**Edison Foundation Conference on**

**Carbon Capture and Storage**

**March 3, 2008**

**Keynote Address**

**Sen. Jeff Bingaman (D-NM)**

**Chairman, Committee on Energy and Natural Resources**

**United States Senate**

**Introduction \[Title slide\]**

Thanks, Jeff, for the kind introduction. I appreciate the efforts that
the Edison Foundation and its partners \-- the Electric Power Research
Institute, the Natural Resources Defense Council, the Coal Utilization
Research Council, and the National Rural Electric Cooperative
Association \--have undertaken to host this important conference today.

I would like to begin by highlighting the three main points that I will
make in my talk today.

First, a rigorous carbon emissions reduction scheme is needed to ensure
that carbon capture occurs.

Second, the proper financial incentives are needed to assist in
expansion of the existing carbon dioxide transportation infrastructure.

Third, a comprehensive policy and regulatory framework needs to be
developed to ensure safe, long-term geologic storage of carbon dioxide.

**\[Slide 2 \-- Why is CCS needed?\]**

I'd like to start my discussion of carbon capture and storage, or CCS,
by putting it in the context of two basic realities. The first is that
US emissions today are neck and neck with China's. In fact, some
estimates suggest that China's emissions have already exceeded ours.
 The second reality is that China's emissions are increasing at almost
five times the rate of US emissions growth. It is clear from these
statistics that the developing world is currently driving its march
toward higher living standards with large quantities of fossil fuels,
just as the developed world has for much of the last century.

The problem with this trend is that the atmosphere cannot absorb the
carbon dioxide from those large quantities of fossil-fuels without
undergoing major changes. Unless we start to curb our dependence on
fossil fuels, the Earth's temperature will experience a dangerous rise,
with severe consequences to life on Earth.

If we want to avoid the worst consequences of global warming, we need to
act swiftly. Broadly speaking, we can do at least two things. First, we
can increase the efficiency with which we use energy. Secondly, we can
look to the promise of advanced energy technologies, such as carbon
capture and storage, to deal with the problem.

I believe we must try hard to get this technology off the ground. If we
do, the job of stabilizing atmospheric greenhouse gas concentrations
will be much easier. If we fail, it will be much harder.

**\[Slide 3 \-- Energy Independence & Security Act of 2007\]**

Congress recently took a significant step toward addressing the threat
of global warming by passing the Energy Independence and Security Act of
2007. This Act, which President Bush signed into law last December,
included provisions concerning carbon capture and storage. They are the
first significant legislation that has been enacted concerning that
subject.

The carbon capture and storage provisions in the Act include a change of
scope for the existing Department of Energy CCS research, development,
and demonstration program. We refocused the Department of Energy on
fundamental science & engineering research supporting carbon capture and
storage technologies, as well as carbon utilization activities. To
address the challenge of technology scale-up, the bill called for seven
large-scale carbon capture and storage demonstration projects at DOE.

Additionally, to address the growing industry manpower and
competitiveness issues, the National Academy of Science was directed to
help universities in designing carbon capture and storage curriculum.

Let me briefly mention a few other highlights. They include:

-   directing the U.S. Geological Survey to conduct carbon dioxide
    storage capacity assessments for geologic systems and terrestrial
    ecosystems;

-   instructing the Bureau of Land Management to keep an inventory of
    carbon dioxide stored under public lands; and

-   directing the Secretary of the Interior to develop a recommended
    framework for managing geological carbon capture and storage
    activities on public land.

In addition to the legislation that has already been passed, the Energy
and Natural Resources Committee recently held a hearing on two other
pieces of carbon capture and storage-related legislation. These two
bills focused on infrastructure development and development of a
comprehensive regulatory framework for carbon capture and storage.

While the bills that have been enacted or introduced contain very
important and necessary steps for the scale-up of CCS to a commercially
deployable technology, many challenges remain for safe, rapid scale-up
and widespread use of these technologies. For the remainder of my time,
I'd like speak about the challenges inherent in each of the phases of an
integrated carbon capture and storage program and how we are attempting
to address those challenges in Congress.

**\[Slide 4 \-- Integrated CCS Program \]**

How should we describe an integrated CCS program? An integrated carbon
capture and storage system can be characterized by three main phases.
The diagram presented on the screen represents this three-phase program.
Because of the importance of all three major phases, perhaps we should
speak in terms of CCTS -- carbon capture, transportation, and storage --
instead of CCS in describing this integrated system going forward.

The first phase is the capture portion of the project whereby carbon
dioxide is captured and compressed at an industrial emission source,
such as a coal-fired power plant or a cement manufacturing facility.

The next phase includes the transportation of the capture carbon dioxide
via a dedicated pipeline infrastructure to the injection site where the
carbon dioxide will be stored.

Finally, storage of the carbon dioxide occurs when it is injected into a
geologic reservoir. The following slide shows a schematic diagram of
what an integrated carbon capture and storage project looks like.

**\[Slide 5 \-- Integrated CCS Program\]**

In this image, you can see the three phases of an integrated CCS program
that I just described. Carbon dioxide is captured in step (1),
transported in step (2), and stored underground in step (3). This
diagram also shows several of the different geological formations that
can be used for geologic storage; including oil & gas reservoirs,
unmineable coal seams, and saline formations.

I'd like to now walk you through challenges associated with each of the
three main phases of the program and describe the Congressional efforts
that are underway to address these issues.

**\[Slide 6 \-- Capture Challenges\]**

First, the capture phase.

The most obvious challenge facing the "capture" phase of the program is
ensuring that there are incentives for capture to occur to begin with.
The first and most important incentive for carbon capture is to have
mandatory caps on greenhouse gas emissions. No one will undertake the
added cost of a CCS system unless emitting carbon dioxide has an
economic cost attached to it. For that reason, Senator Arlen Specter and
I, along with a number of bipartisan colleagues, have introduced an
economy-wide cap-and-trade bill aimed at significantly reducing US
carbon emissions over the next several decades. In this effort, we have
tried to advance strong environmental goals in a way that will protect
consumers and the overall health of our economy. And because I believe
that CCS is so critical to the success of any climate policy, our bill
includes several specific measures to encourage CCS deployment.

Of these, perhaps the most important is the provision that would offer
"bonus allowances" to certified CCS projects. With these provisions
included, the Energy Information Administration of the Department of
Energy has projected that CCS would be the dominant compliance strategy
in the electric power sector.

I want to stress that this projection assumes that CCS technologies will
be available on a very large scale. It also assumes that other
regulatory barriers related to certification and liability will be
quickly resolved. I am personally optimistic that they will, but these
issues will demand our close attention as we move forward.

Technology scale-up of CCS is the first challenge that industry faces.
This means moving carbon capture and storage from small-scale capture
demonstration projects to commercially deployable, large-scale projects
that could be applied at a variety of industrial facilities, such as
coal-fired power plants, refineries, and cement manufacturers, to name a
few. To date, carbon capture systems have not been applied to a broad
range of industrial facilities, nor have they been sufficiently proven
at a large-scale (that is, at scales greater than 1,000,000 metric tons
of CO~2~ per year). The principal challenge is to integrate the three
phases of CCS -- capture, transport, and storage -- and to demonstrate
that integration at commercially deployable scales. What we need to do
is to build the first few fossil energy facilities that integrate these
three components at scale, so that we can discover the practical
engineering problems involved in that systems integration.

While we are waiting for the enactment of a cap-and-trade system for
carbon dioxide, there are other mechanisms that we should be putting in
place to move CCS technology forward. Some of the most important of
these are financial incentives to help bridge the technology gap between
laboratory and commercial practice for CCS. I have been working with the
Senate Finance Committee, in my position as the Energy Subcommittee
Chairman, to develop tax incentives that could assist industry in
jump-starting early deployment of CCS.

The cost of building and utilizing a capture system is a real economic
barrier to most industrial CO~2~ emitters. A tax incentive could help
reduce the operating costs of an industrial capture program.

**\[Slide 7 \-- Transportation Challenges\]**

The second phase is transportation.

Transportation of carbon dioxide from the CO~2~ source to the storage
site also faces economic challenges similar to carbon capture
technologies. Mainly, the costs associated with building new pipeline
infrastructure may be cost prohibitive for those areas that do not have
adequate geologic storage for their industrial carbon dioxide emissions.

The next two slides illustrate the geographic disconnect between where
the carbon dioxide industrial sources occur and those regions in the
U.S. that have sufficient geologic storage capacity.

**\[Slide 8 \-- CO~2~ Sources & Storage Areas\]**

In this image, the total estimated geologic storage capacity for carbon
dioxide is represented with blue shading. This area represents oil and
gas reservoirs, unmineable coal seams, and saline formations. The grey
dots represent reported industrial carbon dioxide emitters. As you can
see, there are areas with good overlap, where CO**~2~** sources and
geologic storage sites coexist. These are areas that may not need
creation of a significant new pipeline network for CO~2~, as industrial
facilities may sit above or near to geologic storage sites.

Conversely, there are large areas throughout the U.S. where there are
many industrial emitters, but no geologic storage potential, such as the
southeast portion of the US -- including Washington, DC. For those
areas, developers will be required to build a pipeline network, as other
transportation options are not economically viable when transporting
large-volumes of carbon dioxide.

While this slide gives a general picture of geological storage capacity,
we really need to better understand what storage capacity actually
exists throughout the United States. For this reason, the US Geological
Survey was instructed in the recently passed energy bill to come up with
a single consistent assessment methodology and then conduct a nationwide
assessment of our geologic storage potential for carbon dioxide.

**\[Slide 9 \-- CO~2~ Infrastructure\]**

When it comes to the question of carbon dioxide pipelines, we can see
from charts like this one that the existing carbon dioxide pipelines
generally are connected with existing oil and gas fields. In this
diagram, the existing pipelines are shown as solid blue lines, the
proposed new carbon dioxide pipelines are shown as dashed blue lines,
and the red shaded areas represent the areas where oil and gas fields
exist. From this you can deduce that the carbon dioxide pipelines were
initially built to supply oilfield operators with carbon dioxide for
enhanced oil recovery techniques. For those areas that do not use carbon
dioxide for enhanced oil recovery, new pipelines will need to be
constructed. As you can see there are vast areas where no carbon dioxide
pipelines exist.

To facilitate this expansion, I have proposed a financial incentive that
could reduce costs for pipeline developers through accelerated
depreciation of their carbon dioxide pipelines. This proposed tax
incentive allows a seven-year treatment for new dedicated pipelines.

**\[Slide 10 \-- CO~2~ Pipeline Oversight\]**

Finally, with regard to transportation, two questions remain -- who, if
anyone, should regulate carbon dioxide pipelines? What can be done to
assist pipeline companies with the siting of their pipelines?

In our recent hearing in the Energy & Natural Resources Committee,
Federal Energy Regulatory Commission Chairman, Joe Kelliher, testified
on the Commission's posittion on regulating CO~2~ pipelines. In his
testimony he listed three ways in which CO~2~ pipelines could be
regulated:

1.  Under the current regulatory framework, CO~2~ pipelines are sited
    under State law, transportation rates are set by the Surface
    Transportation Board, and the Office of Pipeline Safety ensures
    safety

2.  Under the oil pipeline model, pipelines are sited under state law,
    FERC sets the transportation rates, and the Department of
    Transportation ensures safety

3.  Under the gas pipeline model, FERC sites the pipelines, sets their
    transportation rates and the DOT-Pipelines Hazardous Materials
    Safety Administration ensures pipeline safety.

Chairman Kelliher testified that the existing current regulatory
framework was sufficient until proven otherwise.

To address the second question of what can be done to assist pipeline
companies with the siting of pipelines, several of my colleagues have
introduced a bill that would require the Secretary of Energy to conduct
a feasibility study that would address issues relating to financing,
siting, environmental impacts, safety, regulatory and technical
questions associated with the construction and operation of CO~2~
pipelines and sequestration facilities. We have received very positive
testimony on this bill at a recent Energy Committee on carbon capture
and storage regulations.

**\[Slide 11 \-- Storage Challenges\]**

The third phase of CCS is storage.

The storage phase of an integrated carbon capture and storage program
also has issues to resolve, mainly related to perceived regulatory
uncertainty. Within the storage phase there are four distinct
sub-phases.

The four stages shown here relate to (1) site selection and permitting,
(2) site operation, (3) site closure, and (4) post-closure site
management. Additionally, all four stages have liability concerns
associated with each. I'll finish by discussing the liability issues
separately.

Let me mention each stage and some of the questions we need to answer as
to each.

**\[Slide 12 \-- Site Selection & Permitting\]**

There are several areas where clarification is needed for site selection
and permitting of carbon dioxide injection wells. They are shown on this
slide:

-   What are the site selection criteria?

-   Which federal or state government entity has the most expertise in
    this area?

-   Are the existing EPA guidelines enough for proper site selection?

-   Who will be responsible for permitting each site?

-   Who owns the pore space?

Currently there are no formal site selection criteria for carbon dioxide
injection wells that will be used for carbon storage. Carbon dioxide is
monitored for these projects at the moment in the same way that it is
for its use as an enhanced oil recovery agent and for experimental
injection wells. As most of you know, the EPA, under the authority of
the Safe Drinking Water Act, has established guidelines for monitoring
injected fluids via the Underground Injection Control (UIC) program. The
EPA has initiated rulemaking aimed at expanding the existing UIC program
regulations to cover injection wells to be used for carbon storage. The
Agency plans to propose regulations in the summer of 2008. Based on the
testimony of the Assistant Administrator for Water at the Environmental
Protection Agency, Ben Grumbles, at our recent hearing -- the EPA
expects to come out with their final rules sometime in 2011.

As we are trying to move implementation of carbon capture and storage
forward, I wonder whether EPA isn't taking too long. If we don't have
definitive rules for CCS before 2011, how do we give early movers the
regulatory certainty they need to move their projects into the
development stage?

I believe that there are other flaws in the way we are approaching the
potential regulation of CCS sites. Other agencies than EPA have
important and necessary expertise related to site selection and
permitting.

-   For example, the Department of Energy is gaining important insight
    into the problem as a result of conducting its regional carbon
    storage projects.

-   The Department of the Interior is working to determine how to best
    manage and permit geologic storage sites on public lands.

-   The US Geological Survey has knowledge and experience in working
    with complex geologic systems that the EPA has only to a limited
    extent.

-   Finally, States have a long history of regulating carbon dioxide
    injection for enhanced oil recovery. At the State level, the
    Interstate Oil & Gas Compact Commission has developed model
    regulations for CCS -- the only organization thus far to propose an
    actual regulatory framework for regulating geologic carbon storage.

If we are going to have site permits for carbon capture and storage, we
will have to address the current uncertainty as to who the pore space
owner is. Do the pore space rights for carbon dioxide storage belong to
the surface owner or to the owner of the mineral rights? This will need
to be settled before broad deployment of carbon storage occurs.

**\[Slide 13 \-- Site Operation\]**

Site operation is perhaps the best understood phase of carbon dioxide
storage. The petroleum industry has been injecting carbon dioxide safely
into depleted oilfields for nearly three decades. This experience,
combined with State regulatory oversight, has led to a very reliable set
of operating criteria and an exceptional safety record for carbon
dioxide usage.

As we come closer to regulating underground storage of CO~2~, we will
have to decide how rigorously we will want to monitor the subsurface
plumes of CO~2~ that flow out from injection wells. What sort of
long-term site monitoring will be necessary?

**\[Slide 14 \-- Site Closure\]**

Long-term site monitoring takes us into the next major set of questions
about CCS -- how do we ensure the safe closure of the CCS sites after we
have finished filling them with carbon dioxide? What "best practices"
will need to be developed for site closure? The petroleum industry has
had to comply with plug and abandonment protocols for oilfields for
decades. These protocols might serve as a starting place for developing
site closure criteria for CCS, so that wells used for injecting carbon
dioxide are permanently sealed off.

**\[Slide 15 \-- Post-Closure Site Management\]**

Before one molecule of CO~2~ is injected for carbon storage, we will
have to determine who will manage the site following closure. We need to
know who will be responsible in the short-term -- defined as 5 to 10
years \--and the long-term, defined as 10 years and beyond.

To date a clear definition of what we mean by "long-term storage" has
not been determined. How long do we want carbon dioxide to remain in the
subsurface? Is some leakage back into the atmosphere acceptable? I
believe that Congress will have to legislate in this area to clearly
define our national policy as to what long-term storage implies.

Finally, a program will need to be developed to address some of the
potential liabilities, such as property damage and health impacts, that
could occur if the stored CO~2~ leaks. Some key questions concerning
liability are on the following slide.

**\[Slide 16 -- Liability\]**

There are questions of liability that relate to each phase of this
integrated CCS system that I have described.

-   What is the extent of the liability that should attach to each of
    the steps involving capture, transportation, and storage?

-   How long should that liability continue?

-   What is the role of States in creating applicable laws in this area?

-   What is the role of the Federal government?

-   Should we establish something akin to an abandoned well program,
    whereby an operator could contribute to a trust fund and thereby
    shift liability to the government for long-term storage and
    monitoring?

**\[Slide 17 \-- The Way Forward\]**

I would like to close by restating my three initial main points. First,
a rigorous carbon emissions reduction scheme is needed to ensure that
carbon capture occurs. Second, the proper financial incentives are
needed to assist in expansion of the existing carbon dioxide
transportation infrastructure. Third, a comprehensive policy and
regulatory framework needs to be developed to ensure that safe,
long-term geologic storage of carbon dioxide occurs.

If we successfully create this comprehensive policy framework, we will
maximize the chances that CCS will fulfill its promise as a technology
for fighting global warming. But that framework will have to be aimed at
creating the conditions that both meet the needs of those who will be
investing in moving CCS technologies into the marketplace, as well as
the need of the public to be certain that we have answered its questions
and concerns about this emerging tool to forestall global warming.

All of this adds up to a big challenge to Federal and State agencies,
and most of all to Congress. I believe that Congress needs to play an
active role in defining the overall parameters for national CCS policy.
We need to enable all of the other entities and stakeholders to work
together in a way that maximizes the value of the special expertise that
each agency and level of government can bring to the complex challenges
of carbon capture and storage.

Carbon capture and storage is not just a challenge, but also an
opportunity for this country to become a world leader in demonstrating
that emission reductions, industrial advancement, and economic growth
can be achieved together as we reduce the dangers of continued global
warming. We all need to work together to realize that important vision.
Thank you for your work at this conference and in the future toward
making that happen.