Friday, July 15, 2011

The Future of Carbon Capture and Storage

This week, American Electric Power Co., Inc., announced that it would terminate its contract with the Department of Energy for the carbon capture and storage project at its Mountaineer Plant, a coal-fired power plant in West Virginia.  AEP explained that "[d]ue to the current uncertain status of U.S. climate policy and the continued weak economy, AEP has made the business decision to place the project on hold until such time that economic and policy conditions create a viable path forward." 

Will there be a "viable path forward" for carbon capture and storage (CCS)? The resources that states and the federal government already have sunk into CCS suggest that there may be.  These efforts generally have focused on identifying the ideal locations for geological carbon sequestration; researching its risks; developing regulatory options (Texas, for example, has made progress on this front, and the EPA has published a final rule for carbon dioxide geologic sequestration wells); and launching projects to demonstrate the feasibility of the technology--including projects like AEP's Mountaineer Plant. 

Marie Bradshaw Durrant and Professor Arnold Reitze have a useful article in Environmental Law Reporter that discusses western states' approaches to CCS, including state funding for research and pilot projects and state policies to research and/or encourage CCS.  One interesting effort noted in the article is the Colorado Legislature's empowerment of "Colorado's Utilities Commission to include CCS and related technology in their permitting of power producing facilities."  This type of legislation might erase the types of concerns raised by AEP in terminating its project, including AEP's belief--as reported by the New York Times--that "state regulators would [not] let the company recover its costs [of CCS] by charging customers."  Bradshaw Durrant and Reitze also explain that Colorado has attempted to encourage the construction of Integrated Gasification Combined Cycle plants "to demonstrate the feasibility of this clean coal technology with the use of western coal and with carbon dioxide capture and sequestration," and the Colorado Legislature has enabled various state agencies and offices to help proposed IGCC plants obtain federal and state funding.  Colorado is just one example out of many described in Bradshaw Durrant and Reitze's article, and they provide more description of CCS and its future in a second article on state and regional CCS controls.  For a 2009 overview of CCS projects, state regulatory frameworks, and potential risks, see Donna Attanasio's "Surveying the Risks of Carbon Dioxide"; also see Professor Michael Gerrard's 2008 summary of legal issues associated with CCS, and Philip Marston and Patricia Moore's longer 2008 article on the "The Evolving Legal and Regulatory Framework for Carbon Capture and Storage."

Beyond legislation that enables cost recovery for power plant projects and potential financial support for CCS development, successful CCS will require careful consideration of property rights and liability; Professors Elizabeth Wilson and Alexandra Klass have written thoughtful articles in this area, as have Professors David Adelman and Ian DuncanWill Reisinger and others, in turn, have proposed a legislative framework for CCS property rights and liability.

If we assume that AEP's exit from the CCS world is just a small glitch in a larger project moving forward--one that will involve complicated new legal questions and require innovative local, state,  regional, and federal approaches--is this larger project a good idea?  The World Resources Institute believes that CCS is an essential component of a portfolio for "stabilizing climate-forcing emissions," but Professor Patrick Parenteau has concerns about CCS--pointing out, for example, that CCS encourages continued coal use and may "divert[] badly needed investments" from other climate solutions, such as energy efficiency and renewables.  

-Hannah Wiseman

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