The House Subcommittee on Energy and Air Quality today held a hearing on a bill intended to drive the development and deployment of carbon capture and storage (CCS) technologies as part of an effort to reduce greenhouse gas emissions from coal-based electricity generation (H.R. 6258).

The Carbon Capture and Storage Early Deployment Act (”the Bill”) would allocate roughly $1 billion a year over a ten-year period to private, academic, and governmental entities to accelerate the commercial availability of carbon dioxide capture and storage technologies. The Bill contains detailed provisions for establishment, governance, and operation of a private “Carbon Storage Research Corporation,” which would be responsible for soliciting and issuing grants and awards on a competitive basis. The Bill finances these investments through a mandatory per-kilowatt-hour fee charged to power distribution utilities, calculated based on each utility’s unique fuel mix and resulting carbon emission footprint, which would be passed through to ratepayers without regulatory oversight.

Today’s hearing comes at a time when significant headway on more comprehensive climate change legislation appears unlikely. While hearing participants differed on certain legislative strategy and implementation issues, few appeared to question the underlying assumption that clean coal will need to be part of any long-term climate change solution. Key recurring themes at the hearing included:

• Relationship to Cap and Trade Legislation: Hearing participants differed as to whether the Bill should constitute a standalone measure or form part of a more comprehensive package of climate change solutions. For some (such as Jay Inslee (D-WA) and Michael Goo of NRDC), CCS legislation was pointless without a cap and trade scheme to drive a carbon price signal and fuel investment in clean technologies. Others, including Rep. Barton (R-TX) and American Electric Power (AEP) CEO Michael Morris, stressed that the Bill should be viewed as an issue entirely separate from (if not in lieu of) cap and trade legislation.
• Scope: Participants also expressed differing views on the appropriate scope of the CCS fund. One perspective, advocated by Ed Rubin of Carnegie Mellon University, was that the Bill should be narrowed to focus on acceleration and deployment of CCS at critically selected sites, rather than vaguely mandate R&D. Others questioned whether and how the Bill should address other long-term energy investment priorities like CO₂ conversion (rather than storage), alternative fuels, and energy efficiency. Boucher reinforced the fact that the 10-year, $1 billion funding for CCS commercialization in the Bill reflected the specific funding recommendations of both the EPA Advance Coal Technology Work Group and the Electric Power Research Institute.
• Accountability: Given the continued controversy over the Department of Energy’s “restructuring” of the FutureGen project, it is not surprising that the Bill places responsibility for managing the fund with a private Corporation. Nevertheless, James Kerr of the North Carolina Utilities Commission and Edward Markey (D-MA) expressed concern about the lack of regulatory oversight of the Corporation’s funding decisions. AEP CEO Michael Morris expressed a different view: “Keeping this out of the administrative arm of the government is one way to be sure something happens.”
• Representation: Ed Rubin of Carnegie Mellon University proposed that the Corporation’s Board of Directors be expanded to include representation of public organizations (e.g. a representative from DOE, an environmental NGO, or academic body) and non-utility representatives (e.g., from the oil and gas sector) be given a voice.

Since Chairman Boucher introduced the Bill last month, the legislation has gained some bipartisan traction, despite environmental groups voicing opposition to the Bill as a standalone endeavor. Yet, a CCS bill appears to hold more promise in the current Congress than more comprehensive GHG emissions reduction legislation. Indeed, Conservative Republican Barton ventured as far as to say “my guess is this is the only bill that may become law this year.” With comments like this from such a strong opponent of climate change regulation, there is hope that this Bill may reach the House floor for a vote before Congress breaks next month.

For further information about this topic, please contact Akin Gump.