Current Administration and congressional climate proposals depend heavily on geological sequestration to reduce CO2 emissions from coal-fired power plants and other major sources and tend to presume that sources in every state will have access to nearby underground storage capacity.  This is the second post in a three-part series reviewing obstacles to a 50-state sequestration strategy and suggesting the need for a national infrastructure to support medium to long-range transport of CO2. 

Even if additional research and site characterization could resolve geological uncertainties regarding widespread local CO2 storage, companies also will have to overcome the public and political opposition that locally undesirable land use (LULU) energy projects engender.  While CO2 sequestration provides important global benefits, local communities are likely to balk at hosting a sequestration project injecting millions of tons of liquid CO2 as a waste product under or near their communities.

The saga of Used Nuclear Fuel Storage at Yucca Mountain in Nevada illustrates the challenge of siting even one nationally-important, but locally-opposed, facility.  First identified as the nation’s prospective high-level nuclear waste storage site in 1987 and approved by Congress in 1994, the Yucca Mountain high-level nuclear waste storage facility received over 9 billion dollars in funding through 2008 despite vociferous opposition from local stakeholders and, in some cases, key federal constituencies.  In early 2009, the Obama Administration proposed to defund the project.  While only Congress can cancel the project, Senate Majority Leader Harry Reid (D-NV) has committed to doing just that.  Irrespective of the merits of the decision to defund Yucca, it is a significant setback for the domestic nuclear energy industry, as the reversal leaves the nation twenty years behind in developing a long-term disposal strategy for high-level nuclear waste.

Even relatively innocuous renewable energy projects  face siting difficulties.  Indeed, the U.S. Chamber of Commerce recently initiated a campaign to document the wide variety of energy projects that have been stopped or delayed across the nation by local opposition.  The siting challenge illustrates an important reality check for policymakers and investors:  a prospective site may contain optimal subsurface geologic characteristics, but if developers cannot negotiate the local siting process, the technical feasibility of a location is irrelevant.

Siting CCS facilities on federal lands may be one way to reduce the ability of local opposition to stop a project.  The Department of Interior has estimated that 5.5 percent of the onshore U.S. CO2 storage capacity is beneath potentially leasable Federal lands.  But, federal lands bring limitations of their own.  First, federal lands are not uniformly distributed across regions and states, and many areas of the country (e.g., the northeast, southeast and midwest) lack large swaths of federal lands on which facilities could be sited.  The disconnect is even more significant when major emissions sources are considered.  According to a recent DOE Report, while 65% of emissions come from east of the Mississippi River, 83% to 86% of storage capacity on federal lands lies west of the Mississippi River.   In other words, a siting strategy that relies on federal lands for citing will require investment on CO2 transport to match source generation to sequestration capacity.

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Current Administration and congressional climate proposals depend heavily on geological sequestration to reduce CO2 emissions from coal-fired power plants and other major sources and tend to presume that sources in every state will have access to nearby underground storage capacity.  While some federal agencies and studies consider widespread localized sequestration to be viable, a nationwide rollout faces significant obstacles.  In areas where local sequestration is impractical, emissions sources will be forced to transport captured CO2, by pipeline, ship or other mode, to a viable sequestration site.  To date, however, federal climate proposals have given limited attention to developing the CO2 transport infrastructure. 

This series reviews three obstacles to a 50-state sequestration strategy and discusses the need for a national infrastructure to support medium to long-range transport of CO2.

Part 1: The Porosity Problem
Part 2: NUMBY
Part 3: 50-States, 50 Hurdles

Recognizing these obstacles and honestly confronting them is a critical step to making geological sequestration work.  And, without a successful geologic sequestration program, the United States’ ability to achieve emissions reduction targets is astronomically more difficult.

Part 1: The Porosity Problem

While there are many different factors that determine the suitability of a geological formation to store liquefied carbon, one important threshold consideration is porosity.  An effective sequestration site must contain deep layers of porous rock, capable of absorbing and retaining injected CO2 within its void spaces, much like a sponge that absorbs and holds water.  This porous rock must be covered by an upper layer of dense and highly impermeable cap rock that will prevent upward migration of CO2 toward drinking water aquifers or the surface.  

Citing private and public studies conducted to date, the Environmental Protection Agency (EPA) and the Department of Energy (DOE) have estimated that 95% of all coal-fired plants are within 50 miles of an “ideal” candidate sequestration site.  Other government analyses, however, suggest that not all regions and states are geologically equal when it comes to underground storage capacity.  Indeed, federal researchers have had mixed success in identifying viable sequestration sites with the proper geological characteristics based on theory and scientific testing alone. 

EPA and DOE are working to demonstrate the feasibility of geological sequestration at a wide range of host geological sites nationally, but to date, most successful CCS projects have been sited at current or former oil and gas fields.  For decades, the oil and gas industry has injected liquid CO2 underground to promote enhanced oil recovery.  If CCS storage potential is tied to oil and gas production potential, however, there are likely to be significant disparities in storage potential from one region to another.  DOE’s own website acknowledges that “there is a mismatch between largest [CO2 emission sources] and the largest oil and gas traps.”  A 50-state sequestration strategy will force the CCS industry to diversify its portfolio of storage sites.  Federal studies indicate that unmineable coal seams and deep saline formations offer promising storage potential, but the practicality of such formations remains untested in many parts of the country, despite considerable efforts at regional characterization.

For example, there are large numbers of CO2 emitting sources in the Appalachian Basin, making it an important test area for the viability of DOE’s localized sequestration strategy.  In a recent report on progress at a small-scale sequestration field test in the Appalachian Basin of Ohio, researchers found that “porosity, void space and permeability of the target formations were lower than expected.”  DOE’s difficulty in pinpointing a viable sequestration site location for a small regional pilot project illustrates the uncertainties that remain when it comes to siting at the local level.  

DOE is addressing this nationwide site characterization challenge aggressively, investing department resources and grant funding into projects to improve understanding of sequestration capacity in different geological settings.  Earlier this month, DOE announced its intent to offer an additional $50 million in grants to support site characterization work. 

Missing from both Congress and DOE is a serious Plan B in the event that localized geologic sequestration is not feasible in major portions of the country.  Federal policymakers will need a plan to transport captured CO2 from “pore-locked” emissions sources to areas where high-volume sequestration is practicable. 

The prevailing hope of widespread access to local sequestration capacity could become reality within the timeframes policymakers will need to support U.S. climate mitigation plans.  The U.S. experience with project siting on the basis of geology alone suggests strongly that this hope is a dim one.  Geologic sequestration is critical to U.S. climate policy and Congress and the Administration need to address the available alternatives should the local sequestration strategy prove untenable. 

To view Part II in this three-part series, please click here.

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

The American Clean Energy and Security Act of 2009 (ACES) Carbon Capture and Sequestration (CCS) provisions appear at first blush like a wish list for the coal industry and other CCS proponents.  Between directing the Environmental Protection Agency (EPA) to create an improved regulatory framework for CCS, authorizing billions in new ratepayer-generated funds to support early commercial CCS projects, and authorizing EPA to make direct payments to companies that sequester CO₂, the bill, as developed by Congressmen Henry Waxman and Ed Markey, appears intent on removing regulatory and economic barriers to commercializing CCS technology.  Those incentives come with a lofty condition, however, as the final section in the CCS subtitle lays out the expectation that CCS will reach commercial viability by the middle of the next decade - and become a necessary element of any new coal-fired power plant. Should ACES become law, the expectations for CCS commercialization will high, but the stakes for the coal industry will be even higher.

A Regulatory Framework for CCS

ClimateIntel has reported previously on the legal and regulatory barriers investors and project developers face in moving forward with large-scale CCS projects under the current (or even EPA’s proposed) regulatory framework.  ACES would amend both the Clean Air Act (CAA) and the Safe Drinking Water Act (SDWA) to address some of these key barriers: First, ACES would give EPA’s air program new authority under the CAA to regulate the siting and permitting of these CCS facilities to help prevent atmospheric releases of sequestered CO₂.  Also, EPA’s drinking water regulatory program would gain additional authority necessary to impose financial assurance requirements on owners and operators of CCS facilities, building on EPA’s existing authority to regulate those facilities to protect water resources.

In contrast, on some issues ACES reverts to traditional fact-finding and reporting in lieu of charging forward with rulemaking.  The bill would establish a multidiscliplinary task force to study and report on various legal issues associated with CCS regulation, including options for management of long-term liability at CCS facilities-another issue previously examined on ClimateIntel.  The Bill would also direct the Department of Energy (DOE) and the Federal Energy Regulatory Commission to prepare a Report to Congress on barriers to constructing and operating the extensive web of pipelines that would be needed to transport CO₂ to suitable sequestration or enhanced oil recovery sites.

 A Dedicated Funding Stream for Early Movers

In addition to regulatory certainty, the CCS industry has struggled to generate the capital needed to take CCS from a promising demonstration technology to a proven commercial-scale application.  ACES would establish a quasigovernmental corporation, the Carbon Storage Research Corporation (CSRC), to subsidize early CCS commercial projects using an assessment fee passed through to rate-payers.  The CSRC would operate as a division of the nonprofit Electric Power Research Institute (EPRI), under the direction of a Board of Directors composed of representatives from industry, municipal governments, and nongovernmental organizations.  Absent opposition from 40 percent of state regulators, the CSRC would collect a small assessment fee on each kilowatt-hour of fuel-based electricity delivered directly to retail consumers, tailored to each utility based on their energy mix, providing up to $1 billion per year in funding for CCS projects for the next ten years.

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In the past week, the ethanol industry received two pieces of positive news.  First, the Congressional Budget Office (CBO) issued a report, entitled “The Impact of Ethanol Use on Food Prices and Greenhouse-Gas Emissions,” finding that high energy prices had a much more profound effect on the price of food than increased ethanol production in the period April 2007 through April 2008.  Second, EPA published a notice and solicited comments on a waiver application to increase the amount of ethanol that can be blended into a gallon of gasoline to up to 15 volume percent (E15).

CBO Report

The CBO report concluded that, for the period studied, ethanol production accounted for only 10 to 15 percent of the estimated 5.1 percent increase of food prices.  By comparison, the increase in the consumer price index (CPI) for all urban consumers for energy accounted for 22 percent of the 5.1 percent increase in the price of food.

In analyzing ethanol production’s contribution to the increase in the price of food the CBO assessed how increased ethanol production contributed to increases in the price of corn, animal products and soybeans, and how higher prices for these commodities contributed to the prices of foods that are measured in the CPI-U.  Other contributing factors noted by the CBO include a growing demand for meat that increased the demand for animal feed, dollar exchange rate fluctuations that increased demand for U.S. corn exports and concerns about weather for spring planting that caused corn prices to rise during the spring of 2008.

E15 Waiver Request         

The Clean Air Act authorizes EPA to regulate fuels and fuel additives to reduce the risk to public health from exposure to their emissions.  EPA’s regulations require that each manufacturer or importer of gasoline, diesel fuel or a fuel additive, register its product with EPA before “introducing the product into commerce.”  See generally, 40 CFR Part 79.  Since 1978, EPA has established a limit of ten volume percent ethanol (E10) for conventional (non flex-fuel) vehicles.  Growth Energy and fifty-four ethanol manufacturers submitted their E15 application on March 6, 2009.  After EPA’s Notice has been published in the Federal Register, stakeholders have 30 days to submit comments on the waiver application.  The Clean Air Act requires EPA to rule on the waiver application within 270 days of receipt, December 1, 2009.

There will almost certainly be comments submitted to EPA in opposition to the waiver request.  The National Petrochemical and Refiners Association, the American Lung Association, the Sierra Club, the Engine Manufacturers Association and other groups wrote former EPA Administrator Stephen Johnson on December 18, 2008, to oppose any increase in the 10% limit on ethanol in gasoline.  Among the concerns expressed, with respect to a higher blend, were potential machinery impacts, health and safety issues, emissions and compliance with the Clean Air Act.

EPA’s ruling on the waiver request could give an important signal on the direction the Obama Administration will take with respect to the ethanol industry.

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

As noted in last Friday’s post, one of the technological gaps that must be filled to increase the percentage of energy supplied by renewable sources is the need for grid-level energy storage.  The 2007 Energy Independence and Security Act, combined with the 2009 American Reinvestment and Recovery Act (ARRA), makes billions of dollars available for development of new and improved energy storage systems.  This infusion of funding to promote grid reliability provides an important opportunity for the electric power industry to build energy storage into the national grid design.  As utilities, investors, and policymakers assess the best way to do so, however, they will be choosing among a broad suite of potential technologies looking to exploit that opportunity.  In a constantly changing technological environment, making the right choice will be no simple task.  Some of the major types of grid-level energy storage technologies currently in play include:

• Pumped Hydro Storage (PHS): PHS is the most mature and widely utilized energy storage technology in the world, with over 90GW of PHS in use worldwide. PHS generally consists of two reservoirs—an upper and lower—connected by a reversible turbine. During times of low demand, water is pumped from the lower reservoir to the upper; that flow is reversed during times of high demand. Because of the significant capital costs, long construction times, and highly site-specific nature of PHS, little additional construction of these facilities is expected, though using lagoons or other tidal resources to power PHS is an emerging field of research.
• Compressed Air Energy Storage (CAES): In a CAES system, off peak power is used to pump air into an underground storage formation, such as an abandoned mine or a salt cavern. That compressed air is used to turn gas turbines during peak power periods. CAES is the second most commercially mature technology after PHS; two plants—both with over 100MW of capacity—have been constructed, and a number of other projects are planned, including the Iowa Stored Energy Park (ISEP), which will use wind energy in concert with CAES, creating a 268MW/13,000MWh power plant, which will also provide 50 hours of energy storage.
• Thermal Energy Storage: Thermal storage is generally used in concert with concentrated solar power facilities, and involves the circulation of a heat-transfer fluid-generally molten salt, though other advanced fluids are under development-to produce steam during periods when the sun is unavailable to the plant. Examples include the thermal energy storage system storage systems constructed as part of the Solar Two Facility in Southern California, and the massive Andasol solar power plant in Southern Spain.
• Advanced Material Batteries: Advanced material batteries use materials like molten sodium or lithium to store energy. Currently, sodium-sulfur (NaS) and lithium-ion based batteries are the primary designs for these technologies. Currently, sodium-sulfur (NaS) batteries have more fully penetrated the market, as significant numbers have been installed in Japan (where the batteries are produced), including a 34MW battery-currently the largest in the world. Advances in lithium-ion batteries have mostly been directed towards applications in electric cars, but with recent advances in nanotechnology, these batteries are finding use at the utility scale as well.
• Flow batteries: Also known as redox flow-cell batteries or regenerative fuel cells, flow batteries store electricity through a reaction between two different electrolyte solutions. Because the capacity of these batteries is largely dependant on the volume of electrolytic liquid available, these batteries are highly scalable, giving them the potential to compete with bulk storage in terms of charge and capacity. Current battery designs exist around zinc-bromide, sodium-bromide/sodium polysulfide and vanadium solutions. Fewer flow batteries have been installed than the previously mentioned technologies—currently the largest in the U.S. is a 250kW/2MWh plant in Utah.
• Flywheel Energy Storage (FES): FES is another mechanical storage technology, where energy is stored in a rapidly spinning cylinder. When that outside source of energy is unavailable, the rotor for the flywheel acts as a generator. Flywheels are easily moved and have no environmentally reactive components , but have limited storage capacity and a short discharge period, limiting their applicability. The technology is just entering commercial viability: in September 2008, Beacon Power produced the first flywheel storage system for use on a utility scale.
• Superconducting Magnetic Energy Storage (SMES): SMES uses the magnetic field produced by cryogenically cooled superconductors to store energy. By utilizing superconductors, SMES maximizes efficiency (very little energy is lost in the storage process, and there is no conversion between the form the energy is stored in and its usable form—electricity). Like flywheels, however, an SMES system discharges its energy quite quickly, and therefore is useful mostly for short term applications.

The current diversity of storage technologies under active commercial development creates both an opportunity and a dilemma for policymakers and market participants.  The opportunity is that because each technology offers different technical, financial, and political pros and cons, project developers have a broad selection of alternatives to choose from in pinpointing the ideal storage technology to fit the technical, financial, and political constraints facing a project.  The dilemma, in turn, is that given the relative scarcity of long-term performance information for many of these emerging technologies, and the uncertainty regarding whether and when federal policymakers will provide future incentives similar to those provided in the ARRA, policymakers granting funds and the project developers and investors requesting funds will want to get it right the first time.

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

EPA released today its annual national greenhouse gas inventory, identifying and quantifying the United States’ primary anthropogenic sources and sinks which finds that overall emissions during 2007 increased by 1.4 percent from 2006.  The report further indicates that overall emissions have grown by 17.2 percent from 1990 to 2007. The Inventory of U.S. Greenhouse Gas Emissions and Sinks: 1990-2007 is the most recent report the United States has submitted to the Secretariat of the United Nations Framework Convention on Climate Change.

EPA prepares the annual report in collaboration with other federal agencies and after opportunity for public comment.  The inventory tracks annual greenhouse gas emissions at the national level and presents historical emissions from 1990 to 2007.  The inventory also calculates carbon dioxide emissions that are removed from the atmosphere by “sinks,” (e.g., through the uptake of carbon by forests, vegetation and soils).

The carbon dioxide equivalent of the total emissions of the six main greenhouse gases in 2007 was 7,150 million metric tons CO₂ Eq.  EPA concludes that increases in carbon dioxide emissions associated with fuel and electricity consumption were the primary causes of the emissions increase in 2007.  EPA also concluded that the primary contributors to the increase in 2007 were: (1) increased demand for heating fuels and electricity due to cooler winter and warmer summer conditions in 2007 than in 2006; (2) increased consumption of fossil fuels to generate electricity and (3) a significant decrease (14.2 percent) in hydropower generation used to meet this demand.

Together with EPA’s proposed rule for mandatory greenhouse gas reporting, published in the Federal Register last Friday, EPA’s national inventory will help inform the deliberations in Congress over the shape of comprehensive climate change legislation.

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

At both the federal and state level, expanding renewable energy generation has become a major focus of domestic energy, climate, and economic policy.  Today, twenty eight states and the District of Columbia have adopted some sort of Renewable Portfolio Standard (RPS).  President Obama has voiced his support for a national standard that would mandate a 25 percent share of renewable power by 2025 (up from 2.5 percent today, not counting hydroelectric generation), and that standard is included in a new energy bill introduced by  Congressman Ed Markey (D-MA) and 29 co-sponsors.  If the US is going to deliver on these pledges to increase renewable energy capacity and infrastructure, investments in generation technology will have to tackle an even greater challenge: electricity storage.

According to a report by the American Institute of Chemical Engineers, absent changes to the current electrical grid, pushing renewable energy’s share of the grid above 15% may be technically impractical.  Traditional sources of base-load power—coal and nuclear—provide continuous power to the grid and constantly adapt to changing power demands during each 24-hour period.  In times of increased demand, additional units can be brought online, or the plants can utilize their “spinning reserve”—literally spinning their turbines faster to produce extra power.  Solar and wind power on the other hand, do not have this capacity.  If the sun is not shining (or the wind is not blowing), there is no power flowing from those sources.

The intermittent nature of wind and solar sources means that increasing renewable power’s share of the power flowing into the grid will also increase the grid’s instability, complicating the moment-to-moment process of matching the supply of electricity to the demand.  Absent a technical fix for resolving momentary discrepancies between grid supply and demand, the resulting overloads can lead to rolling or even involuntary blackouts.

One way to address renewable energy’s intermittency problem is through advanced energy storage technologies that can store electricity and release it at periods of high demand (or inconsistent supply), smoothing the peaks and troughs of the energy equation.  While large-scale energy storage is still an emerging technology, a number of companies have already taken steps to commercialize various storage technologies.  For instance:

• In 2006, American Electric Power installed the first large-scale advanced battery, with a 1.2-MW capacity, in West Virginia;
• In the spring of 2008, Xcel energy installed a 1-MW battery at a wind farm in Minnesota;
• In Fall 2008, Altair nanotechnologies, in partnership with AES Solar, announced that their 1-MW lithium-titanate battery had met standards for commercial use in the PJM Regional Transmission Organization, the first lithium battery to do so; (Both AEP and Xcel Energy have batteries based on Sodium-Sulfur technology.) and,
• In November 2008, AES Storage LLC installed a 2-MW battery at an AES facility in in Southern California.

Federal policymakers have also recognized the importance of developing energy storage solutions.  The 2007 Energy Independence and Security Act included a title on “Energy Storage Competitiveness” which authorized the spending of nearly $300 million in each of the next ten years on advanced energy storage technologies. The 2009 American Recovery and Reinvestment Act also included significant funding for advanced batteries, and appropriated another $4.5 billion for the Department of Energy’s (DOE) Office of Electricity Delivery and Energy Reliability for grid modernization efforts, including energy storage. Energy storage companies are already pursing those funds, and the DOE, through Sandia National Laboratories, has established partnership programs focused on advancing battery technology.

Investing in giant batteries, fuel cells, and other advanced energy storage systems designed for the power grid may not draw the same popular attention as is lavished on developments in advanced electric cars, but if the U.S. is to embrace renewable energy in a meaningful way—and meet the mandates it has set for itself—developing the country’s energy storage infrastructure is a must.

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

Broadly speaking, biofuel refers to any solid, liquid or gas fuel that has been derived from biomass. It can be produced from any carbon source that is easy to replenish—such as plants.  One of the main challenges when producing biofuel is to develop energy that can be used specifically in liquid fuels for transportation. The most common strategies used to achieve this are to grow plants that naturally produce oils, grow sugar crops or starch that can be fermented into ethanol, or converting “wood” products. 

Over the past year, significant controversies have developed over biofuels related to the extent to which biofuels actually result in reduced carbon emissions, which led to efforts to make “life cycle analyses” to determine the net carbon footprint of biofuels.  Spot food shortages in 2008 led to calls for analyzing whether increased biofuels production leads to food shortages.  In a multi-installment series, ClimateIntel will analyze several issues related to biofuels and the legal and regulatory challenges biofuels face.

The American Recovery and Reinvestment Act of 2009, the Stimulus Bill, includes significant funding and related incentives for development of second generation biofuels.  Earlier this year, the U.S. Departments of Energy and Agriculture  announced a joint funding opportunity pursuant to which $25 million would be awarded to fund biomass research and development.  The funding is directed to researching second generation biofuels, specifically the three technical areas specified in the Food, Conservation, and Energy Act of 2008:

1. “feedstocks development;”
2. “biofuels and biobased products development;” and
3. “biofuels development analysis.” 

Secretary of Energy Steven Chu noted that the biofuels industry should “focus[] on the next generation of biofuels.”  Despite the attention paid to second generation biofuels, however, first generation biofuels still figure prominently and are the only commercially available form of biofuels. 

Recently, the International Energy Agency produced a report comparing first and second generation biofuels.  First generation biofuels are mainly produced from agricultural crops used for food and animal feed, with the two most common sources being sugar cane and maize (corn).  The first generation biofuels market is relatively mature, particularly in the United States, Brazil, and Europe.  Of the three major forms of fuels currently produced, bioethanol, biodiesel, and biomethane, the market is largest for the liquid fuels bioethanol and biodiesel. 

Currently 80% of the world’s ethanol production is derived from sugar cane and corn, based on well-established conversion technologies.  Starch, the raw material from corn and other feedstocks, must first be converted to glucose through a hydrolysis process before ethanol may be produced.  Once the glucose is formed, it goes through a fermentation process during which it is metabolized by yeast cells.  Ethanol is then produced by distilling the product of the fermentation processes.  Sucrose is the raw material from sugar cane, and undergoes the same fermentation and distillation processes as glucose to form ethanol.  The difference is that pressed sugar cane yields sucrose, so it does not have to undergo the hydrolysis step required of starch. 

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Notwithstanding the financial tumult that has characterized early 2009, industries and investors with an interest in carbon capture and sequestration (CCS) technology have received positive news from Washington.  CCS investment played a prominent role in last month’s American Recovery and Reinvestment Act (ARRA) and could be expanded further in the Omnibus spending bill, which passed in the House and is expected to reach the Senate floor for a vote tomorrow.  These bills provide a range of CCS investment incentives, covering both coal and non-coal industrial CCS applications. 

ARRA:  The economic stimulus bill signed by the President last month appropriated $3.4 billion for various fossil-fuel programs, most with either express or potential application to the CCS industry, including:

• $1,000,000,000 for unspecified fossil energy research and development programs (While the final bill is silent as to what programs would qualify for these funds, members of the Illinois Congressional delegation have already argued that the $1 billion appropriation for unspecified “fossil energy research program” activities should be directed to rejuvenating the Futuregen project in Mattoon, IL);
• $800,000,000 for the Department of Energy’s Clean Coal Power Initiative (CPPI) Round III Funding Opportunity Announcement (FOA);
• $1,520,000,000 for industrial carbon capture and energy efficiency improvement projects, including a small allocation for innovative concepts for beneficial CO2 reuse;
• $50,000,000 for a competitive solicitation for site characterization activities in geologic formations; and
• $20,000,000 for geologic sequestration training and research grants. 

The tax provisions of ARRA provide billions more in tax incentives for CCS and other clean energy investments, including:

• $2.4 billion to expand the qualified energy conservation bond program (tax credit bonds allocated to states and large local governments to finance clean energy projects, including projects incorporating CCS technology); and
• $2.3 billion for an advanced energy property investment credit, providing a 30 percent credit for investment in property designed to capture and sequester carbon dioxide as part of qualified advanced energy manufacturing projects.”

The Department of Energy, on March 4, 2008, issued “Notices of Intent” to issue funding announcements in four areas, including:

• Geologic Sequestration Training and Research            
• CCS from Industrial Sources           
• Site Characterization of Promising Geologic Formations for CO2 Storage            
• An Amended FOA for Round 3 of the Clean Coal Power Initiative.

Omnibus Bill:  The proposed Omnibus spending bill that passed in the House and is now under consideration in the Senate would make hundreds of millions more available for CCS projects.  Specifically, the “statement accompanying the Bill” describes proposed appropriations to include:

• $288,174,000 in additional funding for CPPI;
• $73,000,000 in funding for Futuregen;
• $404,235,850 to support research and development into “Fuels and Power Systems,” including funding for a pre-feasibility analysis of the technical, economic and environmental aspects of a clean coal biomass polygeneration plant equipped with carbon capture using a range of coals to produce chemicals, fuels and power at diverse locations; and
• $43,864,150 for Congressionally-directed projects, many of which are related either directly or indirectly to the development of CCS technology for power generation and industrial systems.

Between the stimulus bill and the proposed Omnibus bill, power producers, manufacturers, investors and related industries should have a variety of opportunities to obtain federal support for CCS research, development and commercialization efforts.

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

One of the most difficult dichotomies in climate change mitigation is that between the relatively short window for emissions reductions-the IPCC believes that world carbon emissions must peak within the next 6-11 years-and the long development times for many emissions control technologies, such as mass-market hydrogen or carbon capture and storage. This puts significant pressure on discovering processes which can provide immediate mitigation effects. This past weekend, the Financial Times investigated one potential tool: biochar.

“Biochar,” also known as “agrichar,” is simply charcoal: biomass heated at very high temperatures in the absence of oxygen. This charcoal becomes important in the battle against climate change in concert with one of the planet’s largest carbon sinks: the soil. Soil holds huge amounts of carbon, mostly in the form of decomposing plants. That carbon, however, is largely unstable-disturbing the soil, such as when a farmer plows his fields, causes a release of that carbon into the atmosphere. The instability of soil as a carbon sink presents a series of problems. Land use changes, especially towards agricultural uses, have the potential to release huge amounts of carbon into the atmosphere. This potential creates one of the most complicated-and controversial-issues in the biofuel industry: how should indirect land use changes be included in calculations of the emissions avoided by increased use of biofuels? At an even deeper level, there are questions as to whether the effects of these land use changes on atmospheric carbon can even be accurately modeled.

Biochar, however, provides a relatively stable way to lock carbon into soils. Charcoal stabilizes carbon, leaving it relatively resistant to breakdown. Beyond this stabilization effect, however, biochar has other significant beneficial effects. Particularly exciting, are its effects on soil fertility: some studies have found that it is comparable to chemical fertilizers in its ability to increase crop yields. Biochar therefore provides multiple effects; not only does it lock up carbon that might have been released into the atmosphere, it also prevents the emissions of other power greenhouse gasses: nitrous oxide, produced by nitrogen-based fertilizers, and methane, produced by crop waste left to rot in the fields. Also, because biochar can be made from crop waste-like any biological material-it has the potential to reduce any possible impacts from land use changes.

A number of entities have noticed the potential of biochar; at the recent international negotiations in Poznan, the U.N. Convention to Combat Desertification suggested that biochar production be included in the Clean Development Mechanism. Some scientists estimate that as much as 10% of total carbon emissions could be sequestered by the application of biochar around the world. While the technology to create biochar exists right now (and has existed for hundreds of years), creating biochar at a scale to effect the global climate would require significant effort; to even sequester 0.2 billion tons of carbon annually (2% of global emissions), would require the conversion of 27% of global crop waste to biochar.

Even with the potential challenges of biochar production, it still stands as one of the most significant quick-acting climate change mitigation tools. Academic programs, based out of Cornell University and Edinburgh, are researching ways to more efficiently produce and use biochar, while a number of companies have already begun to develop biochar as an economically viable resource.

“The world is in a race against time, with scientists estimating that major climate tipping points could be passed within a decade,” said Durwood Zaelke, President of the Institute for Governance & Sustainable Development. “It is imperative we take immediate and aggressive action on climate change through ‘fast-action’ mitigation strategies, in addition to reducing CO₂ emissions. Biochar is a fast-action strategy that can be expanded now and will bring near-term mitigation in addition to major agricultural benefits.”

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