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### ASSESSMENT OF THE POTE NTIAL COSTS, BENEFITS , AND OTHER IMPACTS

HAZARDOUS WASTE MANAGEMENT SYSTEM: CONDITIONAL EXCLUSION FOR CARBON DIOXIDE (CO2) STREAMS IN GEOLOGIC SEQUESTRATION ACTIVITIES

FINAL RULE

Economics and Risk Analysis Staff Office of Resource Conservation and Recovery

U. S. Environmental Protection Agency 1200 Pennsylvania Ave., N. W. Washington, DC 20460

August 27, 2013Page 2 Introduction and Purpose

The U.S. Environmental Protection Agency regu lates the generation, transfer, treatment, and disposal of hazardous waste under Subtitle C of the Resource Conservation and Recovery Act (RCRA). The hazardous waste regulations are de signed to ensure that hazardous waste is handled in a manner that protects human health and the environment. Currently, carbon dioxide (CO 2 ) streams are not listed as RCRA hazardous wa stes, but may be classified as a RCRA hazardous waste if they exhibit hazardous charac teristics such as igni tability, corrosivity, reactivity, or toxicity.

On August 8, 2011 the EPA proposed to revise the regulations for hazardous waste management under the RCRA to conditionally exclude carbon dioxide (CO 2 ) streams that are hazardous from the definition of hazardous waste, provided thes e streams are captured from emission sources, are injected into Class VI Underground Injec tion Control (UIC) wells for purposes of geologic sequestration (GS), and meet certain other cond itions. The EPA took this action because we determined that additional regulation unde r RCRA’s hazardous waste program would be unnecessary when these CO 2 streams are managed under the proposed conditions. Furthermore, the rule, as proposed, was expected to substant ially reduce the uncertain ty associated with identifying these CO 2 streams under RCRA subtitle C. This improved regulatory certainty could be expected to help facilitate the deployment of GS. Commen ts on this proposed rule were generally supportive.

The Agency has concluded that the management of these CO 2 streams under conditions outlined in the final rule will not present a substantial ri sk to human health or the environment. As a result, EPA is finalizing the regulations for hazardous waste management under RCRA to conditionally exclude carbon dioxide (CO 2 ) streams from the definition of hazardous waste, provided these CO 2 streams are captured from emission sources, are injected into Class VI Underground Injection Control (UIC) wells for purposes of ge ologic sequestration (GS), and

meet certain other conditions.

This final action is expected to substantially reduce the uncertainty associated with identifying

these CO 2 streams under RCRA subtitle C, and may also help facilitate the deployment of GS by providing regulatory clarity. With this final rule, additional CO 2 regulations pursuant to RCRA’s hazardous waste are considered unnecessary. The purpose of this Assessment is to present the Agency’s best estimate of the potential costs and cost savings, benefits, and other impacts of the

final rule.

Summary of Changes to the Assessment from Proposal to Final

This final rule Assessment applies the same general methodology as was used in the Assessment for the proposal. 1 However, there are three general areas of change that will impact findings.

1 U.S. EPA, Office of Resource Conservation and Recovery. June 2, 2011. A ssessment of the Potential Costs, Benefits, and Other Impacts of the Conditional Exclusion from the RCRA Defin ition of Hazardous Waste for CO 2 Streams Managed in UIC Class VI Wells for the Purposes of Geologic Sequestration, as ProposedPage 3 One is a minor change to the re gulatory requirements of the ru le, and the two others reflect changes in market conditions and analytical assumptions. These are described below:

a) Certification Statements : Requirements for the signed certifica tion statements change slightly. This modification is expected to result in negligible cost impacts , beyond those estimated for the proposal.

b) Number of Facilities Affected: Market dynamics affecting the capture, compression, and sequestration of CO 2 streams have changed since the Agency prepared the Assessment document for the proposed action. These altered market co nditions will be reflected in the revised number of facilities believed to be affected by the final ru le. Compared to proposal findings, this change will result in a decrease in the high-end aggregate annualized net cost savings estimate for the

rule.

c) Percent of CO 2 Streams that are RCRA Hazardous Waste: The preamble to the proposed rule and the June 2, 2011 Assessment document discussed the Agency ’s high level of uncertainty regarding the percent of CO 2 streams that may be characteri zed as RCRA Subtitle C hazardous

waste. Available information at the time indicated that it was possible that some CO 2 streams might meet the definition of hazardous waste, but the Agency considered this information to be insufficient to make a justifiable point esti mate or reasonable range. As a result, the Assessment prepared in support of the proposed rule applied a broad range of 10 percent to 90 percent of CO 2 streams that would be defined as RCRA hazardous waste, reflecting significant uncertainty. The proposed rule requested that commenters provide characterization data relevant to whether CO 2 streams meet the definition of RCRA hazardous waste, and indicated that the Agency would

continue to research and assess this issue. In response to our request, EPA received no new

information or data that would indicate what pe rcentage of captured CO 2 streams would be defined as a RCRA hazardous waste; inst ead, many commenters asserted that CO 2 streams are not hazardous wastes, do not exhibit hazardous char acteristics, and are unlikely to be mixed with

hazardous wastes. Two commenters indicated con cern over the potential hazardous waste status of these streams but provided no data or suppor ting information indicating that such streams could, or are likely to be hazardous waste. Theref ore, there remains a degree of uncertainty as to what percentage of CO 2 streams might be defined as a RCRA hazardous waste. However, within this uncertainty, EPA believes that the high- end estimate of 90 percent is probably an overestimate, based on the Agency’s best prof essional judgment. In addition, the high-end estimate results in a commensurately high estimated costs savings for the rule. Therefore, in an effort to present a more conservative estimate of costs savings, we are dropping the high-end 90 percent hazardous waste scen ario for our final rule Assessment

.

Need for Regulation

Without this rule, a carbon dioxide (CO 2 ) stream that is determined to be a hazardous waste would be subject to the requireme nts of RCRA Subtitle C. EPA has determined that the full set of hazardous waste regulations is unnecessary for captured CO 2 streams. Existing regulations governing the transport and injec tion of CO2 into a UIC Class VI permitted injection well are sufficient to ensure protection of human health and the environment. Furt hermore, as indicatedPage 4 above, this action is expected to substantially reduce the uncertainty asso ciated with identifying

CO 2 streams under RCRA subtitle C, and may also he lp facilitate the deployment of GS.

Summary of Current Rules

Without this rule, if a captured CO 2 stream is a solid waste and determined to be a RCRA hazardous waste that is discarded, the generator w ould be subject to the various hazardous waste generator standards in 40 CFR 262. Hazardous waste CO 2 streams destined for disposal would be required to be managed in a Class I UIC hazardous waste well that is permitted to accept

RCRA hazardous waste. A RCRA hazardous waste CO 2 stream could not be injected into a well that is permitted as a Class VI well under th e UIC Class VI regulations. The owners and operators of Class I hazardous waste wells ar e subject to the hazardous waste management requirements in 40 CFR 264 (Standards for Owners and Operators of Hazardous Waste Treatment, Storage, and Disposal Facilities) and 265 (Interim Status Standards for Owners and Operators of Hazardous Waste Treatment, Storage, a nd Disposal Facilities) if they store or treat hazardous waste prior to injection. The UIC Cl ass I hazardous well, permitted under the Safe Drinking Water Act (SDWA), is subject to RCRA permit-by-rule (see 270.60(b)). In addition, these Class I hazardous waste well owners and oper ators would have to build their sequestration units to meet EPA’s requirements for a Class VI UIC well. 2

If the CO 2 stream is not a RCRA hazardous waste, th e generator would not be subject to the hazardous waste generator standards, and could transport the waste to a Class VI well for injection. The Class VI well woul d be required to meet the Class VI UIC requirements, which in some regards are similar to the requirements for hazardous waste wells permitted under UIC Class I, but are geared specifically toward CO 2 sequestration. 3

CO 2 streams captured for the purpos e of injection are typically transported by pipeline and are subject to the Department of Transportation (DOT) Pipeline and Hazardous Materials Safety Administration (PHMSA) regulations in 49 CFR 195 (Transportation of Hazardous Liquids by Pipeline) through 199 (Drug and Alc ohol Testing). Pipelines are not classified as modes of transportation under RCRA and therefore pipeline transportation would be subject to the same DOT requirements regardless of a CO 2 stream’s RCRA status. If a RCRA hazardous waste CO 2 stream was to be transported by other means, su ch as truck or rail, th e transporter would be subject to EPA’s standards for transporters of hazardous waste in 40 CFR 263 (Standards Applicable to Transporters of Hazardous Wast e), as well as the appl icable PHMSA Hazardous Materials Regulations in 49 CFR Parts 171 (Gener al Information, Regulations, and Definitions) through 180 (Continuing Qualification and Maintenance of Packagings)

.

2 Permit writers may require the RCRA hazardous waste CO 2 injection well to meet both the Class VI UIC requirements and the Class I hazardous UIC requirements; however, there is no specifi c UIC regulation that would require this.

3 Certain U.S. Department of Energy CO 2 injection demonstration projects have been permitted under the UIC Class V experimental technology well program, while other demonstration projects have been permitted under the UIC Class I non-hazardous waste well program.Page 5 Summary of Changes Established in the Final Rule

Under the final rule, 4 carbon dioxide streams that are captu red and transported for purposes of injection into an underground injection well are not hazardous waste if managed according to Class VI Underground Injection Control well re quirements, including the requirements in 40 CFR Parts 144 and 146 of the Underground Injec tion Control Program of the Safe Drinking Water Act. However, selected conditions must be met. 5 Class VI wells injecting excluded CO 2 would therefore not be subject to EPA’s RCRA hazardous waste requirements. The exclusion would apply to captured CO 2 streams only and would not apply to any hazardous wastes that are mixed with or co-injected with CO 2 streams.

Owners and operators of CO 2 capture facilities and sequestra tion wells claiming the exclusion would be required to sign, annually renew, and make available independent certification

statements. These statements must indicate that the CO 2 stream for which they are claiming the

exclusion meets the conditions of the exclusion a nd is being injected into a well subject to the Class VI UIC requirements.

Characterization of the Regulated Community

The entities that may be directly a ffected by the final rule include CO 2 capture facilities, transporters, and sequest ration facilities.

CO 2 Capture Facilities:

CO 2 capture facilities are enti ties that collect their CO 2 byproducts and manage them in a manner other than releasing them into the atmosphere. For the Proposal , we estimated that anywhere from 13 to 27 capture facilities 6 may be affected by the rule. Th is range was based on the best available data at the time of our analysis. The low-end estimate considered only 13 CO 2 capture facilities. This included ten existing capture f acilities, two capture proj ects associated with named DOE pilot projects, and one capture facility that was an ongoing federal/private partnership. The high-end estimate included the thir teen low-end facilities plus an additional 14 planned commercial projects that were expected to begin CO 2 capture at some point in the future.

The Assessment for the Proposal recognized that some of the planned projects may be cancelled or delayed due to approval and funding issues. It was further recognized that, wit hout climate change legislation, a significant economic driv er for both capture and sequestration would be

lost.

The future market for CO 2 capture depends, to a large extent , on the degree to which Federal and state governments pass legislation and adopt regulations designed to restrict or penalize CO 2 emissions. Aside from research and subsidized pilo t projects, a facility is unlikely to install the expensive technology necessary to capture CO 2 from emissions until it is required, or there is an economic reason to do so. Federal climate change legislation has not materialized since the

4 Hazardous Waste Management Systems: Conditional Exclusion for Carbon Dioxide (CO 2 ) Streams in Geological Sequestration Activities – Final Rule

5 See: §261.4 Exclusions (h) – Carbon Dioxide Stream Injected for Geologic Sequestration

6 See Section 2 of the June 2, 2011 Assessment

.Page 6 Proposal. Requirements or in centives designed to reduce CO 2 emissions are important to ensure

the creation of a sust ainable market for CO 2 capture or corresponding credits influencing CCS projects. Unfortunately, in additi on to the lack of federal clim ate change legislation, current market conditions appear to be diminish ing the economic incentives for expanded CO 2 capture. For example, the Global CCS Institute estimates that the current North American market price

for bulk CO 2 is in the range of $15 metric ton to $19 pe r metric ton, and that this is believed to represent an upper limit of prices th at may be expected in the future. 7 Recent model calculations indicate that CCS systems will begin to be deployed on a wide scale when the market price for

CO 2 reaches approximately $25/ton to $30/ton, assu ming that capture plus sequestration costs

decline to at least this level. 8 This price range compares unfa vorably to the estimated cost of capture alone ranging from $15/ton to $75/ton for co al or gas-fired power plants, which are the largest source of CO 2 emissions. 9,10 In addition, Shu 11 found that the cost of retrofitting CCS technology onto supercritical pulver ized coal (SCPC) power plants could be substantial, ranging from $50 to more than $100 per ton. The Worl d Energy Council indicates that the addition of carbon capture and sequestration ( CCS) systems to both existing a nd future power plants could add between 25 percent and 100 percent to the cost of producing electricity. 12

, 13 More recent

estimates indicate that this cost increase could be in the range of a 10 per cent to 36 percent, using projected U.S. average levelized costs fo r coal plants entering service in 2018. 14

The total number of CO 2 capture facilities potentially affected by the final rule remains uncertain. However, based upon current market conditions and the existing regulatory framework, as discussed above, it appears unlikely that there will be any significant expansion in CCS management for CO 2 over the next several years. 15 As a result, we have revised our high-end estimate of the number of capture facilities potentially affected, as presented in the Assessment for the Proposal. We now estimate that ther e may be a maximum of 19 capture facilities

7 Global CCS Institute at: http://www.globalccsinstitute.com

At Site See: http://www.globalccsinstitute.com /publications/accelerating-uptak e-ccs-industrial-use-capturedcarbon-dioxide/online/28461 . (Note: Prices do not include pipe line infrastructure capital costs.)

8 World Energy Council. Carbon Capture and Storage: A WEC Interim Balance. 2007

9 Intergovernmental Panel on Climate Change (IPCC). 2005. “Carbon Capture and Storage.” Edited by B. Metz, O. Davidson, H. de Coninck, M. Loos, and L. Meyer. Cambridge University Press.

10 We recognize that CO 2 demand is largely regional specific, and that the more expensive captured CO 2 may represent a low cost option in selected regions where industries may be located far away from natural reservoir pipelines or low-cost emitters.

11 Shu, Gary, MIT, February 2010. Economics and Policies for Carbon Capture and Sequestration in the Western

United States: A Marginal Cost Analysis of Potential Power Plant Deployment (pg. 21)

12 World Energy Council. Carbon Capture and Storage: A WEC Interim Balance. 2007. [Note: Another source estimates increases production costs between 50 to 70 pe rcent.(Carbon Capture and Sequestration, Pike Research Report, December 2009)]

13 Part of this increased cost is due to the parasitic load from CCS, resulting in as much as a 30 percent increase in coal usage (See: Richard k. Morse, Varun Rai, and Gang He. August 2009. “The Real Drivers of Carbon Capture and Storage in China and Imp lications for Climate Policy”)

14 U.S. Energy Information Administration, Levelized Cost of New Generation Resources in the Annual Energy Outlook 2013. January 2013 (Table 1).

15 A recent report by the U.S. EIA incorporates a 3 perc entage point increase in the cost of capital (CoC) beyond the standard weighted average used for CoC. This increase is added for GHG intensive t echnologies (e.g . coal-fired power plants) operating without CCS under the assumption th at such projects may eventu ally be required to purchase allowances or invest in other GHG emissions reduction projects to offset their emissions, suggesting that there may be an expansion in CCS projects over the next few years. (See: U.S. Energy Information Administration)Page 7 potentially affected by the final ru le. These facilities are identified in Appendix A. Our lowend estimate of 13 capture facilities remains unchanged from the proposal.

CO 2 Transporters

Pipeline transportation of captured CO 2 falls under the “all other pipe line transportation” (i.e., transportation of substances other than crude oil, natural gas and refined petroleum products) industry (NAICS 486990). 16 In response to EPA’s request for comments on non-pipeline transportation, all commenters who replied indicated that, given the volumes of CO 2 involved, non-pipeline transport is not antici pated, except at pilot scales. Th erefore, our analysis for the

final rule will continue to assu me that all transportation of CO 2 for any use other than demonstration and research projects will be c onducted via pipeline, subject to appropriate Department of Transportation (DOT) Pipeline and Hazardous Material Safety Administration (PHMSA) requirements.

In the Assessment for the proposal, we estimated there were 30 operating CO 2 pipelines, operated by 29 separate entities. These operators were estimated to be transporting 34.4 billion

barrel-miles of carbon dioxide in 2008. The analysis for the pr oposal addressed only these 29 operators of pipelines reported to be operating in 2008. Our pos t-proposal research indicated that for 2010, there were an estimated 25 operators transporting nearly 2 trillion barrel-miles of

carbon dioxide. 17 The 2010 barrel-mile quantities repr esent a significant increase over the 2008

values. The reason for this increase has not b een determined. The largest shipper of carbon dioxide in 2010 was Exxon/Mobil, followed by Ki nder Morgan, Enmark, and Bravo. All of the major operators saw significant increases between 2008 and 2010.

Sequestration Facilities:

CO 2 sequestration facilities receive captured CO 2 streams and inject them into UIC wells for the purposes of sequestration. In the Assessment for the Proposal, we estimated that a potential maximum of 29 planned sequestration facilities c ould be affected by the rule. This estimate, projected over a fifty-year time fram e, included 15 pla nned commercial CO 2 sequestration projects and 14 planned projects funded by DOE. The 15 planned commercial projects included 12 enhanced oil recovery projects that were projected to transiti on to sequestrati on over the long term (beyond twenty years but with in the fifty-year time frame). 18 Our low-end estimate for the proposal considered only six potential CO 2 Class VI UIC sequestration fa cilities. This included five sequestration projects asso ciated with named DOE pilot projects and one sequestration facility associated with the Fu tureGen federal/private partnershi p. Class VI UIC wells fall under “Other Non-Hazardous Waste Treatment and Dispos al” (i.e., management by methods other than

16 Some of the entities conducting pipeline transportation of CO 2 also may fall into other industrial source categories (e.g., oil and gas extraction), but this analysis only cons iders NAICS 486990 because it is the industry category most relevant to the activity affected by the rule.

17 U.S. EPA Report. Carbon Dioxide Pipelines in the United States. Submitted by The Cadmus Group, Inc., Under Subcontract to Eastern Research Group, Inc. June 25, 2012

18 U.S. EPA, Office of Resource Conservation and Recovery. June 2, 2011. A ssessment of the Potential Costs, Benefits, and Other Impacts of the Conditional Exclusion from the RCRA Defin ition of Hazardous Waste for CO 2 Streams Managed in UIC Class VI Wells for the Purposes of Geologic Sequestration, as ProposedPage 8 landfill, combustion, and incineration) industry ( NAICS 562219). These Class VI well facilities are not currently operational.

We recognize that if there is no federal climate le gislation within the early part of the projected fifty-year time frame, a significant economic driver for Class VI storage may not be realized. It is possible that these projects may store CO 2 in domes as a staging point for future enhanced oil recovery (EOR) or enhanced gas recovery (EGR ), and working fluids for fracturing tight gas sands and shale. Under this model, it is possi ble that many of these projects would never be subject to the final rule. Based on these considerations, our analysis for the final rule adjusts the high-end estimate for the number of potentially affected sequestration facilities based on the range for capture facilities (13 low to 19 high). Thus, the low-end number of potentially affected sequestration facilities for the final action remains at six, while the calculated high-end number is now estimated at nine facilities [(13-19/(-1 3)+1)*6)) = 8.8, rounded to 9 facilities]. 19

Baseline Conditions and Post-Rule Practices

This part of the Assessment analyzes the expect ed costs and benefits of the final rule. The analytical methodology remains ge nerally unchanged from the Assessment developed for the proposal. 20 However, our cost impact range now refl ects only the discount rate and the number of facilities potentially affected. For this final analysis we apply only a single point estimate for the percent of CO 2 streams potentially RCRA hazardous waste (see further discussion below). Furthermore, because cost impacts are directly linked to the number of facilities affected, the revised high-end estimates for the final rule are derived as a simple linear adjustment based on the number of affected facilities, for both captu re and sequestration facilities. Government impacts (EPA and States) remain unchanged from the proposal.

Assessment of Baseline Conditions:

This section discusses hazardous waste determina tion and expected baseline practices. A more comprehensive discussion of baseline practices and conditions can be f ound in Section 3.2 of the
June 2, 2011 Assessment . This section does not address ba seline transportation practices.

Because the most efficient and most commonly used method of transporting CO 2 is by pipeline (as confirmed by commenters on the proposal ), our analysis assumes that all CO 2 transportation is done via pipelines both in the baseline and under the final rule. Thus, as with the proposal, no incremental impacts to CO 2 transporters are estimated or expected under the final rule.

Hazardous Waste Determination

Without the final rule, generators of captured CO 2 streams must determine whether these streams, if destine d for geological sequestration, would be a RCRA hazardous waste. A captured

CO 2 stream may be a RCRA hazardous waste depe nding on its characteristics. Facilities may determine whether the captured CO 2 stream qualifies as hazardous waste either by testing the

19 The InterAgency Task Force on Carbon Capture and St orage estimates 5-10 commercial wells will come online by 2016. [See: http://www.whitehouse.gov /administration/eop/ceq/initiatives/ccs)

20 See the June 2, 2011 Assessment document for a complete discussion of the analytical methodology.Page 9 waste for hazardous characteristics or by applyi ng knowledge of the materials and processes used to generate the waste, as required by 40 CFR 262.11 (Hazardous waste determination).

As for the proposal, this analysis assu mes that the facilities capturing CO 2 streams from fossil fuel electric power generation, natural gas distribution, ethyl alc ohol manufacturing, and nitrogenous fertilizer manufactur ing would rely on process knowledge and limited testing to

determine if their CO 2 stream is a RCRA hazardous waste. This analysis further assumes that the remaining facilities capturing CO 2 streams from oil and gas ex traction would test their CO 2 streams as a gas to determine if it is a RCRA ha zardous waste. Section 3.2.1 of the June 2, 2011

Assessment presents a full discussion of waste determination methods and costs.

Throughout the development of th e proposal, the Agency was unabl e to identified adequate information necessary to conf irm the percent of captured CO 2 streams that may be RCRA hazardous waste. As a result, our analysis fo r the proposal applied a broad range of 10 percent to 90 percent of CO 2 streams that would be defined as RCRA hazardous waste in an effort to address this uncertainty. The proposed rule re quested that commenters provide characterization

data relevant as to whether CO 2 streams meet the definition of hazardous waste in the hope of deriving a more refined estimate for the final rule.

In response to our request, EPA did not receive an y new information or data that would indicate what percentage of captured CO 2 streams would be defined as a RCRA hazardous waste. One commenter provided inform ation indicating that CO 2 levels in all five samples exceeded 99.7% (i.e., few impurities), without a ny correlation to RCRA hazardous waste characterization. Most commenters asserted only that CO 2 streams do not meet the RCR A definition of hazardous waste, without providing any supporting data. These commenters generally stated that CO 2 streams are not hazardous wastes, do not exhibit hazardous characteristics, and are unlikely to be mixed with any hazardous wastes. Some co mmenters cited a study by Lawrence Livermore National Laboratory which concluded that impurities in captured CO 2 from coal plants would be insignificant or at concentrations similar to am bient levels. Once again, no correlation was made

to the level of RCRA hazardous waste that this finding may represent. One commenter stated that, “EPA should not exempt CO 2 streams from subtitle C wit hout a better unders tanding of the

hazards” (EPA-HQ-RCRA-2010-0695-0082). Another commenter expressed concern about the “dangerous gases considered without being defined as hazardous” (EPA-HQ-RCRA-2010-0695- 0081).

There remains a high level of uncertainty regarding the percentage of CO 2 streams that might be defined as a RCRA hazardous waste. However, w ithin this uncertainty, EPA believes that the high-end estimate of 90 percen t is probably an overestimate, based on the Agency’s best professional judgement. In addition, the high-e nd estimate results in a commensurately high estimated costs savings for the rule. Therefore, in an effort to present a more conservative estimate of costs savings, we are dropping the hi gh-end 90 percent hazardous waste scenario for

our final rule Assessment . For the final rule Assessment we are only using the low-end single point estimate of 10 percent RCRA hazardous waste. This change is the main driver for the significant decrease since the pr oposal in the high-end estimate for aggregate annualized cost savings. The new range presented in the Assessment reflects only the high and low estimated number of affected facilities, and the assumed discount rate.Page 10 Expected Baseline Practices

Capture Facilities:

Applying the same approach used in the Assessment for the proposal, we assume that a capture facility would engage in one of four baseline practices to manage its CO 2 stream: 1) transportation of a non hazardous CO 2 stream to a sequestration facility for injection in a Class VI well, and, 2) one of the following for CO 2 determined to be hazardous waste, a) cease capturing the CO 2 stream, b) transport the CO 2 stream to a facility for injection in a Class I hazardous well, c) treat the CO 2 stream and transport it to a seque stration facility for injection in a Class VI well. Each generator’s choice in how to manage a RCRA hazardous waste CO 2 stream would depend on several factors, with the cost of each management option likely to be a significant factor. However, a generator’s ma nagement decision will be affected by factors beyond the cost of managing the CO 2 stream, including: eligibility for government subsidies, improved public image, and preparation for anti cipated regulatory or market changes.

As discussed above, we have assumed that 10 percent of the captured and managed CO 2 is

RCRA hazardous waste. We further assume that there will be equal distribution among baseline management practices for this hazardous materi al (3.3 percent each), and that all non hazardous material (remaining 90%) will be sent directly to a Class VI sequestration well. These assumptions are the same as those applied for the low-end analysis in the Assessment for the proposal. A complete discussion of this approa ch, including all assump tions and the projected facility impact schedule, may be f ound in Section 3.2.2 of the June 2, 2011 Assessment

.

Sequestration Facilities:

Our analysis for the final rule applies the same methodology and assumptions in the determination of baseline practices as was applied in the analysis for the proposal (see Section 3.2.3 of the June 2, 2011 Assessment ). However, consistent with our justification for the revised facility count for CO 2 generators/capturers, we use onl y the low-end assumptions for the sequestration facilities. Thus, this analysis assumes that, in the baseline, approximately 97 percent of the sequestration wells would manage non-hazardous CO 2 streams and treated CO 2 streams in Class VI wells. 21 The remaining sequestration wells would manage RCRA hazardous

CO 2 streams as Class I hazardous waste wells.

Post Final Rule Practices

Our analysis for the final rule assumes that all CO 2 capture facilities will cl aim the exclusion and

send their CO 2 streams to Class VI wells as a result of th e final rule. Under th e final rule, exempt generators/capture facilities would not be required to conduct testing of their CO 2 streams for

21 Consistent with the methodology applied for the proposal, our analysis assumes that 93.3 percent of CO 2 capture facilities would transport n on-hazardous or treated CO 2 streams to Class VI sequestration wells for injection. Another 3.3 percent of CO 2 capture facilities would transport hazardous CO 2 streams to Class I sequestration wells for injection. Of this total (96.6 percent), 93.3 percent tr ansport their waste to Class VI wells only. Thus, to match the practices of CO 2 capture facilities, we estimate that 97 percent (93.3/96.6) of CO 2 sequestration wells in the baseline would be Class VI wells. The remaining 3 percent of CO 2 sequestration wells in the baseline would be

Class I wells.Page 11 hazardous characteristics or be required to eval uate the hazardous constituent content of the CO 2 stream based on the materials and processes used to generate the waste. These facilities would only be required to post and potentially submit an annual certification that the captured CO 2 stream is exempt. CO 2 capture facilities would also be able to send their CO 2 streams to Class VI wells without the additional cost of treating the CO 2 stream.

Under the final rule, all CO 2 sequestration facilities are expected to be permitted as Class VI

wells. 22 Under the rule, CO 2 managed through geological sequestra tion in Class VI wells would

not be classified as RCRA hazardous waste. T hus, there would be no need for the owners and operators of these wells to pursue a Class I hazardous waste well permit.

Incremental Costs and Cost Savings

This section presents aggregate annual increm ental net cost savings under the low-end and revised high-end scenario. Both scenar ios assume only 10 pe rcent of managed CO 2 streams are RCRA hazardous waste (See above under H azardous Waste Determination).

Compliance Costs:

Incorporated into the net cost savings estimates presented into this section are the estimated compliance cost requirements 23 for both capture and sequestration facilities. Also included are costs to government entities (sta tes and the Federal government) a ssociated with the request and

review of selected cer tification statements. 24 Total compliance costs are negligible compared to overall cost savings and are ther efore not discussed further in th is supplementary analysis. A complete discussion of these costs, including the analytical methodology and assumptions is presented in Section 3.4 of the June 2, 2011 Assessment

.

Cost Savings:

Under the final rule, management of CO 2 streams by geological seques tration would result in

various exclusions from the RCRA hazardous wa ste requirements. Th ese exclusions would result in three areas of savings for CO 2 stream capturers/generators: exclusion from hazardous waste determination, exclusion from complia nce with RCRA training, planning, and reporting requirements, and exclusion from hazar dous waste treatment requirements. CO 2 sequestration facilities managing RCRA hazardous CO 2 streams in an Undergr ound Injection C ontrol (UIC) Class VI well would also realize savings re lated to hazardous waste determination, and compliance with the training, planning, and re porting requirements. Any Class I wells potentially accepting the excluded CO 2 streams may also experience these savings.

22 With the possible exception of some sequestration demonstration projects that may be permitted as Class V experimental wells.

23 I nitial certification statement preparation, annual certification renewals, and se lected certification submissions to

the state or EPA authorities.

24 As with the analysis for the proposal, this analysis assumes that, combined, EPA and state governments will request certification statements from approximately 30 percent of capture facilities and Class VI well operators annually, and that state gover nments will account for about 90 percent of those requests.Page 12 On a per facility basis, avoided CO 2 treatment costs were found to account for approximately 99.9 percent of all cost savi ngs to capture facilities that generate hazardous CO 2 streams in the baseline. Total savings (waste determination, training/recordkeeping/re porting, and treatment)

are calculated for the number of facilities aff ected each year, projected over a 50-year period.

These results are then av eraged without a discount rate a nd annualized using a 3 and 7 percent discount rate. Sections 3.5.1, 3.5.2, 3.5.3, and 3.5.4 of the June 2, 2011 Assessment contain a comprehensive discussion of how cost savings for capture facilities were de rived. This analysis incorporates the same approach used for the pr oposal but refined the aggregate and annualized findings based on a simple linear adjustment for the number of facilities estimated to be affected by the final action (see discussion above under CO 2 Capture Facilities).

Cost savings to sequestration facilit ies as a result of the final rule represent less than one percent of total cost savings. On a per facility basis, waste de termination savings represent approximately 68 percent of all cost savings to se questration facilities. As for capture facilities, total savings (waste determination, and hazardous waste requirements) to sequestration facilities

are calculated for the number of facilities aff ected each year, projecte d over a 50-year period, then averaged without a discount rate and annualized using a 3 and 7 percent discount rate. Sections 3.5.5 and 3.5.6 of the June 2, 2011 Assessment discuss the methodology, data, and findings for sequestration facility cost savings. Again, our analysis for the final rule incorporates this same approach, but develops refined aggreg ate and annualized estimates based on a simple linear adjustment for the number of facilities affected by the final ac tion (see discussion above under Sequestration Facilities).

Findings

The Tables below summarizes 50-year net savi ngs, average annual net savings, and annualized net savings in total, and for capture/generation facilities, sequestration facilities, and governmental entities. Findings as sume 10 percent of all managed CO 2 is RCRA hazardous waste, and reflect high-end and low-end scenar ios based on the total number of facilities potentially affected over the projected 50-year period. Annualized estima tes assume a 3 percent and 7 percent discount rate.

Our findings indicate that CO 2 capture/generation facilities an d sequestration facilities will experience net cost savings as a result of the final rule. 25 CO 2 transporters must continue to meet the baseline Department of Transportation requi rements and are expected to experience no incremental costs, or cost savings. Increased co sts associated with the review of selected CO 2 exclusion certificati on statements are expected for EPA and state governments.

The Tables below indicate that the final rule is expected to result in undiscounted total average net cost savings ranging from $4.96 million/year to $7.23 million/year. Applying a 3 percent discount rate, total annualized net savings we re found to range from $4.68 million/year to $6.83 million/year. Application of the 7 percent discount rate resulted in tota l annualized net savings

25 This analysis does not attempt to model any potential productivity impact of the final rule. However, any such impacts are likely to be primarily positive, as affected facilities could use saving s associated with the rule to increase productive efficiency and/or output.Page 13 ranging from $4.24 million/year to $6.19 million/year. These figures represent more than an eighty percent reduction from estimates presen ted for the proposal, reflecting our revised assumptions concerning the percent of CO 2 streams that may be hazardous and the total number of potentially affected faci lities. Impacts to sequest ration facilities represen t less than one half of one percent of the tota l annualized net cost savings, in all cases examined. The revised annualized estimates for EPA and state government co sts associated with th e review of selected

CO 2 exclusion certification statements remain neg ligible (i.e.,< $1,000/year), compared to total impacts.

Estimated Net Cost Savings for the Final Rule:

Conditional Exclusion from the RRA De finition of Hazardous Waste for CO 2 Streams Managed in UIC Class VI Wells for the Purpose of Geologic Sequestration

Undiscounted (2010 dollars)

Type of Entity 50-year Net Savings Average Annual Net Savings 50-year Net Savings Average Annual Net Savings

Low-End Estimate High-End Estimate

Capture Facilities $247,009,847 $4,940,197 $361,014,392 $7,220,288

Sequestration

Facilities $438,453 $8,769 $640,816 $12,817

State Governments -$12,444 -$249 -$18,187 -$364

EPA -$1,504 -$30 -$2,198 -$44

Total $247,816,205 $4,956,324 $361,634,822 $7,232,697

3% Discount Rate (2010 dollars)

Type of Entity Present Value of 50-year Net

Savings Annualized Net Savings Present Value of 50-year Net

Savings Annualized Net Savings

Low-End Estimate High-End Estimate

Capture Facilities $123,718,061 $4,668,314 $180,818,704 $6,822,921

Sequestration

Facilities $223,177 $8,421 $326,181 $12,308

State Governments -$5,779 -$218 -$8,446 -$319

EPA -$580 -$22 -$848 -$32

Total $124,110,912 $4,683,138 $181,135,592 $6,834,878Page 14 7% Discount Rate (2010 dollars)

Type of Entity Present Value of 50-year Net

Savings Annualized Net Savings Present Value of 50-year Net

Savings Annualized Net Savings

Low-End Estimate High-End Estimate

Capture Facilities $62,471,161 $4,230,515 $91,304,004 $6,183,061

Sequestration

Facilities $114,714 $7,768 $167,659 $11,354

State Governments -$2,656 -$180 -$3,882 -$263

EPA -$188 -$13 -$275 -$19

Total $62,666,600 $4,243,750 $91,467,507 $6,194,132

Human Health, Environmental and Other Benefits

The baseline requirements that appl y to captured RCRA hazardous waste CO 2 streams are designed to protect the human hea lth and the environment. However, EPA has determined that

CO 2 streams may be managed in an equally prot ective manner outside of the RCRA hazardous waste program. The Class VI UIC well requ irements are designed to isolate the CO 2 stream and prevent it from migrating to Underground Source s of Drinking Water (USDWs). In addition, permit writers for Class VI UIC wells have disc retion in whether to allow the sequestration of certain wastes depending on factors such as the composition of the waste, the structure of the well, and the proximity of the well to USDWs. Therefore, EPA has determined that the management of exempted CO 2 streams in Class VI UIC wells would not pose an unacceptable

risk to human health and the environment. 26

In addition to the quantified savings discussed ab ove, this final rule represents a step toward establishing a supporting regulatory framework fo r the future development and deployment of carbon capture sequestration (CCS ) technology. The rule will help provide the regulatory certainty needed to foster industry adopti on of carbon capture and sequestration (CCS).

Relevant Executive Orders and Acts

Executive Order 12866: Regulatory Planning and Review

EPA, in conjunction with the Office of Management and Budget (OMB) has determined that this final rule is a "significant re gulatory action" as defined by Executive Order 12866 because it raises novel legal or policy issues arising out of legal mandates, th e President's priorities, or the principles set forth in the Executive Order. Accordingly, EPA submitted the proposed and final action to the Office of Management and Budget (OMB) for review under EO 12866. Any

26 The final rule conditional exclusion is based upon the Agency’s existing knowledge of the composition of CO 2 streams, and its analysis that comp liance with the existing standards and regulations designed to prevent any exposure of CO 2 (and any associated impurities) would rende r additional regulation under RCRA subtitle C unnecessary. We reserve the right to modify the conditional exclusion in the future.Page 15 changes made in response to OMB recommenda tions are documented in the docket for this

action.

This final rule is not an economically significan t action. The expected an nual costs and benefits of the final rule do not exceed $100 million. Furthermore, the rule does not create

inconsistencies or interfere with an action taken or planned by another agency. This rule is designed to complement related actions from the EPA Office of Water and Office of Air. Finally, this rule does not materially alter the bud getary impact or the rights and obligations of recipients of entitlements, grants , user fees, or loan programs.

Regulatory Flexibility Analysis

The Regulatory Flexibility Act (RFA), as amended by the Small Business Regulatory Enforcement Fairness Act (SBREFA), 5 U.S.C. §§ 601-612, generally requires an agency to conduct a regulatory flexibility an alysis for any rule subject to notice and comment rulemaking requirements unless the agency certifies that the rule will not have a sign ificant economic impact

on a substantial number of small entities. Small entities include small businesses, small not-forprofit enterprises, and small governmental jurisdictions.

This final rule relieves the regulatory burden a ssociated with EPA’s hazardous waste regulations

on CO 2 capture and sequestrati on facilities by exempting CO 2 captured for the purpose of GS in

Class VI well from the definition of hazardous waste. For each small entity claiming the exclusion, savings are expected to outweigh cost s necessary to prepare, post, maintain and potentially submit the required ce rtification statement. Furthermore, the Agency interprets SBREFA to be concerned only with net cost increas es to small entities. Net cost savings are not

considered under SBREFA. Theref ore, this final rule is determined to not have a significant economic impact on a substantia l number of small entities.

Executive Order 13132: Federalism

The final rule does not have Federalism implicati ons. EPA does not anticipate that the rule will have substantial direct impacts on the states, the relationship between the Federal government and the states, or on the distri bution of power and re sponsibilities among the various levels of

government.

Executive Order 13175: Consultation and Coordi nation with Indian Tribal Governments

The final rule is not expected to have substantial tribal implica tions. No Tribal governments are known to own or operate current or planned CO 2 capture or sequestration facilities.

Executive Order 13045: Protection of Children fr om Environmental Health and Safety Risks

EPA does not find that the final rule will have environmental health or safety impacts that disproportionately affect childre n. Therefore, Executive Order 13045 does not pertain to this

action.Page 16 Executive Order 13211: Actions that Significantly Affect Energy Supply, Distribution, or Usage

Although the affected universe of the final rule includes energy s uppliers such as coal power plants, the rule is not expected to result in be havioral changes that w ould affect energy supply, distribution, or usage.

National Technology Transfer Advancement Act

This final rulemaking does not involve technical standards. Therefore, the consideration of voluntary consensus standa rds is not applicable.

Executive Order 12898: Federal Actions to A ddress Environmental Justice in Minority Populations and Low-Income Populations

The final rule is not expected to have disproportionately hi gh or adverse human health or environmental effects on minority or low-inco me populations. EPA finds that the actions allowed by the final exclusions are safe and do not present significant adverse health or environmental impacts. Appendix C of the June 2, 2011 Assessment presents a comprehensive review of Environmental Justice Impacts.

Executive Order 12630: Regulatory Takings Analysis

The final rule does not constitute a regulatory taki ng because it is not expected to result in the physical invasion of property and should not negatively impact the economic viability of

property.

Unfunded Mandates Reform Act Analysis

No analysis is required under the Unfunded Mandates Reform Act (UMRA) because the final rule does not include any mandate that is expected to result in expenditure by the private sector or aggregate expenditure by State, local, and tr ibal governments in excess of $100 million in any one year. The rule is expected to result in net savings to the private sect or and insignificant costs

to state governments.

Joint Impacts of Rules

The final rule will exempt CO 2 streams captured for the purpose of geological sequestration in a

Class VI UIC well from the definition of hazardous waste. Such waste will not be subject to EPA’s hazardous waste regulations. These CO 2 streams may still qualify as solid wastes per the definition in 40 CFR 261.2 (Def inition of solid waste). The management of these CO 2 streams would be subject to the Underg round Injection Control Program (UICP) requirements in 40 CFR Parts 144 (Requirements for wells injecting hazar dous waste) and the technical criteria and

standards for Class VI UIC wells in 40 CFR Part 146 (Underground Injection Control Program: Criteria and Standards). CO 2 capture and sequestration faciliti es claiming the exclusion would remain subject to the mandatory reporting re quirements for greenhouse gas emissions in 40 CFR Part 98 (Mandatory Greenhouse Gas Reporting) . The transportation of captured CO 2 streams byPage 17 pipeline would remain subject to the Depart ment of Transportation (DOT) Pipeline and Hazardous Materials Safety Administra tion (PHMSA) under 49 CFR Parts 195-199. The transportation of captured CO 2 by air, water, or highway woul d remain subject to the PHMSA requirements in 49 CFR Parts 171-180.Page 18 Appendix APage 19IdentifiedU.S.CarbonCaptureProjectsandEstimatedStatusFacility NameandProject TypeOperatingStatus(May 2012)First Year ofClass VISequestration(estimated)CurrentCO2FateCommentsMaintainfor FinalRule?CountLowEstimate(Y-L)HighEstimate(Y-L+Y-H)DKRW Energy LLC, Medicine BowCaptureActive - PermittingPlanning2034 EOR GS year is an estimate. Y-H XAlabama Power Co. Plant MillerCaptureUndergoingengineering designfor retrofit2013? undeterminedAssumed to GS after retrofit. On-site or off-site, unknown.Y-H XExcelsior Energy, Mesaba CoalCaptureUndergoing PlantDesign2034 EOR and some Saline GS?Fossil fuel electric power generation.Planning full CCS according to WEB site.Y-H XCCS Project - CoffeyvilleCapture and InjectionPlanning2013 uncertainNitrogenous Fertilizer manufacturingPlanning GS for 2013?Y-L x xDuke Energy - Edwardsport PlantCapture and InjectionActive – in operation2012 GS (plus EOR?)Fossil fuel electric power generationGS believed to have been started in 2012(See 2011 Assessment)Y-H XFutureGen 2.0 - MeredosiaCapture and InjectionFull project underconstruction,expected to becompleted in lateSummer 20152015? - 2017?SalineFossil fuel electric power generation.Planned sequestrationY-L x xGreat Plains Synfuels PlantCapture and InjectionActive–EORInjection Ongoing2030 EOR Natural Gas Distribution. Y-L x xAntrim Gas PlantcaptureActive – Operationalas EOR2030 EOR GS switch-over uncertain Y-L x xKoch Nitrogen Company's Enid Fertilizer PlantCapture and InjectionActive - InjectionOngoing2030 EOR Assumed GS switchover. Y-L x xPage 20Facility NameandProject TypeOperatingStatus(May 2012)First Year ofClass VISequestration(estimated)CurrentCO2FateCommentsMaintainfor FinalRule?CountLowEstimate(Y-L)HighEstimate(Y-L+Y-H)SECARB Plant James M. BarryCapture and InjectionActive operation(Preparation forpermanent captureand sequestration?).Plannedsequestration firmbut date unknownEOR (according to MIT)Coal and natural gaspowered power plant.Started as CCS pilot projectSee: Southeast Regional CarbonSequestration Partnership (SECARB)Newsletter, April 20, 2010.Y-H xShute Creek Plant (La Barge), Exxon MobileCapture and InjectionActive – EORInjection Ongoing2030 EORMost CO2 is currently sold to companies forEORAssumed will switch over to GS in 20 yrs butmay be uncertainY-L x xTexas Val Verde Natura Gas Plants, TerrellfiveCapture and InjectionActive andoperational2030 EORAssumed will switch over to GS afterapproximately 20 yrsof EOR operationY-L x xTexas Val Verde Natura Gas Plants, Gray RanchCapture and InjectionActive andoperational2030 EORAssumed will switch over to GS afterapproximately 20 yrsof EOR operationY-L x xTexas Val Verde Natura Gas Plants, MitchellCapture and InjectionActive andoperational2030 EORAssumed will switch over to GS afterapproximately 20 yrsof EOR operationY-L x xTexas Val Verde Natura Gas Plants, PuckettCapture and InjectionActive andoperational2030 EORAssumed will switch over to GS afterapproximately 20 yrsof EOR operationY-L x xTexas Val Verde Natura Gas Plants, Pikes PeakCapture and InjectionActive andOperational2030 EORAssumed will switch over to GSafterapproximately 20 yrsof EOR operationVerified by Cadmus as one of Val Verdefacilities.Y-L x xPage 21Facility NameandProject TypeOperatingStatus(May 2012)First Year ofClass VISequestration(estimated)CurrentCO2FateCommentsMaintainfor FinalRule?CountLowEstimate(Y-L)HighEstimate(Y-L+Y-H)WESTCARB Kimberlina Test FacilityCapture and InjectionOn Hold orcancelled?undetermined(2012 previouslyplanned)salineCCS pilot project that is on hold(MIT)Fossil fuel electric power generation.Project has been cancelled.Left in analysis for final rule due to uncertaintyof status.Y-L x xKentucky NewGasCapture and InjectionActive - SiteSelection2017 GSAssumed one or more units will be operationalfor GS by 2017Y-H XCincinnati Arch Mt. Simon Saline ReservoirDOE Pilot Project (capture and Inject)Status uncertainProject may havebeen cancelled ormoved to Michigan.Originally wastargeted for 2010unknownEthyl Alcohol ManufacturingFacility included in low-end Assessment forproposal. Left in Final Analysis due touncertainty of status.Y-L x xTOTAL1319Page 22Facility NameandProject TypeOperatingStatus(May 2012)First Year ofClass VISequestration(estimated)CurrentCO2FateCommentsMaintainfor FinalRule?CountLowEstimate(Y-L)HighEstimate(Y-L+Y-H)Notes:Low facility count is all “Y-L” (13 facilities)High facility count is all “Y-L” plus “Y-H” (19 facilities)Facility information presented in this table is used for generalanalytical estimates only and should not be considered the Agency’s finaldetermination as tofacility status or plans.Sources:U.S. EPA. June 2, 2011. Assessment of the Potential Costs, Benefits, and Other Impacts of the Conditional Exclusion from the RCRA Definition of HazardousWaste for CO2Streams Managed in UIC Class VI Wells for the Purposes of Geologic Sequestration, as Proposed,Cadmus/ERG,. June 25, 2012. A Review of CO2Capture and ProcessingCarbon Capture and Sequestration Technologies @ MIT Located at: http://sequestration.mit.edu/tools/projects/index_capture.html