Carbon Dioxide Utilization Markets and Infrastructure Status and Opportunities: A First Report (2023) / Chapter Skim
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5 Policy, Regulatory, and Societal Considerations for CO2 Utilization Systems
5 Policy, Regulatory, and Societal Considerations for CO2 Utilization Systems
Pages 109-128
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From page 109... ...
The chapter starts by providing broad policy considerations and continues with a presentation of the current regulatory framework for CO2 utilization, storage, and transportation, highlighting challenges and proposing solutions. Policies meant to expand the CO2 utilization economy could have societal impacts that negatively affect already disadvantaged communities.
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Knowledge spillovers are an example of positive externalities. Similar problems arise when investment in new technologies generates cost reductions due to learning effects.
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Subsidies -- including grants for research, tax credits, and direct government purchases -- can be used to stimulate R&D and adoption of CO2 utilization technologies with positive knowledge externalities. To a large extent, the two externalities can be treated separately, and R&D support in carbon utilization technologies can be given equal weight to R&D support in other sectors of the economy (Nordhaus 2011)
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. 5.1.1.2 Further Regulatory Needs Although the major impediments to investment in CO2 utilization technologies are the lack of regulation of CO2 emissions and the lack of support for positive knowledge spillovers, other policy interventions are warranted for the following reasons.
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5.2 CURRENT REGULATORY FRAMEWORK FOR CARBON CAPTURE, UTILIZATION, AND STORAGE 5.2.1 Facilities Permitting Permits are typically necessary for building and operating industrial facilities, for example, permits for construction or to discharge waste; permitting requirements for such facilities are generally well established. This is already true for carbon capture and hydrogen production facilities, both of which are envisioned to be used extensively as part of a carbon management strategy that includes CO2 utilization.
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State-issued State-specific A state-issued Incidental Take Permit authorizes the "take" State entity CC, WE, Incidental Take of an endangered, threatened, or candidate species if the SMR + CCS Permit take is incidental to otherwise lawful activity, the impact of the authorized take is mitigated, and adequate funding is available to do so. Take, as defined by the ESA, refers to the harassment, harm, pursuit, hunting, shooting, wounding, killing, trapping, capture, or collection of the aforementioned species.
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In this case, no criteria pollutants are produced, and therefore there is no requirement to obtain air permits. SOURCE: Adapted from Council on Environmental Quality, 2021, Report to Congress on Carbon Capture, Utilization, and Sequestration, Washington, DC, https://www.whitehouse.gov/wp-content/uploads/2021/06/CEQ-CCUS-Permitting-Report.pdf; and Energy Futures Initiative, 2020, "An Action Plan for Carbon Capture and Storage in California: Opportunities, Challenges, and Solutions," https://energyfuturesinitiative.
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In 2022, CEQ recognized the permitting complexities surrounding the end-to-end carbon capture value chain, especially given the relative nascence of CCUS as a commercial endeavor. CEQ produced guidance to facilitate reviews associated with the deployment of CCUS and to promote the efficient, orderly, and responsible development and permitting of CCUS projects at an increased scale in line with the Biden administration's climate, economic, and public health goals (CEQ 2022)
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§ resources 470; 36 CFR Part 80 State and local authorizations Department of Environmental Quality, Issues National Pollution Discharge Elimination System State environmental quality statute Water Quality Division permit for discharges; approves Stormwater pollution prevention plan 401 Water Quality Certification Section 401 of the Clean Water Act Highway department Issues permits for oversize and overweight loads State transportation department Issues encroachment permits for state highways State transportation department State land board Issues easements to cross state lands State land board statute State engineer's office Grants permit to appropriate water for hydrostatic testing, State engineer statute dust control, and other uses State historic preservation office Reviews compliance activities related to cultural resources Section 106 of the National Historic Preservation Act, 16 U.S.C. § 470; 36 CFR Part 80 County commissioners Issues road crossing permits, land-use permits, and licenses County zoning regulations County health departments Permits temporary sanitation facilities County sanitation regulations 117
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in August 2022 significantly enhanced the magnitude of the Section 45Q Carbon Capture Credit. Notably, provided a project adheres to prevailing wage and apprenticeship requirements, the tax credit has been increased from $35/tonne to $60/tonne for utilization.
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5.3 SOCIETAL ACCEPTANCE AND ENVIRONMENTAL JUSTICE Widespread deployment of carbon capture and utilization will lead to diverse environmental, economic, and societal impacts. The application of CBA, as recommended in Section 5.1, ensures that all these impacts are considered and, whenever possible, monetized.
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Carbon capture and fuel production may have local pollution impacts. Using the fleet of internal combustion engine vehicles with synthetic fuel will produce health-harming criteria pollutants from vehicle tailpipes, while electric vehicle fleets will not emit pollution at the tailpipe.
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While both utilization and removal solutions can mitigate climate change and locally reduce criteria pollutants, CO2 utilization differs in that it additionally results in goods with monetary and other value, which can provide advantages to potential host communities of utilization infrastructure over that of carbon removal infrastructure. On the other hand, CO2 utilization can have disadvantages in comparison to carbon removal, such as a tendency to co-locate with existing industrial facilities, likely in communities already bearing adverse impacts.
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Denholm, eds., 2021, LA100: The Los Angeles 100% Renewable Energy Study, NREL/TP6A20-79444, Golden, CO: National Renewable Energy Laboratory, https://maps.nrel.gov/la100.
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An example of such community engagement that has been used predominantly in siting of nuclear waste storage facilities is termed consent-based siting (DOE-NE n.d.)
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5.4 FINDINGS AND RECOMMENDATIONS FOR POLICY, REGULATORY, AND SOCIETAL CONSIDERATIONS FOR CO2 UTILIZATION FINDING 5.1 Economic Tools to Support CO2 Utilization. The most cost-effective way to promote the diffusion of CO2 utilization technologies is to internalize the carbon externality (e.g., with a carbon tax or emissions trading scheme)
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On the basis of careful assessment of benefits, costs, distributional effects, and potential compensatory measures, regulators may choose not to invest in projects that would generate a net benefit for society but have equity implications that are deemed unavoidable and unacceptable. FINDING 5.9 Community Engagement.
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2022. "Environmental Justice Organizations Post Comments on Carbon Capture and Storage to the White House Council on Environmental Quality Indigenous Environmental Network." https://www.ienearth.
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2022. "Community Acceptance and Social Impacts of Carbon Capture, Utilization and Storage Projects: A Systematic Meta-Narrative Literature Review." PLOS ONE 17(8)
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2022. Carbon Taxes or Emissions Trading Systems?
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