Regulatory Promotion of Emergent CCS Technology

Abstract

Despite the growing inevitability of climate change and the attendant need for mitigation strategies, carbon capture and sequestration (CCS) has yet to gain much traction in the United States. Recent regulatory proposals by the U.S. Environmental Protection Agency (EPA), limited in scope to new-build power plants, represent the only significant policy initiative intended to mandate diffusion of CCS technology. Phase I of this Project assessed barriers to CCS deployment as prioritized by the CCS community. That research concluded that there were four primary barriers: (1) cost, (2) lack of a carbon price,(3) liability, and (4) lack of a comprehensive regulatory regime. Phase II of this Project, as presented in this Report, assesses potential regulatory models for CCS and examines where those models address the hurdles to diffusing CCS technology identified in Phase I. It concludes (1) that a CCS-specific but flexible standard, such as a technology performance standard or a very particular type of market-based regulation, likely will promote CCS diffusion, and (2) that these policies cannot work alone, but rather, should be combined with other measures, such as liability limits and a comprehensive CCS regulatory regime.v Executive SummaryThis Report examines potential regulatory models for promoting CCS and seeks to assess where those regulatory regimes address or fail to address the impediments to commercial-scale CCS deployment identified in Phase I of this Project. Notwithstanding sustained government efforts to advance CCS-and ongoing industry utilization of many of the technologies comprising CCS in enhanced oil recovery (EOR) efforts-CCS technology remains primarily an R&D rather than a commercial technology. Given the extent of domestic dependence on coal-fired power plants for baseload electricity production, and the increasingly ominous specter of unavoidable climate change, CCS would seem to be a potentially critical tool in mitigating the rise of global warming. Numerous analyses, including the Phase I Report, have identified and assessed the various barriers to effective CCS technology diffusion. The Phase I research utilized an opinion survey issued and completed in the first quarter of 2011 by 229 members of the CCS community. 1 Phase I examined three questions: What are the most significant obstacles to broad-scale CCS use? What incentives might best overcome those obstacles? How should CCS regulation be shaped to close the gap between the state of the CCS industry today and its realization as a full-fledged climate change solution?The Phase I survey data showed that the CCS community believes that, given the high costs associated with CCS adoption, the primary barrier to CCS deployment is the lack of a carbon price. This finding confirmed previous CCS studies' conclusion that definitive governmental action on climate change is crucial to domestic commercialization of CCS technology. The Phase I research further found that liability concerns were a prominent barrier to CCS deployment, as was the lack...