitoring requirements that address all aspects of well integrity, CO₂ injection and storage, and groundwater quality during injection operations and the post-injection site care period.
- Extensive site characterization requirements to demonstrate the fate and behavior of injected CO₂.
- Financial responsibility requirements securing the availability of funds for the life of the project (including post-injection site care and emergency response).
- Injection well construction requirements for materials that are compatible with and can withstand contact with CO₂ over the life of a geologic sequestration project.
- Injection well operation requirements.
- Reporting and record-keeping requirements that provide project-specific information to continually evaluate Class VI injection operations and confirm protection of underground drinking water sources.
Investing to Avoid Pitfalls
To help navigate the Class VI injection well criteria and weigh the various project considerations, it is helpful to partner with a firm that has the diverse science, engineering and business consulting capabilities needed to effectively design, evaluate and execute these complex projects. A partner should also have experience navigating a wide range of local, state and federal regulatory and public involvement efforts, while understanding the various decision points in the process that require knowledge of the regional and site-specific geologic conditions that impact the success of an injection well project.
The experience, knowledge and technical capability of the project team are critical to navigating a CO₂ sequestration project through each phase of technical study, cost analysis, regulatory approval, and design, construction and operation. A single CO₂ injection well can cost millions of dollars and the total cost of a CO₂ sequestration project is likely to be in the hundreds of millions of dollars, before tax incentives. Without an understanding of the geologic conditions, available infrastructure, and local socioeconomic and regulatory environment, a company could waste substantial time and capital resources pursuing a facility location that cannot be developed or permitted for CO₂ sequestration.
A full-service team can start by properly interpreting publicly available data to conduct a desktop feasibility analysis that considers geologic, economic, environmental and regulatory factors. An appropriate field investigation can then be planned and executed to provide the data needed to advance the permitting process in a way that meets the regulatory agency’s expectations and avoids unanticipated costs or delays. The team should include capable process and facilities engineering functions to evaluate, specify and design the appropriate CO₂ compression and dehydration equipment needed to condition the CO₂ prior to injection. Engineering resources to deliver the necessary injection monitoring system and pipeline or other transmission infrastructure needed to deliver CO₂ to the disposal facility are also a plus. An experienced team means all the difference when it comes to completing these complex projects safely and cost-effectively, from start to finish.
As environmental regulations change and renewable energy becomes more cost-effective to produce and store, owners and operators of coal- or gas-fired power plants should create a plan for using captured and sequestered CO₂.
by RANDY DAVIS