### United States Government Ac countabilit y Office 

# GAO Report to the Chai rman of the Select Committee on Energy Independence and Global Warming, House of Representatives 

# CLIMATE CHANGE

Federal Actions Will Greatly Affect the Viability of Carbon Capture and Storage As a Key Mitigation Option September 2008

GAO-08-1080

### What GAO Found

**United States Government Accountability Office** 

### Why GAO Did This Study 

# H ighlights **Accountability Integrity Reliability S**  **epte mber 200**  **8** 

## CLIMATE CHANGE

**Federal Action s**  **Will Greatly Affect the Viability of Carbon Capture and**  **S to**  **ra g**  **e A s**  **a Key Miti g**  **ation Option**  Highlights of GA O-08 -1080
, a rep o rt to the Chairman of the Select Committe e on Energy Independ ence an d Global Warming, Hou s e of Repre s enta t ives

Key sci e nti f i c ass e ssm ents ha ve und ers c or ed the ur gency of

r e du c i ng e m issio n s of c a rbo n dioxide (CO 2 ) to a ddr ess cl i m at e ch an ge . M an y ha v e ci t e d c a r bon capture and s t or age (CCS) as an essenti a l tech nology becau s e it h a s t h e po te nt ia l to gr ea t l y re duc e CO 2 emissions fro m po wer plan ts w h ile allowing for p r ojected in cr eases in el e c tri c i t y d e man d

. CCS i nvol ves capturing CO 2 f r om a po we r p l an t ’s emissions, tr anspor ting it to an und er grou nd stor age lo cati on, an d the n inj e cting it into a g e olog ic forma t ion for long -te r m storag e.

As re qu est e d , GAO e x ami n e d ( 1 ) key e c onomic, leg a l, re gula tory,
an d tec h nolog i ca l ba rriers impe ding c o mme rc ia l-sca l e deplo y m e n t o f CCS tech nol ogy and (2) actio n s th e Departm e n t of Ener gy ( DOE ), En vi ronm e n t a l Protection Agen cy (EPA), and oth e r agenci es ar e taking to
ov er com e b a r r i e rs to com m e r c i a l

- sc a l e de p l oyme nt of CCS t e c h n o l og y. Amo n g ot he r th in g s , G A O exa m ined ke y studie s an d

con t ac te d o ffi cials from p e r t ine n t ag en ci es , co mpa n i e s, a nd

en vi ronm en t a l gro ups, as w e l l as res ear ch and oth e r or ganizatio n s. 

### What GAO Recommend **s**
Among GA O’s re com m e n d a ti ons ar e t h a t ( 1 ) D O E con t i n u e t o pl a c e gr ea te r emph asi s on CO 2 ca pt ure a t existin g pow er plants an d ( 2 ) EPA

e x a m ine how its sta t utory
au thori t ies can b e us ed to addr ess pot en ti al CCS ba rri ers

. D O E

ne ithe r explicitly a g ree d nor disa gree d with the f i rst
recomm en dation. EPA ex pr essed ge ne ral a g re emen t wi th th e se con d

recomm en dation. Nationally-recognized studi es and GAO’s contacts with a diverse group of industry representatives, nongovernm ental organizations, and academic

rese archer s s how that key barrier s to CCS deployment include (1) underdevelo p ed and costly CO 2 capture technology and (2) regu latory and legal uncertainties over C O 2 capture, injection, and st orage. Key technological barriers include a lack of experience in capturing significant amounts of CO 2 from commercial-scale po wer plants and the signifi cant cost of r e trofitting existing pl an ts that are th e sin g le l a rg e s t source of CO 2 emi ssion s in the United States. Regulatory and legal u n certainties include questions about liability concerning CO 2 leakage and o w nership of CO 2 once inj e cted. According to the National Academy of Sciences and ot her knowl e dgeable authorities, another barrier is the absen ce of a natio n al strat e gy t o control CO 2 emissions (emissions trading plan, CO 2 emissions tax, or other mandatory control of CO 2 emissions), without w h ich the electric utility in dustry has little incentiv e to capture and store its CO 2 emissions. Moreover, according to key ag ency offic i als, the abs e nce of a n a tional strategy to control CO 2 emissions has also deterred their age ncies from resolving ot her important practical issues , such as how se que s tered CO 2 will b e transported from power plants to appropriate s t orage lo cati ons and how stored CO 2 would be treat ed in a future CO 2 emi ssion s trading pl a n

.

Federal a gen cie s ha ve b e g un to address some CCS barriers but have yet to comprehensi vel y address the full rang e of issues that would require resolution for large-scale CCS dep l oyment:

• DOE’s resea r ch strategy has, until re cently, d evo ted relativ e l y few resources to lowering the cost of CO 2 capture fro m existing coal-fired power plants, focusing i n stead on in novative technologies ap plicable to new plants. In recent y e a rs, however, the ag enc y has beg un to place greater emphasis on CCS technologi e s a pplicabl e to existing facilities.

• EPA issued in July 2008 a proposed rule to guid e the permitting of large volume, or commercial-scale, CO 2 injections. It a ddressed at least some of the key issues under the Safe Drin king Water Act but left other issues related to E P A’s implementation of i t s air, hazardous waste and substance statutes unresolved.

• Other agenc i es , such as Interior and Transportation, have juri sdiction over a numb e r of interdi s ciplinary issues that co uld delay CCS deployment if unaddressed, but whic h have t hus far receiv e d little attention. T h ese include , among oth e rs, a leg a l a nd regulator yregime for a national CO 2 pipelin e infrastructure and a p l an for addressing CO 2 emissions re ductions from CCS in a future emissions trading plan. In addition, unl ess the effects of CCS deployment are clearly exp l ained, public oppo sition could delay future CCS projects. To view t he full product, including the scope and methodolog y, click on GA O-0 8 -1080

. For mo re i n forma t i on, conta c t Joh n Stephenso n at (2 02) 512 -3841 o r stephen sonj@ga o .gov

.

# Contents

Letter 1

Results in Brief 3 Background 6 Barriers to CCS Deployment Include the High C o st of Current Technologi e s, Regulator y Uncertaint y , and th e Lack of a National Strategy to Con t rol CO 2 Emi ssions 15 Federal Age n cies Have Yet to Resolve the Ful l Range of Issu es Requiring R e solution for Widespread CCS Deployment 30 C o n c l u s i o n s 5 1 Recommendations for Executive Act i on 52 Agency Comments and Our Evaluatio n 52


### Appendix I Objectives, Scope, and Methodology 55



### Appendi x II Comment s from the Department of Ener gy 57

GAO Comments 59


### Appendix III Comments from th e Environmental Protection Agency 61

GAO Comments 64


### Appendi x IV GAO Contact and Staff Acknowledgments 66



### Figures
Figure 1: Co ntribution of Coal-Fired Power Plants and Other Sources to T o tal U.S. CO 2 Emission s 8 Figure 2: CO 2 Capture, Tr ansport, and Storage in Geologic F o r m a t i o n s 1 2 Figure 3: Pr e-combustion (i.e., IGCC) versus Post-combustion (i.e., pulverized c o al) CO 2 Capture 20 Figure 4: Po tential Geol ogic Storag e in the Unite d States 47

Page i GAO-08-1080 Carbon Capture and Stora g eAbbreviations

AoR Area of Revi ew BLM Bureau of L and Management CCS carbon capt u re and storage CCTP Climate Change Technol ogy Program CERCLA Comprehensive Environmental Response, Compensation, and Liabilit y Act CO 2 carbon dioxi de DOE Department of Energy EPA Environmental Protectio n Agency ETS Emissions T r ading Sch e me EU European Union FERC Federal Energy Regulatory Commi ssi on IEA International Energy Age n cy IGCC Integrated G a sification C o mbined Cycle IPCC Intergovern m ental Pane l on Climate Change MIT Massachusetts Institute of Technolo gy NSR New Source Review PHMSA Pipeline an d Hazardous Materials Safety Administration RCRA Resource Conservation and Recovery Act SDWA Safe Drinking Water Act SO 2 sulfur dioxide STB Surface Tra n sportation Board UIC Underground Injection Control UNFCC C United Nations Framewor k Convent i on on Climate Change USGS U.S. Geologi cal Survey

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Page ii GA O

- 0 8

- 1 0 8 0 C a rbon Capture and Stora g eUnit ed Stat e s Governm e nt Acco unta b ility Off i ce Wash ingto n , DC 205 48

September 3 0 , 20 08

The Honorable Edward Markey Chairman Select Committee on Energy Indep e ndence and Global Warming House of Representative s The Honorable Edward Markey Chairman Select Committee on Energy Indep e ndence and Global Warming House of Representative s

Dear Mr. Chairman:

Key scientifi c assessments have und e r scored the urgency of reducing emissions of carbon diox ide (CO 2 ), the most significant gre e nh ouse gas, to help mitigat e the ne gativ e effects of c limate chan ge. Given th e United States’ heavy reliance o n coal-burni ng power plants that emit significant quantities of CO 2 , many have cited carbon captu re and storage (CCS) as an essential technology b e cause it can greatly reduce CO 2 emissions from these faciliti e s, while all o wing for projected increases in electric power demand. 1 CCS is a proces s of separating CO 2 from other gases produced in fuel combustion and oth e r industrial processes, transporting the CO 2 via pipeline to an undergrou nd storage l o cation, and injecting an d storing it long-term in underground geologi c f o rmations. Key scientifi c assessments have und e r scored the urgency of reducing emissions of carbon diox ide (CO 2 ), the most significant gre e nh ouse gas, to help mitigat e the ne gativ e effects of c limate chan ge. Given th e United States’ heavy reliance o n coal-burni ng power plants that emit significant quantities of CO 2 , many have cited carbon captu re and storage (CCS) as an essential technology b e cause it can greatly reduce CO 2 emissions from these faciliti e s, while all o wing for projected increases in electric power demand. 1 CCS is a proces s of separating CO 2 from other gases produced in fuel combustion and oth e r industrial processes, transporting the CO 2 via pipeline to an undergrou nd storage l o cation, and injecting an d storing it long-term in underground geologi c f o rmations.

While other climate mitigation optio ns exist—such as energ y efficien cy improvements, a switch to less carbo n -intensive f u els, nuclear power, and renewable e n ergy sourc e s—CCS is c onsidered b y many to b e a cruci a l component of any U.S. approach or strategy for addressing the climate change prob lem, particul arly giv e n th e United Sta t es’ current reliance on coal for alm o st half of it s electricity production. Moreover, there is a lar ge potential rol e for CCS in rapidly developing count ries, such as China and India, which will be relyi n g increas ingly on coal t o meet their energy needs. In fa c t , as of 20 07, Chinese CO 2 emissions likely ex ceed ed those of the United S t ates, ac cording to the I n ternational Energy Age n cy (IEA). 2 While other climate mitigation optio ns exist—such as energ y efficien cy improvements, a switch to less carbo n -intensive f u els, nuclear power, and renewable e n ergy sourc e s—CCS is c onsidered b y many to b e a cruci a l component of any U.S. approach or strategy for addressing the climate change prob lem, particul arly giv e n th e United Sta t es’ current reliance on coal for alm o st half of it s electricity production. Moreover, there is a lar ge potential rol e for CCS in rapidly developing count ries, such as China and India, which will be relyi n g increas ingly on coal t o meet their energy needs. In fa c t , as of 20 07, Chinese CO 2 emissions likely ex ceed ed those of the United S t ates, ac cording to the I n ternational Energy Age n cy (IEA). 2

1 CCS can also be used t o reduc e the C O 2 emis sions from ind u s trial prod uctio n of hy droge n , chemicals, substitute natural gas, and tra n sportation fuels.

2 The International Energy Agency (IEA) is an i n tergovernment al organiz ation fou nded in 1974 that acts a s energy policy advisor to 27 m e mber c ount ries. The IEA’s cu rrent work focuses on climate change policies, mark et reform, and e n ergy technolog y collaboration and outreac h.

Page 1 GAO-08-1080 Carbon Capture and Stora g eThe IEA projects contin ued growth in CO 2 emissions from Ch ina and oth e r developin g economies.

At present, there are fewcommercial-scale CCS p r ojects in op eration. While recent assessments by the IEA and the Inte rgovernmental Panel on Climate Change (IPCC) have indi cat ed that CCS could be a k ey contributor to controlling gree nhous e gas emissions worldwide, 3 a number of barriers may preclud e its widespread use. Th e r efore, many organizations, including the IEA, emphasize that it will be critical to overcome these barriers and demonstrat e the feasibility of thi s technology. In this context, this report examines (1) the key economic, legal, regulatory, and technolo g ical b a rriers impeding commercial-scale deployment of CCS tech nology a nd (2) the actio n s federal ag e n cies are taking to overcome barriers to or facilitate the commercial-sc a le deployment of CCS tech nology.

To examine barriers to CCS, we cond ucted a l i ter a ture reviewand synthesized CCS-related information contained i n a number of key reports, including th ose by the I P CC, the National Academy of Scien ces, and b y various federal agen cies. We also con t acted a non probability sample of electric pow er companie s, major oil and gas c o mpanies, CO 2 pipeline owners, environmental organizations, and resear chers at thin k tanks and universities to determine their persp ectives on k ey barriers to CCS deployment at commercial scale. We selected maj o r U.S. ener gy producin g companies, as well as organizations and researc h ers that participate activel y in o n going di alo g ues on CCS. We also sel ected a number of smaller companies and o r ganizations to ensure th at we obtain e d a broad e r range of p e rspectives on key issues. 4 We used a s e mistructured interview guide to (1) obtain inform ation from individual s t akeholders on key barriers to CCS deployment at comme rcial scal e and (2) facili tate an aggreg ate an alysis of stakeholder pe rspectives o n key b a rriers to CCS.

3 T h e Interg o ver nmental P a nel on Climate C h a n ge (IP CC) is a s c ientific body s e t up by the World Meteorological Organization and by th e United Nations En vironment Programme

. T h e IP CC w a s es tablis hed to provide decis i on make rs w i th an o b jective s ource of information about climate cha n ge.

4 Results from nonproba bility samples cannot be used to make inferences a b out a population. This is because, in a nonproba bility sample, some elements of t h e population being studied have no cha n ce or a n unknown chance of bein g selected as part of the samp le.

Page 2 GAO-08-1080 Carbon Capture and Stora g eTo examine federal a c tio n s to addr ess CCS barriers, we obtained and analyzed inf o rmation from the Envi ronmental Protection Agency (EPA), the Department of Energ y (DOE), and other fede ral agen cies regarding their CCS-related a c tiviti es. We coll e c ted 1 2 ye ars of budget i n formation from DOE’s Coal Program and followed up on recommendations contained i n two recent EPA and DOE advisory c o mmittee re ports. We also attended two EPA Underground Injection Control program workshops and followed up with EPA officials on stakehol der concern s expressed at these meeti n gs. Usin g the methodology described for our first objectiv e, we obtain e d the p e rs pectives of in dustry stakeholders, environmental organizati ons, and researchers at t h ink tanks a nd universities on federal a gency action s to overco me barriers to, or to facilitate deployment of, commercial-s cale CCS i n the United States. We conducted t h is performance audit fr om October 2007 to Sept ember 2008 i n accordan ce with general ly ac cepted government auditing sta ndards. Those standards require that we plan and perform the audit t o obtain sufficient, appropriate evidence to p r ovide a reasonable basi s for our findings and conclusions based on ou r audit objec tives. We b e lieve th at the evid e nce obtained pr ovides a reasonable basi s for our findings and conclusions based on ou r audit objectives.

Nationally-r ecognized st udies and ou r contacts with a diverse group of industry representatives, nongovern m ental organizations, an d acad emic researchers show that key barriers to CCS deplo y ment inclu d e (1) underdevelo p ed and costly CO 2 captu re technology and (2) regulatory and legal un cert a inties over CO 2 capture, injection, a nd storage. Among the key technologi c al barriers are a lack of experience i n capturing significant amounts of CO 2 from power plants and the signif icant cost of capturing CO 2 , particularly from existing coa l-fi r ed power plants, which are the single larges t source of CO 2 emissio n s in the United States. C o mpounding these techn o logical issu es are regula to ry and le g a l uncertaint i es, includin g uncertainty regarding liability for CO 2 leakage an d ownership of CO 2 once injected. Ac cording to t h e IPCC, the National Ac ademy of Sc iences, an d other knowledgeab le aut horities, ano t her barrier is the absence of a national stra tegy to control CO 2 emissions (emissions trading plan, CO 2 emissions tax, or other mandatory control of CO 2 emissions), without which the el ectric utility industry has li ttle incenti ve to capture and store its CO 2 emissions. More over, ac cord ing to ke y ag ency offi cial s, the absence of a national str a tegy has als o deterred t h eir agen cie s from addressing other important practical i ssues, such as resolving how stored CO 2 would be treated in a future CO 2 emissions trading pla n

. 

# Results in Brief

Page 3 GAO-08-1080 Carbon Capture and Stora g eFederal a g e n cies hav e b egun to addr ess some CCS barriers but have yet t o comprehensively address the full ran ge of issues that would require resolution for commerc ial-scale CC S deployment:

• Key technol ogical barri ers . DOE has achieved li mited results in lowering the cost of C O 2 capture fr om existing coal-fired po wer plants. A major reason is that the ag ency has focused on “Integrat ed Gasificati on Combined Cycle” (IGCC) technology, a promising technolo g y for new coal-fired po wer plants, but one that is less useful when applied to existing coal power plants. The agenc y has only recentl y begun to shift toward an approach th at also emphasizes CCS technologi e s applicabl e t o existing power plants.

• Key legal and regulatory barriers . T h e EPA issued a propos ed rule in Ju ly 2008 concerning underground inject ion of CO 2 for geologic se questration. Because of t h e large inje ction volumes associate d with geolo gic sequestration, this proposed rule would apply to commercial-scale injections. T h e proposed rule was issu ed under th e agency’s Safe Drinking Water Act (SDWA) authority. However, some issues that fall o u tside of this authority are still unresolved. These include whether and how the Comprehensive Environmental Response, Compensation, and Liability A c t (CERCL A) and the Resource Conservation and Recovery Act (RCRA ) apply to inj e cted CO 2 . Also unresolved are issues concerning how the Clean Air Act’s requirements will apply to existing power plants that install CCS.

• Other con s i d erations . Even if the DOE- and EPA-related issues are resolved, th ere are a nu mber of issues, many of which cross the jurisdictions of multiple agenci es, th at could d e l ay CCS depl oyment if no t addressed in a timely fas h ion. These include whe t her the fede ral government could be h e l d liable if C O 2 stored below public lands leaked onto adjoini n g nonfeder al property. In addition, a number of federal agenci es (such as the F e deral Energ yRegulatory Commission, the Surfac e Transportation Board, Department of Transportation, DOE, and EPA) will need to work together t o examine h o w CO 2 pipeline infrastructure might be regulat e d to accommodate commerc ial-scale CCS. Others will need to devise a p l a n for how CO 2 emissions reductions f r om CCS will be treated in a future emission s tra d ing scheme.

We are maki ng a number of recommendations to agenci es with major CCS-related responsibilities to addre ss key barrier s to CCS deployment. To better en sure that DOE’s research and de velop ment efforts address CCS at both new coal-fired power plants and exi s ting plants, we are recommending that DOE continue its recent pract ice of pl acin g a gre a ter

Page 4 GAO-08-1080 Carbon Capture and Stora g eemphasis on technologi e s that can reduce CO 2 emission s fro m existing coal-fired po wer plants. In commenting on a draft of this report, DOE’s September 9, 2008, lett er neither expli c itly a g reed nor disagree d with this recommend ation but included a num ber of comments that recognized a need for increased fundi ng for CO 2 emissions control techno logies for existing coal -fired power plants.

To enhance EPA’s ability to address barriers that may be affecting CCS deployment, we are reco mmending that EPA mo re comprehensively examine barr iers to CCS developmen t beyond tho s e relevant t o the SDWA, by addressing issues under RCRA, CERCLA, and other statutes within the agency’s juri sdiction. EPA’s September 12, 2008, l e tter responded that providing re gulatory c e rtainty on issues related t o geologi cal storage of CO 2 was a high priority f o r the age nc y and a g reed with the intent of the recommend ation—to provide cl arity on how statutes within the ag ency ’s jurisdiction may apply. The ag ency noted that it had made a n initial effo rt to identify a nd discuss these issues in the preamble of its July 20 08 proposed rulemaking an d had requ ested comments on many of the SDWA topics—including some of those identified in ou r report. It said it exp ect ed further progress on the SDWA topics after recei ving input fr om stakeholder s during the comment period (which extends through November 24, 20 08).

Finally, we a r e recommending that a n interagen c y task force (or similar mechanism) be establish e d to de velo p a compreh e nsive strate gy that guides cogni z ant federal agenci es in r e solving re maining issues that, if no t addressed proactively, could impe de commercial-scale CCS d e ployment. DOE maintained that a coordinating body—the DOE-led Climate Change Technology Program (CCTP)—already a ddresses these kind s of issues. However, the CCTP’s scope focuses on technolo gy; it do es not address legal and ins t itutional issues, such as the resolution of CO 2 pipeline regulation and infrastructure, among ot hers. In addition, off i cials from cognizant of fices within the Departments of the I n terior and Transportation told us they have not yet be en invi ted to partic ipate in CCTP discussions. Moreover, we co ntinue to bel i eve th at a m o re centralized t a sk force with a broader mission, perhaps authorized by the Executive O ffice of the P r esident, would be a preferable alt e rnative.

DOE’s and EPA’s comme nts are addr essed at the end of this l e tter and reproduced in appendixes II and III, respectively (along with our responses to each of thei r main points). The agen cies also pro v ided technical co mments separately, whi c h ha ve been incorporat ed in our fin a l report, as ap propriate. In addition, w e sought and receiv e d cl a r ification and verific at ion on speci fic issues from the Department of the Interior’s

Page 5 GAO-08-1080 Carbon Capture and Stora g eBureau of L and Manage ment and U.S. Geologic al Survey; th e Department of Transportation’s Pipel i ne a nd Haz a rdous Materials Safety Administration; the Fed e ral Energy R egulatory C o mmission; and the Surface Transportation Board, and have in corp orated their input in finalizing the report.

There is growing concern about clim at e change and the impact it will have on people and the ecosystems on wh ich they dep e nd. Accordi n g to the National Ac ademy of Sc iences, gl ob al temperatu r es have alre ady risen 1. 4 degrees Fah r enheit sinc e the start of the 20th ce ntury—with much of this warming occurring in the last 30 yea rs alone—and temperatures will likely rise at least another 2 d e grees Fahre nheit, and p o tentially m o re than 1 1 degrees, ov e r the next 1 0 0 ye ars. This warming will cause sign ificant changes in sea le vel, eco systems, and ice c o ver, among other impacts. In the Arctic re gion, temper atures have i n creased al most twice a s much as the global av erage, and t h e landscap e is chang i n g rapidly. M o st scientists agree th at th e warming in recent d e c a des has bee n caused pri m arily by human activities that have increased the amount of greenhou se gases in the atmosphere. Greenh ouse gases, such as CO 2 , have i n crea sed markedly since the In dustrial Revolution, mostly from the burning of f o ssil fuels for energy, i ndu strial processes, and tran sportation. According t o the Nation al Academy of Scienc es, CO 2 levels are at their high est in at le ast 650, 000 years and c o ntinue to rise.

In 199 2, the first major multilateral treaty on gl o b al warming, the United Nations Framework Co nvention on Climate Change (UNFCCC), was finalized. On e hundred ni nety-two co untries, incl uding the U n ited States, have ratifi ed this treaty a nd agreed to its objective to “achieve...st abilization o f greenhous e gas con c entrations in the atmosphere at a level th at woul d prevent dangerous anthropogenic interference with the cli m ate syst em.” The UNFCCC required signatory states to publish greenh ouse gas em ission levels; formulate a national response to climate change; an d develop and dis t ribute tech nologies to control, red u ce, or prev ent gree nho use gas emissions. However, its mitigation provisions focused on vol untary effort s by signatory states. Under the Kyoto Protocol to the UNF CCC, 37 industrialized countries have agreed to re duce or limit their greenh ouse gas emissions by an avera ge of 5 percent be low 1990 l e v e ls between 2008 and 20 12. Also, in 2 005, th e European Union (EU) began imple m en ting its Emissions Trading Sch e me (ETS), a program that limits C O 2 emissions in each member state and is intended to help states achieve their commitments under the Kyoto Protocol. Many countries with si gnificant greenh ouse gas emissions, including th e United States, China, and India, h a ve not committed to 

# Background

Page 6 GAO-08-1080 Carbon Capture and Stora g ebinding limits on emissio n s through the Kyoto Pr otocol or ot her mechanisms as of the da te of this rep o rt. Despite the UNFCCC’s ratification, global an nu al fossil fuel-related CO 2 emissions increased fro m an average o f approximately 23.5 billi on metric tons of CO 2 per year in the 1990 ’s to ap proximately 26.4 bil lion metric tons of CO 2 per year from 200 0 to 200 5. 5

A complicating factor in addressing this increase in temperature is the heavy relian ce by th e Un ited States a nd other cou n tries on co al-fired power plants for electric power generation. Coal accounts for about half of electricit y generation i n the United States. Moreover, a ccor d ing to the IEA, coal is used to produce more than half of several other n a tions’ electricity, i n cluding So uth Africa, P o land, China, Australia, and India.

Coal-fired p o wer plants are one of th e largest sou r ces of CO 2 emissions. I n the United S t ates, coal-fi r ed power plants accoun t for approximately onethird of total CO 2 emissio n s. Figure 1 shows total U.S. CO 2 emissions, what portions are from each sector of the economy, an d sources where CCS could more readily be used. 6

5 The IPCC notes that these em issions include t hos e fr om the pro duction , dis t ribution , a nd

cons umptio n o f fos s il fuels and as a by-pr odu ct from cement pr oductio n

. T h e data f rom 2004 and 2005 are interim esti mates.

6 CCS is not considered suitabl e for red u cing emis s i ons from the t r ans p o r tat i on, res i dential, and c o mmercia l s e ctors becau s e s ources in th es e sectors tend to emit small quantities of CO 2 .

Page 7 GAO-08-1080 Carbon Capture and Stora g e**F i**  **g u**  **re 1: Co n**  **t rib**  **u t**  **ion o**  **f Coal-F**  **ired Po**  **w e**  **r Plan ts an**  **d Oth**  **er So u**  **rces t o**  **T o**  **t al U.S.**  **CO 2**  **Emissio n**  **s**

To complica t e matters further, increa sed energy d e mands are projected for the future, both in th e United States and worldwide. The I EA projects that if governments around the world proceed wit h current po licies, the world’s energy ne eds would be ov er 50 perc ent h i gher in 2 030 than toda y. 7 For the United States, an assessment by DOE’s Energy Information Administ ration indicates that electrici t y sales will increase 29 percent by 2030 , if curr ent policies continue. M o reover, the IEA anticipa tes that the two largest developin g countries—Chi na and Ind i a—will drive increased **14.4% 31.0%** 

**32.3%**

S o u rce: GAO a n a ly s i s of d a t a from the Environment a l Protection Agency, Inventory of U.S. Greenhouse Gas Emissions and Sinks: 1990-2006 (April 2008). **3.5%** Commerci a l

Tr a n s port a tion Co a l-fired power pl a nt s **5.5%** Re s identi a l
**6.7%** All other

**6.6%** Other fo ss il f u el power pl a nt s (e.g., n a t u r a l g as )

**14.4%** Ind us tri a l

S o u rce s for which CC S i s a pplic ab le

7 The IEA’s 2007 World Energy Outlook also assesse s two alternative scenari o s. T h ese include a s cena r io in w h ich w o rld dema nd for energy a n d coa l generally increases less than otherwise expe cted due to cha n ges in gove rnment policies that address climate change

concer ns and a s cenario i n w h ich w orld dema nd inc r eas e s more t h an othe r w is e expected due t o higher rates of econom ic growth i n China and India.

Page 8 GAO-08-1080 Carbon Capture and Stora g edemand for coal to meet growing ele c tricity dem and. The IE A notes that China and In dia’s heavy r e liance on coal has already contribut ed significantly to recent in creases in gl obal CO 2 emissions, with China likely overtaking t h e United St ates as the l a rgest CO 2 emitter in 200 7.

In order to prevent this d r amatic incr ease in co al- b ased energy productio n from emittin g significant amounts of CO 2 to the at mosphere, many are suggesting C C S as a uniq u e tool that allows for continued co al use, while mitigating it s associated effect on th e climate. Th e IEA identif i es CCS and other clean coal technol ogies as one of the most promising routes for mitigating emission s and notes that “CCS could reconcile co ntinued co al burning with the ne ed t o cut emissions in the lo nger term.” Similarly, the IPCC notes that CCS would help preser ve existin g energ y infr astructure, thereby rest raining the cost of emissions reductions. Looking ahead, t h e IEA projects that CCS co uld contribu te to 21 perc ent of avo id ed emissions to stabilize atmospheric CO 2 concent r ations at 450 parts per million, a level which i s projected t o limit the a verage incre a se in glob al temperature to 2.4 d egre e s Celsius (4.3 degre e s F ahrenheit).

The EU is also beginning to highlight the importance of CCS i n addressing climate change. In 2008, the EU propos ed legisl ation, known as a propo sed directive, on the geol o gic a l storage of CO 2 that would support the EU policy of lim iting global averag e temperature inc r eases to less than 2 degrees Cels ius (3.6 degr ees Fahrenh e it). Specifi c a lly, in 200 7, the European Council urged EU member states and t h e European Commission to develop t h e necessary techni cal, economic, and regulator y framework to remove existing legal barriers to CCS so that the technol o gy can be applied to n e w fossil fuel power plants by 2020, if possible. The following year, the European Commission proposed legisl ation that w ould create a legal frame w ork for capture, trans port, and ge ological stor age of CO 2 within member states’ te rritories.

CCS is comp rised of multiple processes, including CO 2 capture and compressio n ; transport of the CO 2 to a storage lo cation; inj e c t ion and storage in ge ologic formations; and monitoring to verify that t h e CO 2 is staying in pl ace. A suc c e ssful CCS sy stem must integrate all of them. The first step in CCS is identifying and ve rifying a suit able loc a tio n for CO 2 storage. Nex t , CO 2 would be capt u red at power plants and oth e r large industrial sources. The goal of CO 2 c a pture is to produce a c oncentrated stream of nearly pure CO 2 at high pre ssure so that it can b e tra n sported via pipeline to a storage site. Regardless of the captu re approach used, additional e n ergy, often referred to a s the energy penalty, is required for capture and compression. Three maj o r approach es to capturi ng or separating C O 2 from industrial sources have be en identified— p rePage 9 GAO-08-1080 Carbon Capture and Stora g ecombustion capture, pos t-combustion capture, and oxyfuel combustion capture. 8

After CO 2 capture and co mpression, the compressed gas, now in a supercritical state, 9 would likely b e transported vi a pipelin e to a storage site, unless a storage site was availabl e at the capt u re facility. Once at a storage site, the CO 2 would likely b e i n jected well below the surface, at depths of over 800 meter s , or about 2,600 f eet, int o geologi c f o rmations thought to b e conducive for long-ter m sequestration (that is, hundreds to thousands of years) from the atmosphere. When injected , th e CO 2 is sequestered by a combin ation of physical and geochemical tr apping processes.
Physical trapping occurs because th e relatively buoyant CO 2 reaches a layer of rock that inhibits further upward migration. Geochemi cal trapping occurs when the CO 2 reacts chemic ally with minerals in the geologi c formation that result in t h e precipitat i on of solid minerals. Geologic formations, such as depl eted oil and gas reservoi rs and saline formations, are thought to be particu l arly favorab l e for CO 2 storage. Th ese formations tend to have high porosity, or an abu ndance of p o res for CO 2 to fill in, and an impermeable barrier, known as a solid caprock, to keep th e buoyant CO 2 from migrating to th e surface. Fi gure 2 d e pic t s CO 2 capture, transport, and storage in geolog i c f o rmations and highlight s the charac teristics of caprock an d the underlyi ng rock that are favorabl e for CO 2 storage. DOE and IEA estimates indica te that the U n ited States has appropriate ge ology that could potentially st ore over 3 tr illion tons of CO 2 —enough to store 1,00 0 ye ars of CO 2 emissions from nearly 1,0 00 co al-fired power plants.

8 T h is report foc u s e s primarily on pre- a n d pos t-combus tion c a pture

.

9 When the tem perature and pre ssure of C O 2 are increased, the CO 2 ente rs a f l uid, or supercritical state.

Page 10 GAO-08-1080 Carbon Capture and Stora g e[This page le ft blank inte ntionally.]

Page 11 GAO-08-1080 Carbon Capture and Stora g e**F i**  **g u**  **re 2: CO 2**  **Ca ptur**  **e ,**  **Tr a**  **n s**  **por t, a**  **nd St o**  **r a**  **g e**  **in Ge olo**  **g ic**  **For ma**  **tion s** 

**Caprock**

Gr a in s m a king u p thi s rock a re den s ely p a cked with few interconnected

pore s p a ce s . The low perme ab ility of the s e rock s m a ke s them ide a l

ba rrier s to prevent the migr a tion of CO 2 o u t of the t a rget s tor a ge form a tion. Ex a mple s a re

s h a le a nd c a r b on a te s

.

**Medium- g**  **rained**
**s and**  **s tone** 

Gr a in s m a king u p thi s rock a re m u ch le ss tightly p a cked th a n the c a prock. The d a rk gr a y a re as a re void s in the rock th a t a re filled with w a ter not
su it ab le for drinking. Injected CO 2 wo u ld move

into the s e void s p a ce s

.

**Cour s**  **e- g**  **rained**
**s and**  **s tone** 

Gr a in s m a king u p thi s rock a re even le ss tightly p a cked th a n the previo us
sa mple. Thi s loo s er p a cking me a n s th a t a ll of the void s a re well connected to e a ch other
a llowing the injected CO2 to more e as ily move thro u gh the form a tion. Th us , more CO 2 c a n b e injected a nd a t a higher

r a te th a t in the medi u mgr a ined sa nd s tone.

S o u rce: GAO a n a ly s i s of IPCC a nd Joint Glo ba l Ch a nge Re s e a rch In s tit u te, B a ttelle P a cific Northwe s t Divi s ion d a t a

. **Power plant**  **Power plant** 

**Coal Under**  **g round**  **g eolo**  **g y:** 

**Key to CO 2**  **tran s**  **port Key to**  **g eolo**  **g ical formation** 
Injected CO 2
S tored CO 2 C a prock

Medi u m-gr a ined sa nd s tone

Co u r s e-gr a ined sa nd s tone

Page 12 GAO-08-1080 Carbon Capture and Stora g eCarbon Capture and Stora g e Page 13 GAO-08-1080 CO 2 c a pt u re

CO 2 tr a n s port

CO 2 injection a nd s tor a ge **1 1** 

**2 2** 

**3 3**  **Electricity di s**  **tribution Power**  **plant**

**Coal**

**S tep**  **s in the**  **CO 2**  **s tora**  **g e**  **proce ss** 

Page 13 GAO-08-1080Multiple federal agencies have prog r a ms and other responsibilities that will affect CCS deployment, but the key ones are administered primarily by DOE and EPA:

• DOE is the lead fed e ral agency for supporting th e development of clean coal technol ogy, in cludi ng CCS tech nology. Th e agency established the Carbon Sequestration program in 1997 to ascertain the techni cal vi ability of CCS. The core researc h and de velo p ment in the program involves laboratory a nd pilot-scal e resear ch i n areas that include CO 2 capture and storage. The demonstration and depl oyment ele m ent of the program is designed to show the viability of CCS technologi e s at a scale l a rge enough to overcome real and p e rceived infra s tructure challenges. In order to do so, DOE established a n e twork of s even Region al Carbon Sequestration Partnerships to devel op t h e technol o gy, infrastructure, and regulations necessary to implement CO 2 storage in different r egions of th e nation. Other DOE programs are also dev e l oping tech n o logies relat e d to co alfueled powe r generation with CO 2 capture; includ ing (1) the A dvance d Integrated G a sification C o mbined Cycle (IGCC) program to su pport developmen t of gasificat ion technolo gy to en able CO 2 capture; (2) the restructured FutureGen program to demonstrate IGCC or oth e r advan ced coal technol ogy, as well as CO 2 capture; (3) the Innovations for Existing Plants program, which has recently f o cused more attention o n develo p in g technology t o facilitat e CO 2 capture a t existing co al-fired power plants; and (4) the Clean Coal Power Initiative, which i s supporting advan ced coal-based t echnologi e s that capture and sequest e r CO 2 emissions.

• EPA has authority under the SDWA to regulate u nderground injections of various substances, incl u d ing nonhaz ardous and hazardous wastes into injection we lls. Injection wells have a range of u s es that traditionally include waste disposal, enhancing oil production, and mining. The SDWA requires EPA to develop minimum federal requir ements for injection practices th at protect p ublic heal th by preventin g injection wells from endangering undergroun d sources of drinking water. There ar e five different well types: Clas s I (injection s of hazardous wastes, industrial nonhazardous wastes, municipal wastewater); Class II (injections associated with enhanced oil and gas production); Class III (injections associated with mineral extraction); Class IV (now mostly banned, 10 but formerly, to inject hazar dous or radioactive waste above or i n to an underground source of drinking water); and Class V (wells n o t included i n other classes, including wells used in experimental technolo g ies, such as

10 An exce ption is made f o r groundwater remediation at hazardous waste sites.

Page 14 GAO-08-1080 Carbon Capture and Stora g epilot CO 2 storage). 11 EPA has given 33 s t ates primacy, or primary enforcement responsibility, to admini ster the Underground Inj ection Control (UIC) program, and 7 states have p a rtial responsibility for administering the UIC program. 12

• The prospect of widespread, nati on wide use of CCS would also require the involvement of other agencies with varied responsibilities. The Department of the Interi or’s Bureau of Land Man agement, for example, would have broad jurisdiction over CO 2 injected on public l a nds. Whether the Federal Energy Regulatory Commission or the Surface T r ansportation Board would have r egul a tory responsibilities for pipelines transporting captured CO 2 is an issue t h at needs to be resolved. The CCTP, authorized by the Energ y Policy A c t of 200 5, is ta sked with assisting the interagenc y coordinatio n of climate change tech nology resea r ch, dev e lop m ent, demonstration, and d e pl oyment. Because the CCTP coordinates interagen cy discussion of climate ch ange t echno logy issues, i t will likely also be invol ved in any o n going inter agenc y dialo g ue on CCS deployment.

Nationally-r ecognized st udies and ou r contacts with a diverse group of industry representatives, nongovern m ental organizations, an d acad emic researchers show that key barriers to CCS deplo y ment inclu d e (1) the hi gh cost of, and lack of e xpe rience with, CO 2 capture technologi e s and (2) regulatory u n certainties concerning CO 2 capture, injection, a nd storage. Among the technologi cal barriers impeding CCS deployment at coalburning power plants are the significant cost of ret r ofitting exi s ting coalfired power plants and lack of commercial-scale demonstrations. Compounding these technological issues are uncertainties over regulator y and legal issues, including legal unc ertainty regarding liabilit y for CO 2 leakage and ownership of CO 2 once i n jected. A c c o rding to th e IPCC, the National Academy of Sciences, an d other knowledgeab le aut horities, another barrier is the abs e nce of a na tional strate gy to co ntrol CO 2 emissions (e mission s tra d ing plan, CO 2 emissions tax, or other mandatory control of CO 2 emissions), without which th e electric utility industry has little incenti ve to c a pture and store i t s CO 2 emissions. Moreover, ac cordi n g to key a gen c y officials, t h e absenc e of a nation al strategy to control CO 2 emissions has also deterr ed their ag e n cies from resolving oth e r important 

# Barriers to CCS Deployment Include the High Cost of Current T e chnologies, Regulatory Uncertainty , and the Lack of a National Strategy to Control CO

2 

# Emissions

11 Class V well s are typically sha llow wells that place a variety of fluids di rectly below t h e land surface

.

12 EPA administers the UIC prog ram in 10 states and f o r all Indian tribes.

Page 15 GAO-08-1080 Carbon Capture and Stora g epractical iss u es, such as how stored CO 2 would be treated in a future CO 2 emissions trading pla n

.

Capturing CO 2 from large ele c tric po wer plants, particularly coal-fired power plants, entails a n u mber of tec hnological challenges that affect its cost of depl oyment, and hence its ap peal to indu stry. Among these challen ges a r e (1) the ab sence of an y commercial-scale demo nstration of the technolo gy at a power plant; (2) ce rtain limitations of coal gasification technology f o r capturing CO 2 emissions at new power plants; and (3) the high cost of retrofitting CCS to exis ting pulveriz ed coal-fired power plants that will, for the next several decades , accou n t for a significant share of U.S. CO 2 emissions.

To date, th ere have been several small-scale tests of CO 2 capt u re at power plants in the United Stat es and ot her countries, b u t these demonstration projects have typically r e moved CO 2 from only a small fraction of the power plant’s overall out put. Lar ge-s cale d e monstrations of CO 2 capture a t a power pla n t have been identified a s an important step in improving capture tech nology, as well as secu ri ng industry support for CCS. Hence, the DOE Carbon Sequ estration Program’s program plan notes that the testing of CCS technolo g ies at a l a rger scale is i m portant to identify and eliminate technical and economic b a rriers to commercializa t ion of CCS technology. With the need to acceler ate the t e sting of innovative technologi e s in mind, two key int e rnational organizations—the IEA and the Carbon Sequestratio n Leadershi p Forum—recommend that a minimu m of 20 full-scal e CCS demons tration projects be implemented worldwide by 20 20.

In a similar vein, a DOE advisory co mmittee, the National Co al Council, noted that l a rger-scale d e monstratio ns will be necessary to secure industry support. It noted, in particul ar, that “deployment will require successful pilot-scale tes t ing and op e r at ion at a d e monstration scale of 50 to 100 megawatts before companies will have co nfidence in t h eir cost an d performance for large s cale systems.” 13 Similar opinions were offered by several of th e stakeholders we interv iewed, who told us they t hought it would be helpful for testing to focus more on actual demonstrations, rather than l a boratory te sting. For ex ample, two electric pow er company officials told us they tho u ght testing on a larg er scale was important 

## CO 2 

## Capture Must Overcom e Significant T

echnol ogical Hurdles to be a Cost-Effective T

echnol ogy for Coal-Fired Power Pl ants

CCS Has Y e t to Be Demonstrated on a Commercial Scale at a Power Plant

13 National Coal Council, Technologies to R e duce o r Capture and Store Carb on Dioxide Emi ssi ons (June 2007).

Page 16 GAO-08-1080 Carbon Capture and Stora g ebecause th e reliability of power plants with carbon management has not been ad equa t ely conside r ed.

Despite the i m portance of gaining thi s kind of ex perience wit h CO 2 capture, CO 2 capture h a s not been d e monstrated on a larg e sc ale at a power plant in the United States or i n any oth e r country. The IPCC’s Special Re p o rt on CCS observed th at “there hav e been no ap plications [o f carbon capt u re] at large- scale power pl ants of several hundred megawatts” and emphasized the signi f icance of th is omission by cautioni n g that largescale power plants are th e major source of curren t and project ed CO 2 emissions.

It should be noted that s o me progress has been made in testing CCS at other types of industrial facilities. Specificall y , four industrial facilities have re ceiv e d attention a s major demonstrations of CO 2 captu re and storage tech nology. Th ese faciliti e s presently cap ture and sto r e anthropogen ic CO 2 on a l a rge scal e. 14 Three of the s e projects involve separation o f CO 2 from n a tural gas: t h e Sleipn er and Snohvit projects, located off t h e coast of Norway, and the In Sal ah project in A l geria. Th e fourth project captures CO 2 at a faci lity in North Dakota, whe r e coal is gasified to make methane. The capt u red CO 2 is then inject ed at an oil fiel d in Weyburn, Canada for t h e purposes of enhanced oil recovery and to permanently store almost all of the i n jected CO 2 .

CO 2 capture has also been demonstrated at other industrial facilities, including pl ants that purify natural gas and prod uce ch emical products (ammonia, alcohols, and synthetic liqui d fuels). For example, one existing industrial application of CO 2 capture is to remove CO 2 from na tural gas—a process call e d natural g a s sweetening—to prev ent pipelin e corrosion and increase the heating valu e of the gas. However, much of the C O 2 captured at these fa cil i ties is currently vent e d t o the atmosphere bec au s e there is n o requirement or incentiv e to store it. 15

14 The IEA define s large scale as injecting over 0

. 5 Mt (500,000 metric tons) pe r year.

15 T h e IP CC S p ecial Report on C C S n o tes that s o me of the CO 2 captured from natural gas processing and ammonia production facilities is used f or e n hanced oil recov e ry, a process which may res u lt in the seque s trati on of a s u bs tantial amou nt of the CO 2 from the atmos phere

.

Page 17 GAO-08-1080 Carbon Capture and Stora g eNonetheless, accordin g t o the IPCC a nd other kn owledgeable authorities, key differences may inhi bit the transferability of CO 2 capture at these facilities to coal-fired power plants:

• Lower C O 2 concentratio ns at coal-fired power plants . A study by researchers at the Massachusetts Inst itute of Tech nology (MIT) indicated that industrial processes, such as nat u ral gas pro cessing and ammonia production, produce highly concentrated streams of CO 2 as a byproduct, facilitating CO 2 capture. 16 By contrast, CO 2 is relatively diffuse i n the exhaust, or f l ue gas, pro duced by co al power plants—about 13 to 15 percent by v o lume—ma k ing CO 2 ca pture substantially more energy intensive.

• Challenges in adapting the CO 2 r e moval process t o power plants . The most commonly-used ch emical method for removing CO 2 from natural gas may be chal l e nging to ad apt to captu re at power plants. Acco rding to the IPCC Special Report on CCS, CO 2 is most commonly removed from natural gas using ch emical solve n ts. However, DOE officials told us that one such commonly used solvent, monoethanolamine, is not designed t o costeffectiv ely r e move the d ilute conc en trations of CO 2 from the extremely large volum e s of flue gas produced by pulverized coal power plants.

The IPCC report noted t h at applyin g CO 2 capture and sequ estration only a t these types of industrial facilities—and not at ot her facilities , such as coalfired power plants—wou ld contribut e only margi n ally to addressing climate cha n ge. Sp ecific a lly, it estimates that CO 2 capture, if widely used at natural gas sweetening faciliti e s, would acco unt for less than 1 p e rcent of CO 2 emissions per year from large stationary sources.

DOE has pursued gasific ation techno logy—specif i cally IGCC technology—as a key t echnology f o r reducing the environ m ental impact of coal-based e l ectricity ge neration, an d which may be adv anta g e ous for CO 2 capture. Th e gasification process che m ically deco mposes the fuel before its combustion to provid e a stream of CO 2 for separation and storage, as well as a stream of hydrogen for el e c tricity prod uction. It is advanta geou s in facilitating CO 2 captur e bec ause it provides a more conce n trated strea m of CO 2 at hig h pressure for separation and reduc es the energ y required fo r additional compression of the CO 2 for transport. DOE also indicates that IGCC plants may enable near-zero e m issi on s of pollutants, i n cluding sul f ur 

### Coal Gasification Technology Offers Pro m ise in Cap t uring CO 2 

### at New Plants but Has Limitations That May Impede Its Widespread Use

16 How ard Herz o g and Dan G o lo mb, “Carb o n C a pture and St or age from F o s s i l F u el Us e,” Encyclopedia of Energy , 2004.

Page 18 GAO-08-1080 Carbon Capture and Stora g edioxide, nitr ogen oxid e s, and partic ul ate emissions, as well as increase fuel effici en cy.
While capturing CO 2 at IGCC plants would impo se additional costs, assessments by DOE and internation a l organizati ons conclud e d that thes e costs would be lower than they woul d be for pulverized coal-f ired power plants that remove the C O 2 after fuel combustion. For example, a 200 7 DOE study concluded th at IGCC plants—if built initially with the capabilit y to capture CO 2 emissions—had a lower adverse impact on efficienc y a nd cost of el ectricity pro duction than equippin g a new pulverized c o al-fired po wer plant an d, therefore, were a less expensive option for capturing CO 2 emissions. 17 DOE officials told us that, based on the ag ency ’s analysis, th e cost of el ectricity prod uction would increase b y 35 percent f o r newly co nstructed IGCC plants with CO 2 captu re, compared to a 77 perc ent increase for newly co nstructed pulverized coal power plants equip ped with CO 2 capture. 18 Figure 3 illustr a tes several of the key differences between the two capture approaches.

17 Department of Energy, Nation al Energy T e c h nology Lab orat ory, Cost a n d Performa nc e Ba seli ne fo r Fo ssi l En ergy P l a n ts—Vol ume 1 : Bi tumi nous Coa l a n d Na tura l Ga s to Electri ci ty , Fi na l Rep o rt (2007).

18 DOE officials told us t h es e es timates w e re ba s e d on Cost a n d Perfo r ma nce Ba seli n e for Fossi l E n e r gy Power Pla n ts —Volume 1

.

Page 19 GAO-08-1080 Carbon Capture and Stora g e**Figur e**  **3 : Pre-co**  **mb u**  **s tio**  **n (i.e., IG**  **CC) versu s Po**  **st-co m**  **b u**  **s tio**  **n (i.e., pu**  **lverized co**  **al) CO 2**  **Ca ptur**  **e**

G as ific a tion **IGCC (pre-combu s**  **tion)**

**Pulverized coal (po s**  **t-combu s**  **tion)** Co a l

Air

Air
s ep a r a tion

Co a l

Air Oxygen Nitrogen

Nitrogen CO 2 c a pt u re

CO 2 c a pt u re

CO 2

CO 2 Com bus tion

t u r b ine

Com bus tion CO 2 compre ss ion

CO 2 compre ss ion H 2

Boiler Fl u e g as (mo s tly nitrogen a nd oxygen) S te a m t u r b ine

Electricity Electricity S yng as

S o u rce: GAO a n a ly s i s of IPCC a nd DOE d a t a

. Nonetheless, while IGCC plants using CCS techno logy ha ve b e en plann e d in a number of countries, the outlook for IGCC po wer plants remains uncertain. A m ong the factors impeding deplo y ment of the t e chnology ar e the following:

• Cost of constructing IGCC power plants . Recent assessments indicate that it may be initially more expe nsi ve to build a new IGCC p o wer plant than to build a pulverized coal power plant if CO 2 emissions are not captured. Th e IEA notes, in particular , that the in v e stment cost for an

Page 20 GAO-08-1080 Carbon Capture and Stora g eIGCC plant is about 20 p e rcent high er than for a pulverized coal combustion plant. 19 Moreover, the DO E Cost and Performanc e Basel ine for Fossil E n ergy Plants report states that if the power plant does not capture CO 2 emissions, both the total cost of the plant as well as cost of electricity p r oduction would be mo re expensive at the IGCC power plants. 20 Furthermore, the IEA notes considerabl e uncertaint y in IGCC costs becaus e no co al-fired IGCC plants have rec e ntly be en b u ilt.

• Reliability c o ncerns wit h IGCC plan ts . Several st akeholders we interviewed expressed concern abou t the reliabili ty of IGCC plants for electricity p r oduction. One electric p o wer company official said that existing turbines for IGC C power plan ts are not reliable enou gh to provid e base-load po wer for customers at high levels of C O 2 capture. Moreover, according to an MIT study, several IGCC power plants experie n ced reliability ch allenges in t h e first few years of operation, altho u gh many of these early problems pro ved manageable and the reliability of the plants subsequentl y improved. 21 However, the National C o al Council i d entifies reliability as one continuing area of concern in which IGCC technology could be im proved. 22

• Challenges in building new coal-fired power plants in the United States

. Using IGCC as an enabli ng technol o gy for CCS is premised o n building new coal-fired power plants. However, efforts to build new c o al-fired power plants, regardless of the te ch n o logy used, are facin g in creased regulatory s c rutiny due t o environmental conc erns. A 2008 DO E report, Tracking New Coal-Fired Power Pla n ts , states that significan tly fewer new U.S. co al-fired power plants ha ve been buil t than origin ally plan ned. Delays and c ancellati ons have b een at tributed to regulatory un certainty, including cli m ate chang e concerns an d escalatin g costs.

19 International E n ergy Age ncy, Energy Techno logy Perspect iv es 2008: Scena rios and Str a te gie s to 2 050 (Paris, 2008).

20 DOE officials told us t h at t h e s t udy w a s bas e d o n c urre nt te chnology an d n o t o n pos s i ble advanced technology being developed.

21 MIT, Th e Futu r e of Coa l (2007 )

.

22 The National C o al Council, Technologies t o R e duce o r Capture and Store C a rbon Dioxide Emi ssi ons

.

Page 21 GAO-08-1080 Carbon Capture and Stora g eKey assessments indicat e that post-c o mbustion capture of C O 2 , which would be used at pul veri z ed coal po wer plants, faces signific ant techni cal challen ges t h at greatl ya ffect the cost and feasibi lity of its de ployment using currently available technology. 23 This is significant be caus e these pulverized coal faciliti e s account for an overwhel ming share of the world’s coal-fired c a p acity.

In a pulverized coal plan t, coal is burned with air in the boiler to produce steam. The steam then drives a turbin e to gen erat e ele c tricity. Hence, CO 2 would have to be separa ted from the boiler exha ust, or flue g a s, after combustion, rather than separating t h e carbon b e fore combustion, as is the case in a n IGCC plant. The ne ed t o separate C O 2 from the flue gas ad ds a number of technical ch allenges th at can aff ect t h e cost and efficienc y of CO 2 capture: 

### Capturing CO 2 

### from Existing Coal-fired Power Plants Requires Significant A m ounts of Energy and Imposes High Costs

• Treating lar g e volumes of flue gas to remove CO 2 . As noted earlier, larg e volumes of flue gas must be treated t o remove dil u te conc entrations of CO 2 . DOE estimates that CO 2 account s for only ab out 15 p e rcent of the volume of th e flue gas from a pulveri z ed coal-fire d power plant, compared to about 40 percent in an IGCC plant.

• Removing impurities from the flue gas before C O 2 removal . Trace impurities in the flue gas, such as part iculate matt er, sulfur dioxide, and nitrogen oxi des, can red u ce the effe ctiveness of certain CO 2 capture processes. The IPCC notes that it is i m portant to reduce the acidic gas components, which would reduce th e absorption capacity of the solvent used to remove CO 2 . Ad ditionally, IP CC notes that fly ash an d soot present in the flue gas could be problematic, if not addressed.

• Compress in g the captur ed or separa t ed CO 2 . Co mpressing captured or separated C O 2 from atmospheric pressure to pipeline pressure represents a large auxil i ary power load on the o verall plant system. The MIT study indicated th at the en erg y required to compress the CO 2 is the second largest facto r in reducing the effici en cy of the po wer plant. 24

• Significant cost inc reas es in r e trofi tting CCS to an existing plant . An IPCC assess ment of several studies concluded th at retrofitting a CO 2 capture system to existing coal-fir ed power plants would increase the

23 Nearly all existing coal-fired power pl ants a r e pulveriz e d coa l pow er plants

.

24 MIT, Th e Futu r e of Coa l

.

Page 22 GAO-08-1080 Carbon Capture and Stora g eincremental cost of producing el ectri ci ty from about 150 to 290 percent. Similarly, ba sed on a stu d y of a repre s entative c o al-fired plan t in Ohio, DOE estimated that capt uring 30 p e rcent of a ret r ofitted plan t’s CO 2 emissions would increas e its cost of electricity p r oduction b y 2.3 cents p e r kilowatt-hour, while capt u ring 90 p e rcent of the p l ant’s CO 2 emission s would increase the cost of producin g electricity by nearly 7 cents per kilowatt-hour. 25 For comparative purp o ses, the DOE’s Energy Information Administration reports that the a ver age retail pri ce of el ectri city in the United States is 8.9 cents per kilowatt hour.

The IPCC, two federal advisory commi ttee reports, and many stakeholder s we contacted agreed that key regulat o ryand legal issues will need to be addressed if CCS is to be deployed at commercial scale. Among these issues are (1) confusion over the rule s for injectin g large volu mes of CO 2 , (2) long-term liability issues concerning CO 2 storage and pot ential le akag e, (3) how pro p erty ownership patterns may affect CO 2 storage, and (4) how the Clean Ai r Act will apply to faci liti e s that capt u re CO 2 .

Electric utili ties and oil a nd gas comp anies hav e u nderscored the need for guidanc e on how CCS projects that i n ject larg e v o lumes of CO 2 would be regulated un der EPA’s Underground In jection Co ntrol (UIC) program, which is designed to pro t ect undergr ound sources of drinking water. As noted earlier, under the UIC program, EPA regulates underground injections of various substances, incl uding nonhazardous and hazardous wastes into more than 800,0 00 inj ect ion wells. The SDWA requires EPA to develop min i mum federal requirements fo r injection practices that protect public healt h by prevent i ng injecti o n wells from endangering undergroun d sources of drinking water. However, the injection of CO 2 for long-term storage raises a new set of unique iss u es related t o its relative buoyancy, its corrosiveness in the p r esence of water, and l a rge volumes i n which it would be inj ected.

Stakeholder s suggested that the abs e nce of re gu lations relat e d to larg evolume CO 2 injection a n d storage was creating co nsiderable u n certainty for CCS projects. Recent l y, EPA proposed a regul a tion to add r ess this uncertainty. Prior to this proposal, near ly half of t h e 20 stak eh olders we interviewed said uncertainty regardi ng CO 2 injec t ion and storage regulations was a large or very larg e barrier to CCS deployment. For 

## Regulator yand Legal Uncertainties Also Complicate Capture, Injection, and Stor age of CO 2



### Confusion over Rules about Large-Volume Injectio ns of CO 2

25 Department of Energy, Nation al Energy T e c h nology Lab orat ory, Carbon Dioxide Capture from Ex i s ti ng Coa l -Fi red Po wer Pla n ts (20 07).

Page 23 GAO-08-1080 Carbon Capture and Stora g eexample, on e industry stakeholder s a id that h e was uncertain about whether injecting CO 2 in large volum e s was actually legal, since EPA’s guidance to date only ad dresses pilo t CCS projects. Other stakeholders have mentio ned that wit hout new EPA guidance on large vol u me CO 2 injections, t h ey were un certain abou t how stringent their wel l construction and monitoring needed to be. In add i tion, a diverse panel at EPA’s 2007 UIC workshop on the issue noted th a t well spacin g could b e a significant is sue that nee d ed to be ad dressed, since the press u re effects caused by various CO 2 injections co uld intersect and ha ve a major impact due to inject ion volumes, particularly with the size and potenti al number of CO 2 projects. Finally, according to a 20 07 repo rt by the American Publi c Power Association, th e uncertainty associated with UIC permit requirements has complicated commer cial scal e planning for new coalfired power plants becau se it has left utilities uncertain as to whether they could inject CO 2 locally or be requir ed to pipe C O 2 over grea t distances.

In July 200 8, EPA addressed some of these techni cal and regu latory issues in its proposed rule for u nderground injection of CO 2 for geologic sequestration. Preliminary stakehol d e r reaction t o EPA’s proposed rule, discussed later in this report, suggests that some CO 2 injection-related uncertainties may be headed for res o lution through the EPA rulemaking but that others will be more challenging to res o lve.

Beyond the i mmediate concerns over how to inject large volu mes of CO 2 , stakeholder s expressed broader con cerns over t h e long-term liability associated with its storage. Th ey po inted specifi cally to a la c k of clarity regarding who—the injector or the p r operty owner—will ultimately be responsible for CO 2 injections and storage aft e r the wells are capped. If stored CO 2 migrated beyond the area in which it was intended to be stored, there are two potential o u tcom es that generat e c oncern: 

### Long-Term Liability Concerns over CO 2 

### St orage and Possible Leakage

• Stored CO 2 could migrate undergroun d and end an ger undergr ound sources of drinking water, leadi n g to liabilit y under the SDWA for the party responsible. According t o EPA, CO 2 migration into drinking water can cause the l e aching of co ntaminants, such as arsenic, lea d , an d other compounds, into the wat e r. CO 2 migration could also result in chang e s in regional gro undwater flow and the movemen t of saltier fluids into drinking water, causing its quality to degrad e. As the July 2008 proposed rule’s preamble reiterates, und er the SDWA, well operators remain responsible indefinitely f o r any migration th at end angers underground sources of drinking water, and cour ts could impos e civil p e n a lties as hig h as $25 ,00 0 per day. P a rticipants in EPA’s 2007 UI C workshop raised th e prospect o f environmental and h ealt h concerns posed by CO 2 injections, i n cluding th e

Page 24 GAO-08-1080 Carbon Capture and Stora g emobilization of previousl y isolated metals, lower pH as a result of CO 2 interaction with water, and saltwate r displacement.

• Stored CO 2 could also migrate ben eat h adjac e nt la nds. If CO 2 was injected for geologic storage and it migrated underground into neighbo ring mineral deposits, for example, it could interf ere with the adjace nt mineral owners’ abilities to extract those resources, a nd the inject ion well’s operator could be held li abl e for nuisan ce, trespass, or another t o rt.

EPA’s 2007 UIC workshop, attend ed by more tha n 200 stak eh olders, revealed liability associ ated with un intended migration of in jected CO 2 to be a critic al concern. Si milarly, 19 o f the 20 stak eholders we interviewed told us that l i ability relat e d to CO 2 storage was a large or v e ry large barrie r to deployment of CCS at commercial s cale, with some noting t h at liability concerns have already n egat ively im pacted companies’ abilit y to initiate CCS projects. For example, two stake holders reported that t h ese concerns have already made it diffi cult to obtai n insurance for CCS projects. They noted specif i cally th at in surers have difficulty writing insurance polici e s because of t h e uncertain ties associated with and limited data availab l e for CCS, while another added that investors will not support projects like CC S if they expose them to unlimited and undefined l ong-term liabilities, especially when future r evenue strea m s are uncertain.

Setting asid e any complications that could later a r ise from CO 2 leakag e onto others’ property, electric utilities and other st akeholders note that at the outset of a CCS project, it would be essential to identify and obtain th e consent of all surface an d mineral property right s owners. Such a determination is not al ways straigh tforward because ownership of surface land is often severed fro m ownership of minerals located be l o w the land’ s surface and, in the same vein, ownership of saline reservoirs. In these circumstances of severe d ownership, state law v a ries on who owns the geologi c formation or potential stor age site th at would sequester the CO 2 . In some states, the surface landowner owns the geological formation, but in others, the mineral rights owner owns the formation. Moreover, those geologi c formations used for CO 2 storage that ext e nd below surface lands could en co mpass the mineral rights of multiple owners.

Aside from the question of who own s th e storage site, it is also not cle a r who would actually own the CO 2 on ce inje cted —the inject or, the owner of the surface l and, or the o w ner of the subsurface g e ologic formation— because f e w state laws or courts hav e yet to addr ess the issue. Some state laws and co urts, however, have rec o gniz ed that injectors of natural gas retain ownership of that gas. 

### Property Ownership Patterns May Also Affect CO 2 

### Storage

Page 25 GAO-08-1080 Carbon Capture and Stora g eMultiple stakeholders told us that thi s issue will be a much larger one as CCS projects are scaled up to commer cial scal e and move beyond existin g enhanc ed oi l recovery projects that i n ject smalle r volumes of CO 2 in order to extract ad ditional oil f r om underground reservoirs. They n o ted that the CO 2 plume, or pressure front created by inje cting the CO 2 und erground,

can co ver tens to hundreds of square miles, affect ing numerous property owners. According to on e power co mp any offici al, this property rights issue is different from liability-related issues, since it could pr event CO 2 from being injected into the ground i n the first place. If th ey cannot get access right s to the formation, they cannot do a p r oject.

According t o EPA air officials, the C l ean Air Act’ s New Source Review (NSR) requirements apply to new po we r plants that are co nstructed with carbon capt u re technolo gy and may apply to existing power plants that install the technology. NSR is triggered when a n e w facility is built, or when an exi s ting facility makes a major modification, a physi cal or operational change that would result in a signific ant net in cre a se in emissions. Under NSR, permitting aut horities review the proposed facility or modification to establ ish emissi on limits and ensure the requisite pollution control technologies will be used befor e granting it a permit. Because of t h e addition al energy r e quired for car bon capture, EPA officials not e that power plants implementing th e technolo g y might need to burn more coal to gen erate the same amount of electricit y . If this increased co al usage res u lted in a sig n ificant net i n crease of e m issions of pollutants regulated un d e r the act , such as ozon e or sulfur oxide, NSR could be triggered.

Some note that the NSR requirements, and the a d ditional cost s and uncertainties associated with them , may discourage facilities such as power plants from adopting CCS tec hnology. For example, a recent repor t from a federal advisory c o mmittee to the Secret ary of Energy states that “for existing coal-fired f a cilities, a major question is whether the Clean Air Act, includin g the NSR re quirements of the Act, would apply if CCS equipment i s installed.” 26 Multiple stakeholders we interviewed agreed that adding CCS equipment t o an existi ng power plant could raise problems under NSR. One noted, i n particular, that NSR ch allenges wer e manageable while CCS projects were at the d e monstration scale but c oul d pose greater problems when CCS is deployed at a larger scale. 

### Uncertainty Regarding How the Clean Air Act Will Apply to Power Plants with CCS

26 The National C o al Council, The Urge ncy of Sustainable Coal (Washingt o n D

. C., 2008).

Page 26 GAO-08-1080 Carbon Capture and Stora g eAccording t o the IPCC, the National Academy of Scienc es, an d other knowledgeable authoriti e s, another barri er is the absence of a nation al strategy to c ontrol CO 2 emission s (emission s tra d ing plan, CO 2 emissions tax, or other mandatory control of CO 2 emissions), without which the electric utili ty industry h a s little incentive to capt ure and store its CO 2 emissions. Moreover, according to key a genc y officials, the absence of a national stra tegy to control CO 2 emissions has also deterred t h eir agen cie s from resolvi n g other important practi cal issues that will ultimately require resolution if CCS is to be deployed on a large scal e. Such issu es include lack of c l arit y regarding who owns injected CO 2 and how stored CO 2 will be addressed in a future emissions trading schem e

. A wide range of academic, industry, and other kn owledgeable authorities agree th at CCS is unlikely to be used to any substantial ext e nt without some kind of national strategy to con t rol CO 2 emissions. The IPCC’s 2005 report on CCS observed, for example, that “all m odels indicate that CCS systems are unlikely to b e deploy ed o n a large scal e in the absence of an explicit poli cy that subst antially limit s greenhouse gas emissions to the atmosphere. With greenh ouse gas emission limits imposed, ma ny integrated a ssessments foresee the d e ployment o f CCS systems on a large scale within a few decad es from the st art of any significant c limate chan ge mitigation regime.” It stated further that “the stringency of fu ture requirements for the con t rol of green house gas emission s and the expected costs of CCS systems will dete rmine, to a large ext e nt, the future deployment of CCS tech nologies rel a tive to oth e r greenhouse gas mitigation options.” 27

EPA’s Clean Air Act Advisory Committee’s Advanced Coal T echnology Workgroup similarly reported that wide spread commercial deployment o f advanced cl ean coal technologies, incl uding l a rge-scale CCS, likely will not occur without legislatio n that establ ishes a significant long-t erm “market driver.” The majority of stakeholders we intervie wed agreed, characterizi n g the a b sen ce of a natio n al strategy to control CO 2 emissions as a large or very larg e b a rrier to CCS deployme nt on a com m ercial scal e, with many stating that w i thout a price on emittin g CO 2 , there is no rationale for utilities or other fac ilities to control their emissi ons. Moreover, according to a leadin g res earcher, 28 “in order for significant 

## The Absence of a National Strategy to Control CO 2 

## Emissions Gives Neither Industry Nor Government Agencies an Incentive to Invest in CCS

Industry Has Little Incentive to Invest in C O
2 

### Control Technologies without a National Strategy to Control CO
2 

### Emissions

27 IP CC, IP CC S p ecial Report on Carb o n Dioxid e Captu re a nd Storage (2005)

.

28J.M. Antle , University Fello w, Resources for t h e Future, I s Th ere a Rol e for Geologi c a n d Ter restri a l Ca r bon S e que s tra t i o n i n Gre enh o use Ga s Mi ti ga ti on? (F ebruar y

2008).

Page 27 GAO-08-1080 Carbon Capture and Stora g eprogress to be made in r e ducing gr eenhouse gas emissions, some form of mandatory emission s limits or tax on greenhouse gases will be required, just as in ev ery other ar ea of en vi ro nmental regulation where substantial costs of emission reductions must be borne.”

One indicati on as to ho w emitters might respond to a cost on CO 2 emissions was provided by a Norweg ian petroleu m company after Norway introduced a $40 p e r metric ton tax o n offshore CO 2 emissions in 199 1. Th e Statoil petro l eum company’s Sleipne r project, a n a tural gas pr ocessing project locat ed at a gas fi eld 25 0 kilo meters off the coast of Norway, had already b e e n removing CO 2 from the natural gas to prepare i t for sale on the open market. But with no financi a l incenti ve to do other w ise, Statoil had simply vented the C O 2 into the atmosphere. At least partly in response to the tax, h o wever, the company, in 199 6, be gan to capture a pproximately 3,00 0 metric tons of CO 2 per day fro m natural gas extraction and store it 800 meters u nder the North Sea’s sea b ed in a geol o gic formation called a saline reservoir.

The United States’ exp e rience with other pollut ants, notabl y sulfur dioxide (SO 2 ), also provides insights into the kind of market-based e m issions control regi me that coul d emerge if a national strategy to co ntrol CO 2 emissions was adopted. In Title IV of the Clean A i r Act 1990 Amendments, Congress established a goal of reduci n g annual emission s of SO 2 by 10 million tons from 1980 emission s levels. Specifi cally, the law established overall emission limitations and allo cated SO 2 emission allo wances to individual el ectric utiliti e s. The utilit ies are requi r ed to own enough allowances at the end of each year t o cover th eir emissions. Under the law’s allowance trading system, utilit ies can trade some or all their allowances i n a way that allows them greater flexi b ility in achi eving the required emission reductions at the l o west cost. In cases where utilities were able to reduce emissions below their require d allowance, they were able to sell t h e extra allowances at th e market price to other utilities. As with the SO 2 program, analyses by go vernment an d acad emic organizations generally i ndicate th at CCS technol ogy will be more extensively used as emission limits tighten.

An importan t lesson from the SO 2 program was that as vend o r s competed to meet utilities’ emissio n reduction needs, they were promp t ed to seek the least expensive means of providing utilities with low-sulfu r coal,

Page 28 GAO-08-1080 Carbon Capture and Stora g e“scrubbers,” and other methods for reducing sulf ur dioxide emission s. 29 As a result, the overall cost of reducing emissions decreased o v er time. More generall y , a study commissioned by t h e IEA’s Greenhouse Gas R&D Program emphasizes the decrease in co sts of new technologi e s over time. 30 It suggests that for new coal emission control technologies, t h e initial higher plant costs incurred are gra d u a lly reduc ed through exp e rience and from continued research and develo p ment.

The absenc e of a nation al strategy to control CO 2 emissions n o t only leaves th e re gulated community with little incenti ve to redu ce their emissions, it also leav es regulators wi th little reas on to devise the practic al arrangements necessary to implement the reducti ons. For exa m ple, regulators have not addr essed how utilities that capture and s equester CO 2 would be treated under a future emi ssions trading plan. Th e EU’s early experience with CO 2 emissions tradi n g illustrates the significance of including C C S in an emissions trading plan. EU officials tol d us when the Emissions Trading Syste m (ETS) was conceiv e d, the maturity of CCS as a technical reduction opti on for CO 2 was not clear. Therefore, CCS projects were not systematically i n cluded in t h e ETS. 31 However, EU officials noted that t h e situation has chang e d substantially since then

. Indeed, a recent European Commission report indicates th at not syste m atically including C C S in the ETS may be on e barrier to i t s deployment. 32 Accordingly, the European Commissi on is now proposing legislation to explicitly i n clude, after 2012, faciliti e s involved i n the capture, transportation, and storage of CO 2 in the ETS. These facilit ies would then earn allowa nces for non emitted CO 2 and would h ave to surre nder emissions allowances for any lea k ag es of CO 2 that occur. Co nsequently, EU officials told us that t h e proposed directive, when enacted, would remove this barrier. 

### The Absence of a National Strategy to Control CO 2 

### Emissions Has Constrained the Federal Government’s Efforts to Plan For and Develop CCS Projects

29 GAO, Air P

o llution : Allow a n c e T r

adin g Offer s an Oppor t un ity to Re du c e Emis s i on s at Les s Cost , GAO / RCED-95-30 (Washington, D

. C.: Decembe r 1 6 , 1994) and Air Pol l uti o n: Overview and Issues on Emissions Allowance Trading Pro grams , GA O/RCED-97-183 (Was hingto n, D

. C. : J u ly 9 , 1997 ).

30 Edward S. Rubin et al , “Use of Experience Curves to Estimate Future Cost of Power Plants with CO 2 Cap t ur e, ” I n terna ti ona l Jour n a l of Gre enh o use Ga s Co ntr o l , vol. 1, issue 2 (2007).

31 EU member states can seek t o include CC S projects in their national emission cap by gaining app rov al from t h e E u r opean Co mmissio n o n a case- b y-case b a sis.

32 EU Commission Staff Working Doc u me nt, ac companying document t o th e Prop o sa l for a Di recti v e of th e Europ e a n Pa rli a m ent a n d o f

th e Coun ci l o n th e Geologi c S tora g e of Carbon Dioxide (J anuary 23, 2 0 08).

Page 29 GAO-08-1080 Carbon Capture and Stora g eLikewise, co gnizant agen cy offici als responsible for U.S. programs have told us that t h ey will not act on key C C S impleme n tation issues prior to Congress establishing a n a tional strat egy to control CO 2 emissions. For example, as noted earlie r, the official s told us that uncertain ty regarding property rights ownersh i p stems fr om ambiguity over who o w ns the injected CO 2 , and it is si milarly unclear what the government ’ s potential liability might be for long-term stora ge of CO 2 on federal land s. Bureau of Land Manag e ment (BLM) officials said they ar e a w are of the i ssue and of the BLM’s jurisdiction in the matter but told us they are looki ng to Congress for a solution before they will take any specific acti ons to address it. These official s also noted that while th ey do h ave a u thority to permit CO 2 injections on federal la nd s that are sol e ly for seque s tration purposes, they are u n cer tain whether BLM has statutory autho r ity to establish a f unding mechanism for long-term management of sequestratio n sites on federal lands.

Other practical issues requiring resolution, which cross the jurisdictions of a range of fe deral ag enci es and of sta t e and lo cal governments, are discussed later in this report.

While federal agen cies h ave b egun to address CCS barriers, they ha ve yet to comprehensively addr ess the full range of issu es that would require resolution for widespre ad CCS depl oyment. DOE has achieved limited results in lowering the cost of CO 2 capture at ex i s ting power plants, and the agency’s focus on gasification tec hnology to date may no t provide for the need ed r e ductions in emissions b ecause few f acilities with this technology currently ex ist. However, DOE’s focus has recentl y shifted to better balan ce the n eed for capture t echnology at both new and existing power plants. EPA has recently issued a propos ed rule that clarifies significant r egulatory un certainties r e lated to CO 2 injection a nd storage. However, critical qu estions remain about long-t erm liability for stored CO 2 . Elsewhere in the federal government , agen cies h ave not addr essed a number of issues that co uld delay CCS deployment. Among them are ho w CO 2 pipeline infrastructure might be develop ed a nd how a future emissions trading pla n would treat a v o ided CO 2 emission s due to CCS. 

# Federal Agencies Have Y e t to R e solve the Full Range of Issues Requiring Resolution for W i despread CCS Deployment

Page 30 GAO-08-1080 Carbon Capture and Stora g eDOE has identified IGCC technology as the key enabling tech nology for reducing CO 2 emissions from newly construc ted coal-fired po wer plants and has help ed to develo p and demo nstrate IGCC technology. However, key assessments by the National Ac ademy of Sc iences and i n ternational organization s have raised questions about how the agency’s focus on IGCC technology may have aff ected th e broa der effort to substantially reduce CO 2 emissions from coal-based ele c t r ic ity gen era t ion because (1) as noted earlier, the o u tlook for widespread d e ployment o f IGCC technology is questionable and (2) the agency’s fun d ing related to IGCC technology h a s substantially exceeded fu nding for technologies more applicab le to reducing em issions fro m existing co al-fired power plants. DOE has recently star ted to focus greater atte n t ion on tech nologies more applicab l e to reducing emissions from existing power plants.

Consistent with DOE’s emphasis on IGCC, the agency cites a number of accomplishments in advancing th e t ec hnology, s u ch as its support for two operational IGCC power plants, in Fl orida and In diana, th at p r oduce substantial amounts of electricity, wh ile also dem onstrating the production of high-pressure syngas amenable to CO 2 capture

. 33 DOE also cites its cont ributions to the develop m ent of several IGCC-related technologi e s, which would advan ce p r e-combustion CO 2 capt u re. Specific a lly, recent te chn o logical adv ances cit e d by the a gen c y include successful fabrication and testing of a liquid membrane that is stable at high temperatures and t h at could b e used for CO 2 capture in I G CC plants, as well as a new material with CO 2 se paration pot ential for gas separation. Moreover, according to a published j ournal articl e with three DOE coauthors, adv ances in me mbranes ma y be signifi c ant in ad van cing CO 2 capture be c ause membranes are less energy i n te nsive, compared to othe r separation t echniqu es. 34 T a ken tog e th er, the Natio n al Academ y of Scie nce s credits DOE’s efforts in promoting IG CC technolo gy, citin g th e agency’s 

## DOE Has Only Recently Prioritized Research to Help Control CO 2 

## Emissions from Existing Power Pl ants

DOE Has Achieved Some Advances with IGCC Technology

33 Syngas is the gas pro duced by the gas i fication p roces s , c o m pos ed of hydr o g en, ca rb on
mono xide, and minor am ounts of other co ns titu ents

. While D O E co ns iders t h e gas s t ream amenable to C O 2 recovery , C O 2 capture was not act u ally de monstrated i n t h e projects.

34

Jo se D. Figu eroa, Timo th y Fo ut, S e an Plasyn sk i, Ho war d McIlvr ied , an d Ramesh war D. Srivastava, “A dvances in CO 2 c a pture techn o logy- T h e U

. S

. D e partment of E n ergy’s Ca rbo n Sequestration Program,” I n te rna ti ona l Jour na l of Gre enh o use Ga s Co ntr o l, vol. 2 (2008).

Page 31 GAO-08-1080 Carbon Capture and Stora g eefforts to develop “a close working relationship with the indus try to move the technolo gy through t h e commercial demonstration stage.” 35

Looking ah ead, DOE hopes to make furt her investments, and progress, in demonstrati n g IGCC’s feasibility to capture CO 2 through its FutureGen program, which aims to a ccelerat e co mmercial deployment of IGCC or other advan ced cl ean co al-based po wer generati on technolo gy with CCS. Moreover, under the restructured Fu tureGen program, DOE a n ticipates supporting demonstratio ns at more than one site.

DOE’s progress, however, has required both sign ificant time and resources. As the National Academy of Scienc es noted, the d evelopment of an integrat ed IGCC system has been an important component of DOE’s Fossil Energy Research Developmen t and Demonstration program for more than 20 years, and between 1 978 and 2000, DOE invested $2.3 billion in gasificati on technolo gy. 36 Moreover, DOE budget data in dicate that in more recent years, the ag ency h a s co ntinued to p r ovide substantial funding for I G CC technology. S everal Fossil Energy programs provide substantial support for developin g IGCC technolo gy, incl uding the IGCC program, the FutureGen program, a nd the ad vanc e d turbines program. Together, th ese programs account fo r a significant share of F o ssil Energy’s overall bud get. The Carb on Sequestr ation program also provides some additional fu nding for CO 2 capture u s ing IGCC technology.

Developing an exact esti mate of DOE funding fo r IGCC technology is challen g ing because th e individual D O E programs pursue multiple objectives and funding categories ha ve ch anged over time. However, an examination of DOE’s budget informat ion sugges ts that its support from 1997 (the ye ar the Carbo n Sequestrat ion program began) to p r esent is likely on the order of hundreds of m illions of dollars and probably in excess of $500 million. A DOE official within Fossil Energy acknowledged to us that “the bulk of coal program capture fun d ing relates to gasificati on, particularly IGCC,” although DOE officials said th ey are n o w focusing more attention on existi ng pulverized coal power plants. 

### DOE F undi ng Decisions Reflect Agency’s Focus on IGCC

35 National Res e a r ch C ouncil, Na tional Academy of Sciences , Energy Re sea r c h a t DOE: Wa s It Worth It? En ergy Effi ci en c y a n d Fossi l E nergy Re sea r c h 1 9 7 8

to 2 0 00 (Was hington , D.C., 2001 ).

36 National Acade m y of Sciences , Energy Res e a r ch a t DOE: Wa s It Worth It ?

Page 32 GAO-08-1080 Carbon Capture and Stora g eThe payoff f o r this investment, however, will dep e nd heavily on the ext e n t to which IGCC technolo gy is used in newly const r ucted power plants— both in the United State s and worldwide. In this regard, the National Academy of Sciences said in a recent assessment that the Car bon Sequestratio n program “is taking on a relativel y hi gh overall risk to create technologi e s for commercial demonstrati on by 2012 in that it relies heavily on the successful deployment of fu ll-scale IGCC plants.” The report added that there ar e only a few IGCC plants operating worldwide and advan ced, commercial-scale IGCC units are onl y in the d e sign phase an d have no C O 2 sequestration. 37

Moreover, as noted earli er, studies by the IEA, DOE, and the National Coal Council cite a number of compelling f actors, such as the relati ve cost of IGCC plant construction and the limi t ed operatio n al experien ce worldwide with this relatively new technology, which may limit commercial deployment of IGCC technology. S e veral industry stakeholder s we interviewed expr essed concerns about using IGCC technology f o r electricit y gen eration , including t h e cost of constructing IGCC plants and possible reliability con cerns. For example, of ficials from one electric power comp any told us t h ey thought high levels o f CO 2 capture at I G CC plants would necessitate the us e of a turbin e, which has not yet been commercially demonstrated. Lookin g ahead, the IEA’s 2007 World Energy Outlook notes that “for IGCC to establish itself in the market, further develo p m ent to bring down costs and improve operation al flexibility is necessary.”

Until recentl y, DOE budget decisions reflected a view that IGCC technology offered greater potential to capture CO 2 than technologies applicabl e t o pulverized coal-fired p o wer plants. As indicate d earlier, D O E budget inform ation we reviewed indi cates substantial funding for IGCC technology, likely in the order of hundreds of millions of dollars. By comparison, DOE suppo rt for post-combustion CO 2 capture technology, most applicable for exis ting plants, appears more limited, lik ely on th e order of tens of millions of dollars.

As noted ear lier, DOE has cited a nu mber of chal lenges that c o mplicate efforts to capture CO 2 emissions from pulverized coal-fired power plants, 

### IGCC Technolog y ’s Potential for Reducing CO 2 

### Emi ssions Is Uncertain

DOE Has Thus Far Ac hieved Limited Su ccess in Reducing CO 2 

### Emissions from Existing Power Plants

37 National Res e a r ch C ouncil, Na tional Academy of Sciences , Prosp ecti v e Eva l ua ti on of Ap p l i e d Energ y Resea rch a n d Develop m enta t DOE (Ph a se Two ) (Was hington , D

. C. , 2007).

Page 33 GAO-08-1080 Carbon Capture and Stora g eincluding th e large volu mes of gas that must be treated; trac e impurities in the exhaust gas (such as particulate matter, sulfur dioxide, an d nitrogen oxides) that can de grade the effecti v e n ess of certain capture p r ocesses; and the hi gh amount of energy needed to compress CO 2 emissions. Among other things, a DOE study conclu ded that if CO 2 capture were added to a pulverized c o al-fired po wer plant that started op erations in 2 010, its c o st of electricit y production would incr ease by ap proximately 80 percent. 38

These techn o logical re al ities, howev er , are at od ds with another reality anticipated by a number of organizat ions: these f acilities will account for the vast maj o rity of coal capacit y in t h e United St ates and aro und the world in the near term. Accordingly, i n past years, the ag ency has undertaken some initiatives to advan ce technolo g ies to captu re CO 2 from these faciliti e s and point s to a numbe r of accomp lishments arising from these efforts. Among them, DOE researchers reported patenti n g a techniqu e to capture CO 2 from a coal- f ired power plant’s exha ust using ammonia, a techniqu e pl anned for tw o capture d e monstrations at power plants in Ohio and North Dakota. DOE officials al so point to several oth e r projects related to post-combustion CO 2 capture, including d evelopment of ionic liquids with greater absorption capacity for CO 2 and development of sorbent tech nology for r e trofitting existing pulverized coal p l ants. DOE officials also pointed to i nvestments in two other challen g ing aspects of CO 2 capture. One involv e s research to address one of the l a rg est cost drivers, the cost of rege nerating the absorbent. DOE officials also pointe d to work on technologi e s to improve the effici ency of compressing CO 2 , a major cost factor in c a pt uring CO 2 at these faciliti e s.
Nonetheless, DOE’s own analysis rai s es questions concernin g the a genc y ’ s progress in helping to reduce the cos t of CO 2 capt u re at pulv e rized coal power plants. For post-combustion CO 2 capture, DOE officials indicated to us that the a gency ’s current goal is to develo p , b y 20 12, pilot- scale systems to capture 9 0 percent of CO 2 at no more than a 3 5 percent in crease in the cost of elect ricity produ ction. However, it is not eworthy that this goal is to develop pilo t-scale systems only; commercial-sc a le units will not come online until t h e 20 20 time frame.

An assessment report recently publis he d by DOE indicates th e size of the challen ge D O E faces in reducing the cost of capt u re. The stu d y indicat ed that CO 2 cap ture would increase the cost of elect ricity produ ction by 77

38 DOE, Cost a n d Per forma nce Ba seli ne fo r Fo ssi l En ergy P l a n ts—Vol ume 1

.

Page 34 GAO-08-1080 Carbon Capture and Stora g epercent at a pulverized c o al power plant starting operation in 2010

. 39 A DOE official within Fossil Energy acknowledged to us that o w ners of existing pul verized coal power plan ts, under a fu ture emissio n s trading arrangement, might choo se to purchase carbon all o wances, rather than pay for an expensive ret r ofit, and th at plant age and other economic considerations will make the determ ination of whether a retrofit or another acti on, such as purchasing allowances, will occur.

One contributing factor to DOE’s limited progress in reducin g CO 2 emissions from existing power plants is that it is a relatively l o wer priorit y for DOE. Th e National A cademy of S c iences not ed that the C a rbon Sequestratio n program has focused o n IGCC technology to achieve its go al of reducing t h e cost of carbon captur e

. 40 Our examination of D O E’s budget in recent years supports this view:

• The Carbon Sequestration program has provided limited ca pture funding : DOE officials estimated the Carbon Sequestration program provided ap proximately $50 million i n funding rel a ted to all types of CO 2 capture fro m fiscal year 200 2 to fisc al ye ar 200 7. While DOE officials were able to provi d e limited in formation qu antifying p r ecisely how this funding was split between post-combustion and pre-combustion captu re, they indicated th at the majority of it went toward the development of postcombustion and oxy- c o m bustion capture techn o logies. DOE officials suggest that, historically, 20 perc ent of the Carbo n Sequestrat ion program’s budget has go ne toward ca pture, which DOE officials said allowed cap ture technol ogy develop ment to continue as DOE evalu a ted geologi c storage of CO 2 . However, capture-relate d funding has generally received les s funding in the Carbon Sequestratio n program’s budget than other areas, such as the r egional p a rtnerships.

• Post-combustion captur e has not been supporte d by related programs : Until recentl y, post-combustion CO 2 capture had not receiv e d large amounts of funding from other programs in Fossil Energy. Sp ecificall y , until fiscal y ear 20 08, no other major Fossil Energy programs provided substantial funding relat e d to post-combustion capture, in co ntrast to those programs’ support for IGCC technology.

39 DOE, Cost a n d Per forma nce Ba seli ne fo r Fo ssi l En ergy Po wer Pla n ts —V olume 1

.

40 National Acade m y of Sciences , Prosp ecti v e Eva l ua ti on.

Page 35 GAO-08-1080 Carbon Capture and Stora g eLooking ah ead, DOE officials told us that the agency is now focusing more attention on reducing CO 2 emissions from existing plants by sh ifting the focus of a re lated Fossil Energy prog ram, the Innovations for Existing Plants program, so that it emphasizes the develo p ment of post-combustion capture of C O 2 . Among the factors ci ted in this d ecision were (1) the larg e number of pulverized co al power pl a n ts in the United States; (2) congressional direction i n the report accompanyi ng the a gen c y ’s fiscal year 2 008 ap propriation to focus more attention o n this issue; and (3) the applicabilit y of advances in this area to the large number of pulverized coal power plants under construction in China and India.

In February 2008, DOE announced th at it was soliciting appli c ations for projects “specificall y fo cused on developing t e chnologies fo r CO 2 capture and separati on that can be retrofitte d to existing pulverized c o al (PC) power plants.” In July 2008, the ag en cy annou nced it was providing $36 million in funding for 15 projects to d evelop n e w and cost-eff ective capture tech nologies for existing po wer plants.

Other recent changes in DOE’s funding decisions also appear to recognize the significa n ce of redu c i ng emissi ons from existing power plants: 

### DOE Has Recently Focused More Atten t ion on Existing Plants

• The Carbon Sequestratio n program’s funding for post-combustion CO 2 capture (inc luding oxyfu el combustion capture) increased fr om $10.1 million in fiscal year 2007 to $15.4 mi llion in fiscal year 2008.

• The network of Regional Carbon Sequestr ation Partnerships appears to b e placing more emphasis on demonstrations of CO 2 capture at coal power plants for an upcoming series of larg e-scale seq u estration projects. Specific a lly, a DOE official identified three projec ts being plan ned to capture CO 2 from coal-fired power plants, includi ng possibly capturing 500, 000 tons of CO 2 from a coal-fir ed power plant in North Dakota.

• DOE indicated in an Au gust 2008 ann ouncement t h at the agen cy’s Clean Coal Power Initiative pr ogram would support coal-based technologies to capture and sequester CO 2 emissions. For post-combustion CO 2 capture, the announ cement indicated that ad vanced tech nologies are sought to reduce the cost and addi tional power load of CO 2 capture.

While it see m s too early to evalu a te the results of DOE’s increased focus on post-combustion CO 2 capture, k e y organizatio ns’ assessme n ts appear supportive of this shift. A 2008 Nation al Coal Cou n cil report, f o r example,

Page 36 GAO-08-1080 Carbon Capture and Stora g eidentifies ret r ofitting exi s ting coal po wer plants with CCS as part of a larger appro ach to redu cing emissions. 41 In the same vein, the I P CC notes that the stra tegic importance of post-combustion capture syst ems becomes evi dent when o n e considers the large amount of emissions fro m pulverized c o al power plants.

As discusse d earlier in t h is report, CCS stakeholders have st ated that th e absence of r egulations g o verning lar ge-volume C O 2 injection and storage had creat ed considerabl e uncertaint y about th e projects and risks associated with CCS. In an effort to address many of these co ncerns, EPA issued a proposed a rule in July 20 08 to address permitting and other requirements for injectio n of CO 2 for geologi c sequestration. The proposed rule, issued under the agency’s SDWA authority, clarifies a n u mber of practical iss u es for prospective well owners and operators concerning CO 2 injection a n d identifies certain requ i r ements governing their financial responsibilities, including for the per i od after the CO 2 is injected and th e well is closed. However, as EPA officials note, th e rulemaking was not intended to resolve many questions concerning how other environmental statutes may apply to ca ptured and i n jected CO 2 , including th e Clean Air Act, CERLCA, and RCRA. A number of key issues, therefore, have yet to be addressed.

EPA’s July 2008 proposed rule creat es a new “Class VI” well type for injection of CO 2 for geologic sequ estration. In do ing so, it cl a r ifies a number of issues relating to the more immediate, practical iss u es regarding C O 2 injection for geologic a l storage. H o wever, some notable ambiguities remain, particularly in th e area of lon ger-term financial responsibility requirements. The foll owing summarizes both the issues that have been addressed and those whic h may still need to be clarified. I n the discussion below, we provide th e preliminary views of th e stakeholder s we interviewed. It is important to note, however, that the proposed rule’s 120-day comment pe riod runs until November 24, 2008, during which time EPA will obtain a broader array of publi c advice and opinions on its proposed rule.

Site chara c t erization, w e ll constru c t i on, and monitoring req uiremen ts

. The proposed rule specif i es a number of requirements concerning the location of t h e CO 2 injection well, including (1) t h e criteria f o r 

## EP A Has Begun to Address Regulator yUncertainty Concerni ng CO 2 

## Injection and Storage, but Key Issues Remain Unresolved

EPA Has Is sued a Proposed Rule under the SDWA on Permitting Large-Volume CO 2 

### Injections

41 The National C o al Council, The Urge ncy of S usta i n a b le Coa l

.

Page 37 GAO-08-1080 Carbon Capture and Stora g echaracterizi n g the site o f the geol o gi c formation and (2) requ irements for reviewing th e wider geographic area surrounding the storage site prior to injection. Re garding site characteriza t ion, the wel l owner or operator must demonstrate that the wel l will be located in an area with a suitable geologi c system, includi ng a co nfini n g zone for t h e inject ed CO 2 that is free of faults or fractures, that would contain the CO 2 . The proposed rule also specifies tha t injection of CO 2 above t h e lowermost formation containing an undergro und source of drinking water is prohibited. Regarding the wider geographic area surrounding the storage si te that may be impacted by the inj ect ion, it requir es well owners and oper a tors to deli neate an Area of Review (AoR) within which the o w ner or operator must identify all penetrations , such as wells, that may penetrate th e confining zone and determine whether the w e lls have be en plugg e d i n a manner t h at prevents the movement of CO 2 or associated fl uids that may endan ger underground sources of drinking water.

The proposed rule also i n cludes stan dards for well construction, operation, and monitoring. For example, althou gh EPA does not specify which materials must be used, the pr oposed rule does require the use of materials that meet or e x ceed in dustry standards, that are c o mpatible with injected CO 2 , and that are designed for the life of the well. Th e proposed rule also co ntains an inj ection pressure limitation so that an injection do es not create n e w fractures or cause movement of i n jected CO 2 that endangers underground sources of drinki ng water. It requires continuous monitoring of injection pressure , rate, and volume, and requires semiannual reporting of this data to EPA. The proposed rule also requires well owners and operato rs to submit, with their permit application, a testing and monitoring plan to verify that the CO 2 storage p r oject is operating as permitted and is not en dangering u nderground sources of drinking water.

The proposed rule also addresses sta k eholder co ncerns abou t how current CO 2 injectio n wells operating as Clas s I industrial wells, Class II injection wells that use CO 2 for enhanced o il o r natural gas extraction, and Class V experimental CO 2 injecti on wells wo uld be regul a ted if they t r ansition to use for long- t erm storage. It specifies th at owners of these exis ting wells may apply f o r the new Class VI permit and that the UIC program director would have the discretio n to grandfa t her the well ’s pre-existing construction requirements if the dire ct or determined that doi ng so would not endanger underground sources of drinking water. With th is exception, the project would have to meet all o t he r Class VI requirements in order to obtain a Class VI permit.

Page 38 GAO-08-1080 Carbon Capture and Stora g eFinancial r esponsibilit y requirem e n ts . EPA’s p r oposed rule specifies that well owners and op erators must demonstrate and maint a in financi a l responsibility for correct ive action (t hat is, repair s or other actions necessary to assure that wells within the AoR do not serve as conduits for the movement of fluids into undergr ound sources of drinking water), well plugging, po st-injection site care for a period of 50 years following cessation of injections, si te closure, a nd emergen cy and r e medial response. The UIC program director can ad just the 50- year ti me period for post-injectio n site care d e pending on whether the project pos es an endangerment to underground sources of drinking water. If th e UIC program director choos es to lengthen the post-in jection site care time period, the o w ner and operator must continue to demonstrate financial responsibility until the end of that period. Although the financial responsibility demonstration requirem ent ends when the post -injection site care time period does, the propos ed rule’s preamble indi cates that well operators remain re sponsible inde finitely fo r any end an germent of underground sources of drinking water.

In addition t o clarifying well site care, the propo sed rule also requires tha t well owners and operato rs periodically update th eir cost estimate for corrective a c tion, well p l ugging, post-in jection sit e care and si te closure, and emerge ncy and remedial respon se, and that they redemo nstrate financial res ponsibility for these incr eased costs as the UIC program director dee m s necessary. It also req u ires well owners and operators to notify the UI C program director of an y adverse financial condi tions they encounter, s u ch as bank ruptcy.

While stake holders ack nowledge E P A’s progress in clarifyin g some key financial res ponsibility requirements, they cite several other concerns:

• Although EPA’s proposed rule establ ishes a post-injection sit e care p e rio d , it does not i n clude a provision allowing well oper a tors to be released from liability for endangerment of undergr ound sources of drinking water during the h undreds of years that CO 2 will be stored in a geolo gic storage project. Whi l e it is beyon d EPA’s authority to rel ease inje ctio n well owners and operators fro m liability, a discus sion of long- t erm liability is included in the propo sed rule’s do cket. Stak eh olders told us that they w e re concerned b y the unspecified period of time for which they may be liabl e for stored CO 2 .

• The proposed rule only s p ecifies a d u t y to demonstrate financial responsibility, stating that guidance will be developed at a later date describing t h e types of f i nancial mech anisms that owners or operators can

Page 39 GAO-08-1080 Carbon Capture and Stora g euse. Currently, financial respons ibility for other well classes is demonstrated through th ird-party instruments, su ch as a suret ybond that establishes a trust fund, or self-insurance instru ments, such as a corporate financial t e st. However, EPA’s existing financi a l responsibility requirements have be en criticized as inadequ ate a nd the a genc yis currently re viewing its a pproach. EP A is evaluati ng whether t o revise its financial res ponsibility guidance i n li ght of these criticisms and is seeking public comments on various financial responsibility topics. Moreover, EPA officials told us that the Miscellaneo u s Receipts Statute limits the financi a l responsibility regulation s because it prevents EPA from requiring a cash deposit or receiving money as a trust ee. 42 The proposed rule’s p r eamble also notes that EPA does not have th e statutory authority to t r ansfer financial res ponsibility from the well ow ner or operator to a third party.

Finally, th ere is some question as to whether EPA will have sufficient resources to implement the expan d ed UIC program. EPA has not examined the level of res ources that will be needed to admini ster the UIC program once commercial-scale d e p l oyment of CCS occurs. However, a 2007 report by DOE’s Argonne Natio n al Laborato r y did exami n e the issue and conclud e d that if CO 2 were stored in large en ough volum e s to have a meaningful i m pact on gl obal warmin g, it is likel y that thousan ds or tens of thousands of injection w e lls would n eed to b e developed and permitted in the United S t ates. The re port noted t h at this would require th at state and regional UIC programs expand their staff and capabilities. In this connection , it observed t h at the an nu al national b udget for th e UIC program—a pproximately $11 million—has remained static fo r many year s,
even as UIC agenci es ha ve be en ask e d to take o n additional responsibilities. It warned that failur e to provide sufficient resources would likely create p e rmitting backlo gs, resulting in a bottlen e c k in the overall carbon sequestration effort.

Multiple stakeholders a g reed that E P A needs ad ditional resources for the UIC program, including permit writ ers. One industry representative expressed c oncern that i t can tak e u p to 2 y ears to obtain a p e rmit for a well under EPA’s UIC program, and t h at if CCS projects beco me more widespread, EPA will be responsible for permitting thousands of additional in jection wells.

42 31 U.S.C

. § 330 2(b).

Page 40 GAO-08-1080 Carbon Capture and Stora g eWhile EPA has addressed at least so me of the le gal and regu latory issues on how CO 2 injectors are to protect u nderground sources of drinking water, it has thus far not resolved a n u mber of key environme n tal issues that fall und er the jurisdiction of other statutes, including the Clean Air Act, RCRA, and CERCLA.

Clean Air A c t . As noted earlier, the Clean Air Act’s New Source Revi ew (NSR) requi r ements could be triggered if an existing facilit y’s installation of capture technology makes a major modification that signifi cantly increases e m ission of regulated pol lutants. EPA officials ack nowledge concerns th at NSR coul d cause d e lays and impose added co sts to CCS projects. However, they said that an assessment of how NSR might impact the feasibilit y of CCS projects cannot be made globally becaus e it depends on site-speci fic factors, such as ge olo g ical and hy drological considerations, the CCS technology t h at will be used, how it will operate, and how that operation could affect t h e rest of th e plant.

Laws governing hazardous wastes and substances . RC RA and CERCLA could pose s i milar compl i cations for CCS projects. RCRA aut horizes EPA to establish regulations governing th e treatment, storage, and disposal of hazardous waste. A hazar dous waste is generally d e fined as a solid waste that either ( 1 ) exhibits certain characteristics (ignitability, corrosivity, reactivity, or toxicity) or (2) has been listed as a h a zardous waste by EPA. CERCLA established the Superfund program to clean up sites that have been cont aminated by hazardous s ubstances. CERCLA authorizes EPA to compel the parties statutorily responsib le for the hazardous substances to bear the c o sts of cleanin g up the con t aminated site or to carr y out cleanups its e lf and reco ver costs from the responsible parties. Hazardous substances a r e those which may presen t substantial danger to the public health, welf are, or envir onment when released and include all hazardous wastes subject to RCRA.

Whether any given i n ject ed CO 2 stream is categorically a hazardous waste or hazardous substance has not been resolved by EPA. The preamble to EPA’s propo sed rule not es that pure CO 2 in and of itself is not listed as a hazardous substance un der CERCL A. However, the rule’s pr eamble cautions tha t injected C O 2 streams c ould contain hazardous constituents that would make these streams “hazardous.” 43 It notes that since the 

### Key Legal and Regulatory Issues outside of the SDWA Have Been Largely Unaddressed

43 T h e pr opos ed r u le’s pream ble notes that if a CO 2 stream contains hazardous waste as a constituent, it must be permit ted as a Class I well. Class I wells are intende d for hazardous materials.

Page 41 GAO-08-1080 Carbon Capture and Stora g echemical co mposition of individual i n jected CO 2 streams vary, no categoric a l determination can b e made as to wh ether all inj e cted CO 2 streams are hazardous wastes. Accordin gly, the preamble says that it will be up to the well owners and operato rs to make this determination on the basis of their particular circumstances. EPA officials said th at they l acke d the information about th e composition of CO 2 streams captured from coal

fired power plants neces sary to de term ine whether those streams should categoricall y be listed as a hazardous waste under RCRA.

Thus, considerable unc ertainties over how owners and operat o rs of CCS projects would be treat ed under key environmental laws other than the SDWA rema in unresolve d. An EPA federal adviso ry committe e working group had emphasized, in particular, that the EP A address the liability implications concernin g CO 2 injection under RCRA and CERCLA. 44 However, the proposed rule is unclear as to whether the two laws even apply to inj e cted CO 2 , and it is theref ore uncertai n whether injectors will be subject t o hazardous waste dis posal requirements and liability for hazardous substance rel eases.

In addition t o the tech ni cal and leg a l issues affec t ing CCS’s prospects, key studies, fede ral advisory committees, a nd the stakeholders we interviewed also identifi ed an arra y of other issues that would need to b e resolved if the technolo gy is to be d e ployed wit h in a time frame scientists believe is needed to a ddress climate chan ge. M o reover, whereas many of the technical an d regulatory issues discussed earlier fall within the domain of two agencie s (DOE and EPA), these other issues cross the jurisdictions of the Departments of the I n terior and Transportation, the Fed e ral Energy Regulatory Commission , and other agencies in a manner that would require colla boration bet w een agen ci es and, in many c a ses, c oordination with state governments and other en tities.

Under a nati onal CCS program, CO 2 could be sequestered on both federal and nonfed eral lands an d would raise complex p r operty rights issues needing res o lution in bo th instances. In the case of federal l a nds, BLM, which manages the fed e ral government’s mineral resources, is required b y 

## Other Key Issues That Shoul d Be Proactively Addressed to Support a National CCS Framework

Property Rights and Liability Issues Rela ted to CO 2 

### Injection on Both Fe deral and Nonfederal Lands

44 Clean Air Act Advis ory Com m ittee Advance d Coal T echnol ogy W ork G rou p, F i nal Re po rt of the Adva nced Coal T e chnol ogy W ork G rou p (J an . 29 , 2008 )

.

Page 42 GAO-08-1080 Carbon Capture and Stora g ethe Energy I ndependen c e and S ecuri ty Act of 2 0 0 7 45 to report b yDecember 2008 on a fr amework to manage g e ol ogi cal carbo n sequestrati on activiti e s on public lands. According to BLM officials, the r e port will include a discussion of the unresol ved propert y ownership and liabilit y issues related to long-term CO 2 storage. They note that t h e report will also discuss the statutory aut hority BLM currently ha s and what it lacks, such as the autho r ity to establ ish a fundin g mechanis m for monitoring and mitigation ef forts associated with sequestration sites. They c a u tioned, however, th at the report will not recommend solutions to current uncertaintie s and explai ned that sin ce inje cted CO 2 can move onto adjacent private or state lands, reso lving them will require collaboration with private landowners and state agencies.

Nationwide CO 2 sequestration would also pose major challe n ges on nonfederal l ands. EPA notes that states with primacy for the UIC program have t y picall y addressed such challen ges when they have aris en under that program. The agency acknowledged th e addition al complicat ions that would arise as stored CO 2 crossed state boundaries, but noted that such cross-jurisdictional issues typically o ccur under t h e UIC program and that states have worked together to addr ess them. Nonetheless, t h e significantly larger scale of a future C C S program could magni f y the problems po sed by these jurisdictional issues. EPA officials n o ted that they are h o p i ng that the proposed rule’s comment process will surface ideas to add r ess these problems. However, EPA officials also note that th e agenc y la ck s authority to issue regul a tions resolving these is sues.
Furthermore, while EPA’s proposed ru le reaffirm s liability related to underground sources of drinking wate r, ambiguity remains regarding who—the injector or the property o w ne r— is ultimately responsible for unanticipat e d releases of the inje cted CO 2 that ha ve other eff e cts. As discussed ea rlier, the rel eased CO 2 c ould interfere with the a d jacent mineral own e rs’ abilities to extract those resources, and the i n jection well’s operator could be held liabl e f o r nuisance, trespass, or another tort.

Pipelines ar e the preferr e d method o f transporting large amounts of CO 2 . The Depart ment of Transportation’s Pipeline an d Hazardous Materials Safety Administration (PHMSA) admi nisters safety regulations for CO 2 pipelines that affect interstate comm erce and cer tifies states that hav e adopted regulations co mpatible wi th the minimum federal safety 

### CO 2 

### Pipeline Regulation

45 P ub. L. N o

. 110-140 (2007).

Page 43 GAO-08-1080 Carbon Capture and Stora g estandards to regulate their intrasta te pipelines. N o federal ag ency h a s claimed jurisdiction over siting, rates, or terms o f service for interstate CO 2 pipelines. 46 However, earl y assessments indicate t h at a nati on wide CCS program could require a network of interstate CO 2 pipelines that would raise cross-jurisdictional issues and involve multi p le regulatory authorities—all in the unprecedent e d context o f a nationwi d e program to transport massive volu mes of CO 2 .

Neither the Federal Energy Regula to ry Commission (FERC) o r Surface Transportation Board (STB) currently regulat e in terstate CO 2 pipelines and hav e no t develop ed any guid anc e for possible regulation because, according to agen cy offic i als, neither agenc y has s t atutory aut hority to do so. FERC has the statutory authority to regulate t h e siting, rat e s, and terms of service for interstate pipelines transporting natural gas, which is defined as “ n atural gas unmixed or an y mixture of natural an d artificial gas.” 47 FERC has interpreted this statutory language to mean a gaseous mixture of hydrocarbons th at is used as a fuel. 48 According to FERC officials, under this interpretation, CO 2 pipelines fall outside of the commission’s jurisdiction. 49 According to the FERC Chairman’s congressional testimony, he would n o t recommend that Con g ress preempt the states on CO 2 pipelin es because s t ate siting h a s not been a failure, unlike the si tuation that led to fed e ral preemption of natural gas pipeline siting. 50 FERC officials not ed that the commi ssion could have a prospective role in regul a tion of CO 2 pipelines, which could b e modeled o n its natural g a s transport and storage work, but that it would need statutor y authority to take such a role.

The STB has statutory jurisdiction over pipelines that transport a commodity “other than water, gas, o r oil.” 51 STB’s predecessor, the

46 FERC has jurisdiction ove r int e rstate pipeline s that tra n sport oil o r nat ural g a s. STB has jurisdiction ove r interstate pip e lines that tran sport a commo dity othe r tha n water, gas, or oil.

47 15 U.S.C

. § 717 a(5).

48 Cortez Pipeline Compa n y, 7 F.E.R.C

. ¶ 61,024 (1979).

49

Id

.

50 Testimony of t h e Honorable J o seph T. Kellih er, C h airman, F e deral Ene r gy Regulatory Commission, b efore t h e Com m ittee on E n er gy and Natu ral Resources, Uni ted States Senate, January 31, 2008

.

51 49 U.S.C

. § 153 01.

Page 44 GAO-08-1080 Carbon Capture and Stora g eInterstate Commerce C o mmi ssion, i n te rpreted it s organic sta t ute as excluding al l gas types (i ncluding CO 2 ), regardles s of origin or source, from its juri sdiction. 52 Th erefore, the commission concluded t h at it lack ed jurisdiction over interstate CO 2 pipeli nes. STB staff told us that if a party sought reco nsideration of the prior decision disclaiming jurisdiction over interstate CO 2 pipelines, the board would consid er re-examining the commission’s earlier decision.

While neither FERC nor STB has devel oped guidance for the regulation of interstate CO 2 pipelines, the stakeho l ders we interviewed had differing views on whether federal regulation of CO 2 pipelines should be expand ed. Several stak eholders thought it w ould be necessary for the federal government to take a more activ e rol e in siting is sues and CO 2 pipeline rates. On the other hand, several othe r stakeholde rs expressed concern that expandi ng federal regulation co u l d have unin t ended cons equences. For example, one industry stakeholder told us that regulating pipeline rates could discourage i nvestment in new pipeli nes.

Other factors may need t o be conside r ed for CO 2 pipelines th at cross federal land s managed b y BLM. According to stak eholders, on e key question will be whether new CO 2 pipelines should operate as common carriers under federal l a w. As common ca rriers, pipelines’ terms of service would need to be just, reasonable, an d nondiscriminatory. Under the Federal Lan d Policy Ma nagement A c t, BLM has the authorit y to grant rights-of-way for pipelin es across federa l lands but not to require them to operate as common carriers. In addit i on, BLM officials told us they are not assessing the rights-of-way on federal lands for CO 2 pipelines because th ei r current statutory authority for rights-of-way is sufficient.

DOE’s Southwestern and West Coas t Regional C a rbon Sequ estration Partnerships are presentl y conducti n g a CO 2 pipeline study, in conjunction with MIT an d Sandia Nat i onal Laboratories, which may inform the discussion about future CO 2 pipeline s . According to DOE officials, the report will be issued nex t year. Th e o fficials note that it is not clear whether the report will address all of the relevant issues, including regulatory j u risdiction and siting decisions. 53

52 45 Fed. Reg. 85 ,178 (Dec. 24, 1 9 80); 46 Fed. R eg. 18,805 (Ma r . 26, 1981).

53 DOE officials note that several of t h e Region a l P artners hips , including t h e S outhw es t, Wes t Coas t, So utheas t, Midwe s t, and Plains CO 2 reductio n pa rtners hips , hav e completed or
are w o r k ing on pipeline s t u d ies for t h eir in dividual regio n s

.

Page 45 GAO-08-1080 Carbon Capture and Stora g eIn recent y e a rs, DOE has worked with state geol o gic survey offices and other partners to constru c t a nati o n al carbon sequ estration geographic information system that provides information that can b e us ed to ev alua te the potential for CO 2 geol o gic sequ estration across the United States. However, knowledgeable authorities agr ee th at a more detailed evalu a tion of these site s’ actual cap acity is ne ed ed. As figure 4 shows, the geolo gy of much of the United State s may be well suited for CO 2 sequestration. However, a more detaile d evalu a tion would determine whether these potential sit e s are actu a l l y appropria te for long-t erm CO 2 seq u estration. For example, it is currently not known whether the caprock o verlying these geolo g i c formations is sufficient to contain stored CO 2 . 

### Detailed Assessment o f Feasible CO 2 

### Storage Sites

Page 46 GAO-08-1080 Carbon Capture and Stora g e**F i**  **g u**  **re 4: Po te**  **n t**  **ial G e**  **o l**  **o g**  **ic Sto rag**  **e in the Un**  **ited States** 

S o u rce: GAO a n a ly s i s of DOE d a t a

. The Energy Independen ce and Secu rity Act of 2 007 54 requires the U.S. Geological S u rvey (USGS) to develo p a methodo logy for, and conduct an assessment of, the c a pa city for sequ estration of CO 2 in the United States. USGS officials explaine d that their approach wi ll be to exp l ore geologi c formations at the individual sedime ntary basin level, and they will take storage integrity and inj ectivity into account. Th ey plan to b egin with oil and gas reservoirs becau se these are the most familiar geologic formations

54 P ub. L. N o

. 110-140 (2007).

Page 47 GAO-08-1080 Carbon Capture and Stora g ein terms of t h e integrity of the reservoirs and thei r ability to st ore CO 2 . USGS officials will then assess salin e formations, about which less data are available. According to USGS officials, the methodology s hould be completed b y March of 2009, at which time it will be released for external technical re view and pu blic comment. Following any n eed e d revisions to the methodology and receipt of fundi ng, the USG S will proceed with the actual assessment.

According t o the preamble to EPA’s proposed rule, improperly operated injection a c t i vities or ine ffective l ong -term storag e could resu lt in release of injected CO 2 to the at mosphere, resulting in t h e potential to impact human healt h . EPA’s summaries of stakeholder workshops indicate th at public healt h concerns have b een expressed about such issues. One concern is t h e risk that i m properly operated injections could result in the release of C O 2 , and that at very hi gh concentratio ns and with prolonged exposure, CO 2 can le ad t o suffocatio n. Concerns have also be en raised th at improperly injected CO 2 could raise t h e pressure in a geologic formation and, if it b e came too high, could cau se otherwise dormant faults to trigger seismic even ts, such as e a rthquakes. The IPCC ha s noted, ho wever, that 99 percent of t h e CO 2 stored in appropr iately sel ect ed and managed formations is very likel y to be retain e d for over 10 0 ye ars, 55 and EPA states in the pream ble to its proposed rule t h at the risk of asphyxiat ion and other health eff ect s from airbo r ne exposure to CO 2 resulting from injection activities is minimal. 

### Potential Public Opposition Arising fro m Health Concerns over CO
2 

### Storage and Transport

Thus far at l east, there h a s been little public oppo sition to the CO 2 injections th at hav e take n place in states such as Texas to en hance oil recovery. H o wever, sev e ral notable st udies explain that this lack of publicly-ex p r essed concern may reflect more a l ack of know ledge about CCS rather than confid e n ce that th e process is safe. 56 This is suggested in the IPCC’s 2005 report o n CCS which stated, for example, th at there is insufficient public knowledge of cli m ate change issues and of the variou s mitigation options and t h eir potenti al impact. In another 2005 study, researchers surveyed 1, 2 00 peopl e, r e presenting a gen eral po pulation sample of the United Sta t es, and fou nd that that less than 4 p e rcent of the

55 IPCC, IPCC Special Report o n Carbon Dioxide Capture and Storage

.

56 IPCC, IPCC Special Report o n Carbon Dioxide Capture and Storage (2005); National Academy of Sci e nces, Prosp ect i v e Eva l ua ti on; and Co ngres s i onal Res earch Service, Communi ty Accep ta nc e of C a rbon Ca p t ure a n d S e questra ti on I n

fra s tr uct ure: S i t i n g Ch a llenges (July 2008).

Page 48 GAO-08-1080 Carbon Capture and Stora g erespondents were familiar with th e terms carbon dioxide capture and storage or carbon storage.

Some of the stakeholder s we interviewed explain e d that publi c opposition could indeed grow when CCS exten d s beyond t h e relatively small projects used to enha nce oil and g a s recovery, to include m u ch larger C O 2 sequestration projects lo cated in mor e populated areas. One n o ted, in particular, t h at a lack of education about CCS’s safety co uld potentially create c onfu s ion and fea r

when commercial-scale CCS is implemented.

Citing such concerns, a recent repor t by the Nati onal Acade m y of Scien ces underscored the importance of publi c outreach , noting that while the success of DOE’s carbon capture pro g ram depen d s heavily o n its ability t o reduce the cost of the technology, “the storage p r ogram cannot be successful if a significa n t fraction of t h e public vie w s it as dangerous or unacceptabl e . Thus, the technologi e s must not only be safe an d effective, they must be explain a bl e to the publ ic and th e regulatory co mmunity in such a way as to instill confidence that they are i n fact safe and effectiv e.” 57 T h e report went on to caut i on that “the federal government in general and the DOE in particular h ave not had a good track record in accomplishing this task i n other pr og rams.” For its part, EPA receiv e d similar advice from its Clean Air Act Advisory Committee’s Advance d Co al Technology Work Group. The Work Group’s January 2008 report recommended that the a gency immediately d evel op, in consu l tation with other agen ci es, a public outreach eff o rt to explai n carbon capture and sequestration. 58 A diverse group of pan e l members at EPA’s 2007 UIC workshop made similar recommendations for public outreach and participation.

According t o a recent federal adviso ry committe e report, an accountin g system, or p r otocol, will be needed t o quantify the CO 2 emissions from CCS. The accounting pr otocol could clarify un certainty relat e d to monitoring, reporting, quality assurance and con t rol, and cro ss-border issues. Esta blishing this protocol would be a necessary step to integrate projects that prevent CO 2 from being emitted to the atmosphere into a future regul a tory regime that addres ses climate change . The advisory committee report also n o tes that the IPCC has released natio n al 

### A ccounting System for Measuring CO 2 

### Stored by CCS for Use in a CO 2 

### Emissions Trading Plan

57 National Acade m y of Sciences , Prosp ecti v e Eva l ua ti on

.

58 Clean Air Act A d visory Commi ttee Advance d Coal Technol o gy Wo rk Gr oup , Final Rep ort of the Adva nced Coal T e chnol ogy W ork G rou p.

Page 49 GAO-08-1080 Carbon Capture and Stora g egreenhouse gas inventor yguideli n es for CO 2 capture, transport, injection, and storage, and that a c o mprehensive CCS ac co unting proto c ol develop ed b y EPA and o t her agen cie s would provide ne eded guidanc e for applying IP CC Guidelines in the Uni t ed States.

The Europe an Union’s e xperience s u ggests that in planning f o r future CCS deployment, it is important to addres s such practical issues ea rly in the process, particularly ho w to address reductions i n emitted CO 2 achiev e d by CCS. Specifically, the European Commission proposes to revise the E U ETS to inclu d e CO 2 capt u re facilities , pipelines, and storage sites. A European Commission report ackno wledges that resolution of this important practical matter is importa nt to remove barriers to future CCS deployment. 59 Although EU member states can seek to includ e CCS projects in t h eir national emissions c a p by gainin g approval from the European Commission on a case- by-case basis, proposed legislation would explicitly i n clude, after 2012, faciliti e s involved i n the capture, transportation, and storage of CO 2 in the ETS. These faciliti e s would then earn allowa nces for non emitted CO 2 and would h ave to surre nder emission allowances f o r any le aka ges of CO 2 that occur.

Thus far, EPA’s Office of Air and Rad i ation has begun to devel op a rule requiring mandatory rep o rting of greenhouse gas emissions from all sectors of the economy. 60 The ag ency i s not, however, devel opi ng a protocol clarifying how emissions avo ided as a re sult of a CCS project would be measured, nor how a future emissions trading plan would treat the avoid ed emissions. EPA officials explained th at, giv e n the pressure of other priorities, they wo uld only develop such a protocol when mandated by Congress to do so. However, they noted that s u ch an acco unting syste m would be cl osely linked to the design of voluntary programs, future policies, and regulations to reduce greenhouse gas emission s.

59 EU Commission Staff Working Doc u ment , ac companying document t o the Prop o sa l for a Di recti v e of th e Europ e a n Pa rli a m ent a n d o f

th e Coun ci l o n th e Geologi c S tora g e of Carbon Dioxide , J a nuary 23, 2 0 08.

60 Specifically, E P A officials told us t h ey a r e d e veloping a pr o pos al that w o ul d req u ire “ups tream” p r o ducers a n d “d o w ns tream” s o u r ces above ap p ropriate thres h olds to rep ort their gree nhouse gas emission s.

Page 50 GAO-08-1080 Carbon Capture and Stora g eRecent fed e ral and intern ational ass e ssments indicate th at t h e United States will need to rel y o n CCS as an essential mitigation optio n to achi eve appreciabl e reductions in greenhous e gas emissions. Federal agen cies whose action—or inaction—will greatly affect the prospects for timely CCS deploy ment have t a ken e a rly steps that add r ess some barriers to CCS, but have left critical gaps that impede our understanding of C C S’s full potential for reducing C O 2 emissions and that co uld affect C C S deployment on a broader scale. 

# Conclus i ons

DOE has invested hea v il y in ad vanci ng CCS in IGCC plants, but knowledgeable authoriti e s agree th at these facilit ies will acco unt for only a small percentage of po wer plants’ CO 2 emissions in the ne xt several decades to c o me. DOE has recently b egun to shift its approac h in a way that also emphasizes development of CCS technol ogy for exist i ng coalfired power plants. Given the broad c onsensus that the te ch nology used by these plants will dominat e coal-fired power plant capacit y for the next several decades—both in the United States and around the world—we believe the agency should continue t h is trend. EPA has begu n to address some of the regulatory u n certainties under the S D WA that will need resolution for a national CCS program to move forward, but other key issues assoc i ated with ot her environmental statutes—such as RCRA, CERCLA, an d the NSR provisions of the Clean Ai r Act—have not been addressed.

In addition t o these key barriers, there is an arra y of other is sues that would need to be resolved if the t e chnology is t o be deplo y ed within a time frame scientists beli eve is ne ede d to address climate cha n ge. Moreover, whereas many of the te chn i cal and reg u latory issues discussed earlier fall w i thin the do main of two key a genci e s (DOE and EPA), these other issues cross the jurisdictions of the Depart ments of the Interior and Transportation, FERC, and other agencies in a m anner that w ould require collaboratio n between a gencies and, in many cas es, coordination with state govern m ents and other entities. While the D O E-led CCTP coordinates climate change tec hnol ogy research, development, demonstration, and d e pl oyment among federal a gencies, it h a s not been tasked with resolving th e issues of CO 2 pipeline r egulation an d infrastructure and li abilit y for stored CO 2 , among other issues. Furthermore, officials fr om relevant offices within the Depart ments of the Interior and Transportation told us they ha ve not yet be en invi ted to participate i n CCTP discussions.

Page 51 GAO-08-1080 Carbon Capture and Stora g eWe recommend that the Secretary of Energy dire ct the Office of Fossil Energy to co ntinue its recent budget ary practice of helping to ensure that greater emp h asis is placed on suppo rt ing techno logies that can reduce greenhouse gas emissions at existi ng coal-fired po wer plants.

We recommend that the Administrator of EPA more comprehensively examine barr iers to CCS developmen t by identif y i n g key issues that fall outside the agenc y ’s SD WA authority. Spec i ficall y , we recommend that the Administrator direct the cognizant E P A offices to collecti vel y examine their authorities and responsibilit ies under RCRA, CERCLA, and the Clean Air Act for the purposes of (1) obtain i ng the inform ation necessary to make informed decisions about the regulation of (and potential liabilities associated with) the ca pture, injecti on, and storage of CO 2 ; (2) using this information to develop a comprehensive regulat o ry framework for capture, inj e ction, and u nderground storage of CO 2 ; and (3) i d entifying a n y areas where additional st atutory auth ority might be need ed t o address ke y regulatory a nd legal issues related to CO 2 capture , injection, a nd storage.

We recommend that the Executive O ffice of the P r esident esta blish an interagen cy task force (or other mechanism as deemed appr opriate) to examine the broad range of issues that, if not ad d r essed proactively, coul d impede larg e-scale commercial CCS depl oyment and to develop a strategy for cognizan t federal a g e n cies to add r ess these issues. Among the issues this task force should ex amine are: ( 1 ) identifyin g strategies f o r addressing regulatory a nd legal unc ertainty that could impe de the use o f federal la n d s for the injection, storage, and transp ort of CO 2 ; (2) examining how any regulation of carbon emi ssions will a ddress leakage of stored CO 2 into the atmosphere; (3) developi ng an a ccou n ting protoc ol to quantif y the CO 2 emissions from capture, transpor t, injection, and storage of CO 2 in geologi c formations; (4) examining CO 2 pipeline i n frastructure issues in the context of developi n g a larg e-scal e national CCS program; (5) developin g a public outreach effort to explain CC S; (6) evalu a ting the efficacy of existing feder a l financi a l i n centives au thorized by t h e Energy Policy Act o f 2005 and o t her relevan t laws in furthering the d e ployment o f CCS; and (7) examining t h e federal a nd state resources requi r ed to implement the EPA’s expanded UIC program incorporating commercialscale CCS.

We provided a draft of th is report to the Secret ary of DOE and the EPA Administrator for revie w and comment. DOE’s September 9, 20 08, l e tte r first “commend[s]... the comprehensiveness of this study, including the analysis of potential barr iers to wi despread commercialization of CCS and 

# Recom m endations for Executive Action

Agency Comments and Our Evaluation

Page 52 GAO-08-1080 Carbon Capture and Stora g ethe potential need for inv o lvement by multiple Fe deral ag enci es.” The letter’s subsequent comments are also consistent with the report’s recommend ations that (1) DOE continue to place greater emphasis on pursuing increased fundi ng for CO 2 emissions control techno logies for existing coal -fired power plants and ( 2 ) an intera g e ncy t a sk force be established t o examine c r itical CCS issues and develop a comprehensive CCS strategy. However, the ag ency e xpressed disagreement with our rationale for placing greater emphasis on CCS technologies ap plicable to these faciliti e s and suggests a different approach for the inter agency task force we recommended:

• Placing greater emphasis on ex isting coal-fired power pla n ts . DOE sa ys that while it agrees with the report’s findings con cerning the i m portance of pursuing CCS options for existing co a l-fired power plants, th ese findings incorrectly i m ply “that DOE has focused too heavily on the IG CC option for new plants at the exp e nse of retrofit opportunities.” We are not second-gues sing decisio n s DOE made in past decades. Rather , we are concerned about how the agency can be st move forward in light of the new emphasis on substantially reducing CO 2 emissions and the scientific consensus that CCS will be needed t o help reduce emissions.

• Establishin g an interagency CCS T a sk Force . DOE maintained that a coordinating body—the DOE-led CCTP—al ready addresses these kinds o f issues. However, the CCTP’s scope f o cuses on technology; it does not address legal and institut ional issues such as the r e solution of CO 2 pipeline regulation and infrastructure or liability for stored CO 2 , among others. In addition, off i cials from cognizant offi ces within the Departments of the Interior and Transportation told us they ha ve not yet be en invi ted to participate i n CCTP discussions. Mo reover, we continue to b e lieve that a more centralized task force, with a b r oader scope than the technologyfocused CCTP, may be a preferable alternative

. DOE’s letter appears in appendix II, along with our responses to each of it s main points. The ag ency separately p r ovided tech nical comments, which were incorporated in ou r final report, as appropriate.

EPA’s September 12, 20 0 8 , letter stat ed that provi d ing regulat o ry certaint y on issues related to geol ogical storage of CO 2 wa s a high priority for the agenc y and agreed with the intent of our recommendation—to provide clarity on ho w the broader range of s t atutes within the ag enc y ’ s jurisdiction may apply. The ag ency noted that it had made a n initial effo rt to identify a nd discuss these issues in the preamble of its July 20 08 proposed rulemaking an d had requ ested comments on many SDWA

Page 53 GAO-08-1080 Carbon Capture and Stora g etopics—including some of those identified in ou r report. It said it exp ect ed further progress on these SDWA topics after receiving input f r om stakeholder s during the comment period (which extends through November 24, 2008). EP A did not respond to the recommendation that an interagen cy task force b e establishe d to examin e critical CC S issues and to develop a co mprehensive CCS strategy. The ag en cy also offer e d several other comments and clarifications, which are presented in appendix III, along with o u r responses.

We are send ing copies of this report to the Administrator of EPA; the Secretary of Energy; the House Selec t Committee on Energy Independen ce and Glob al Warming; appropriate congressional committees; and other interested part ies. We will also make copies availab l e to others on request. In ad dition, the r e port will be avail a ble at no charge o n the GAO Web site at http://www.gao.go v

. If you or yo ur staff have any qu estions about thi s report, please contact me at (202)5 12- 3841 or stephensonj@gao.gov . Contact points fo r our Offices of Congressional Relatio n s and Publi c Affairs may be found o n the last page of th is report. GAO staff who made major contributions are listed i n appendix IV.

Sincerely yo urs,

John B. Stephenson Director, Natural Resources and Envi ronment

Page 54 GAO-08-1080 Carbon Capture and Stora g eAppendix I: Obj e ctives, S c ope , and Methodology 

# Appendix I: Objectives, Scope, and Methodology

We were asked to ex amine (1) the key economic, legal, regulatory, and technologi c al barriers impeding co mmercial-sc a le deplo y ment of carbo n capture and storage (CCS) technology and (2) the actions federal agen cies are taking to overcome barriers to or facilitate t h e commercial-scale deployment of CCS tech nology.

To determine the key economic, lega l, regulatory, and technol ogical barriers imp e ding commercial-scale de ployment of CCS, we reviewed assessments by the Int e rgovernmental Panel on Climate Change, the National Academy of Sciences, fe d e ral agencies, nongovernmental organization s , and ac ade m ic researchers. We als o contact ed a nonprobabil i ty sample of stakeholders fro m industry, includi ng officials from electric power co mpanies and oil and g a s companies, as well as stakeholder s from nongovernmenta l organizatio ns and acad emic researchers. We select ed major U.S. energy prod ucing comp anies, as wel l as organizati ons and rese archers that participate a c tively in on going dialogues on CCS. We als o selected a number of smaller companies and organization s to ensure that we obtai ned a broad e r range of p e rspectives on key issues. 1 We used a semistructured intervie w guide to i n terview these stakeholders and f acilitate analys is of what stakeholder s identified as key econ omic, legal, regulatory, and technolo g ical b a rriers impeding commercial-scale deplo y ment of CCS. To obtain f e deral agency officials’ perspectives on key econ o mic, legal , regulatory, and technolo g ical barriers, we conducted i n terviews with officials f r om the Department of Energy’s (DOE) Office of Fossil Energy, the Environmental Protection Agency’s (E PA) Office of Ground Water and Drinking Water and Office of Air and Radiation, as wel l as other ag encies, primarily in the Department of the Interi or and Department of Transportation.

To examine the actions f e deral a genc i es are takin g to overc o me barriers to or facilitate the commercial-scale deployment of CCS technol ogy, we conducted i n terviews with officials f r om the DOE’s Office of Fossil Energy and the EPA ’ s Office of Ground Water and Drinking Water an d the Office of Air and Radiation to a ssess these agenci es’ eff o rts to overcome barriers to or facilitate the commercial-scale deployment of CCS. Moreover, we reviewed a r e port by the National Ac ademy of Sc iences assessing DOE’s Fossil Energy research a nd devel op ment programs. We revie w ed reports

1 Results from nonproba bility samples cannot be used to make inferences a b out a population. This is because, in a nonproba bility sample, some elements of t h e population being studied have no cha n ce or a n unknown chance of bein g selected as part of the samp le.

Page 55 GAO-08-1080 Carbon Capture and Stora g eAppendix I: Obj e ctives, S c ope , and Methodology

made by two federal ad visory committees, the National Coal Council advising the Secretary of Energy and t h e Clean Air Act Advisory Committee a dvising the EPA Administrator, and asked ag enc y officials how they were implementing reco mmendations contained in t h ese reports. We obtained an d analyzed 12 years of DOE budget i n formation, from fiscal year 1997 thr ough the pres ent, to assess the funding DOE has provided for various CO 2 capture rel a ted technolo g ies. We revi ewed the proposed EPA rule for the undergro und injectio n of CO 2 for geologi c sequestration under the Safe Drinking Water Act. To obtain p e rspectives from outsid e the go vern m ent, using the methodology describ e d above we contacted a nonprobabil i ty sample of stakeholders and used a semistructured interviewguide to f a cilitate an aggregate analysis of stakeholder s ’ assessments of the acti ons of feder a l ag encies. To assess the extent to wh ich other fed e ral ag encie s are overco ming barriers to or facilitating t h e commercial-scale deployment of CCS technol ogy, we also conducted i n terviews with officials f r om federal agenci es in t h e Department of the Interi or and De partment of Transportation (DOT), including th e U.S. Geolo g ical Survey, Bureau of L and Management, Surface Transportation Board, a nd DOT’s Pipeline and Hazardous Materials Safety Administration, as we ll as the F e deral Energ y Regulatory Commission. To assess the role of th e Climate Change T ech nology Program (CCTP) in coordinating CCS -related a c t i vities acros s federal agenci es, we interviewed a senior CCTP official a nd asked off i cials at several fed e ral agen cies about their i nvolvement in CCTP acti v ities. Finally, we attended two stakeholder workshops the EPA held concernin g developmen t of proposed regulation s for the underground inj ection of CO 2 for geologic sequestration under the Safe Drinking Water Act.

We conduct e d this perfo r mance audi t from Octo ber 2007 to September 2008 in ac co rdance with generall y ac cepted gove rnment auditing standards. Those standards require that we plan and perform the audit to obtain suffic i ent, approp riate evid e n ce to provid e a reasona b l e basis for our findings and conclusions based o n our audit objectives. We believe that the evid ence obt ain e d provides a reasonable basis for our findings and conclusions based o n our audit objectives.

Page 56 GAO-08-1080 Carbon Capture and Stora g eA ppendix II: C o mme nts from the Departme nt of Energy 

# Appendix II: Comments from the Department of Energy

Note: GAO comment s sup p lem entin g those in the rep o rt text appea r at the end of this app endi x.

See com m en t 1.

See com m en t 2.

Page 57 GAO-08-1080 Carbon Capture and Stora g eA ppendix II: C o mme nts from the Departme nt of Energy

See com m en t 3.

See com m en t 4.

See com m en t 5.

Page 58 GAO-08-1080 Carbon Capture and Stora g eA ppendix II: C o mme nts from the Departme nt of Energy

The following are GAO’s comments on the Depart ment of Energy’s letter dated Sept ember 9, 2008.

1. DOE says th at while it agrees with the report’s findings concerning the importance of pursuing CCS options for existing coal-fired po wer plants, these findings incorrectly imply “that DOE has focused too heavily on t h e IGCC option for new plants at the expense of retrofit opportunities.” We are n o t second-gue ssing deci sions DOE made in the decades b e f o re concern s about carb on dioxide ( C O 2 ) emissions had taken on th e prominence they ha ve t oday. Rath er, we are con cerned about how the agency can best move forward in light of the new emphasis on CO 2 emissio n s and the s c ientific consensus that CCS will be need ed t o help de al with them. 

# GAO Comments

2. DOE says that eve n thou gh CO 2 emissions from e x isting plant s are important, current global trends i ndicate that many new coal power plants will continue to b e built in co ming decades and that many would choose IGCC as the lowest-cost CCS option if it were availabl e. However, a DOE report, Tracking New Coal-Fired Power Plants , indicates th at the new c o al fired po wer plants currently bei n g built and permitted in the United States are pr edominately using pulve rized coal technologi e s, with a smaller number of plant operators opting for IGCC technology. Furth e rmore, DOE cites the i m portance of controlling CCS emissio n s in develo p ing countri es—in particular, China and In dia. Howeve r, the Intern ational Ener gy Agen cy st ates that “the expansi on of coal-fi r ed generati on in China will continue to be based on pul verized coal ” and observes that all of India’s oper a ting coal-fired po wer plants use a form of pulverized coal technol o gy. That said, our report does not call for a rad i cal shift in f o cus from IGCC to convention al technology, but rather a budget ary strategy that appropriatel y reflects a g r eater emphasis on developing captu r e technologi e s that could b e applied to existing pul verized coal power plants. As our draft report noted, suc h a strategy has in fact al ready been reflect e d in recent DOE budgets.

3. DOE acknowledges that it has recen tl y increased requested funding for CCS technol ogies applicable to existing plants, b u t states that the increase doe s not necessarily reflect a higher prio rity. Rather, the increase refl ects an evol ution of the technology developmen t process. Specifically, it is now mo ving from investigating such techno l o gies from a less costly small scale to th e p o int where c o sts rise as technology developmen t is “scaled u p .” Recent st atements by the agenc y , how ever, sugg est that resear ch applic abl e to existing coalPage 59 GAO-08-1080 Carbon Capture and Stora g eA ppendix II: C o mme nts from the Departme nt of Energy

fired power plant techno logies do warrant a higher priority. In particular, D O E’s recent funding ann ouncement f o r CCS technology developmen t for existing pulverized c o al power plants states that this funding opp ortunity is “driven by th e fact th at existing coal- f ired power plants produce a siz eable portion of current CO 2 emissions from all fossil fuel-based sources, and that only about 6 GW of the existing coal-fired el ectricity gen erating fle e t is projected to retire by 2030 .” Similarly, in our discussions with DOE fossil energy offici als about their fiscal y ear 20 08 bud get prioritie s , they point ed to lan g ua ge in House Report 110-1 85, w h ich recommended “a rigorous research program on the potential for retrofitting existing coal plants fo r CO 2 capture and sequestration.”

4. DOE questions the report’s observation that fund ing for CO 2 storage has been sig n ificantly hi gher than th e resources devoted to CO 2 capture, noti n g that the h i gher fundin g level for storage-relat e d activities ref l ects the fa c t that it has evolve d to t h e point where advanc e s in storage would now require expensive field-testing

. We do not dispute t h e need to i nvest in th e field-testing of storage a c tivities. Rather, we note that timely CCS depl oyment will occur only if progress is made with both captur e and storage and th at considerably more progress is needed on th e capture fr ont. A comprehensive C O 2 storage capabilit y will mean littl e if there is no CO 2 to store.

5. DOE maintains that a co ordinating b ody—the DOE-led Climate Change Technology Pro g ram (CCTP ) —already addresses CCS-related issues. However, the CCTP’s scope f o cuses on technology; it does not address legal and institut ional issues such as CO 2 pipeline regulation and infrastructure or liability for stored CO 2 , among others. I n addition, officials from cognizant offices within the Depart ments of the Interior and Transportation told us they have not yet b e en invited to participate in CCTP discussions. Moreover, we continue to believe that a more centralized t a sk force, with a broade r mission than the te chn o logyfocused CCTP, may be a preferable alternative

.

Page 60 GAO-08-1080 Carbon Capture and Stora g eAppendix III: Comme n ts from the Environ m ental Prot ection Age n cy 

# Appendix III: Comments from the Environmental Protection Agency

Note: GAO comment s sup p lem entin g those in the rep o rt text appea r at the end of this app endi x.

See com m en t 1.

Page 61 GAO-08-1080 Carbon Capture and Stora g eAppendix III: Comme n ts from the Environ m ental Prot ection Age n cy

See com m en t 2.

See com m en t 3.

See com m en t 4.

Page 62 GAO-08-1080 Carbon Capture and Stora g eAppendix III: Comme n ts from the Environ m ental Prot ection Age n cy

See com m en t 5.

See com m en t 6.

Page 63 GAO-08-1080 Carbon Capture and Stora g eAppendix III: Comme n ts from the Environ m ental Prot ection Age n cy

The following are GAO’s comments on the Enviro nmental Protection Agency’s l e tt er dated S e p t ember 12, 2 008.

1. EPA says that its recentl y-proposed UIC rule fully covers Safe Drinking Water Act (SDWA)-related issues. We have modifi ed the repor t to more fully reflect the work that EPA is doing to ex amine SDWA-related barriers to CCS deployment. However, while we acknowledge that the proposed rule discusses and seek s comments on many issues, we continue to believe that it leav es many of these i ssues unresolved. While EPA’s proposed rule prohibits the injectio n of CO 2 abov e the lowermo s t formation containing an underground source of drinking water, EPA is still exploring whether the UIC director should be given the authorit y to approv e such an inje ction—an issue that can affect whether unmineable co al seams are used for CO 2 storage. 

# GAO Comments

2. EPA suggests that the report should state EPA’s position on whether the operator of an injecti on well will remain liable indefinitel y for potential pr oblems posed by leakage of CO 2 . Pag e s 23 and 39 of the draft report did in fact st ate that well operators remain responsible indefinitely f o r any end a ngerment for underground sources of drinking water cause d by such le akage . However, the dra ft report also addressed other unresolved liabil i ty i ssues of concern to stakeholders, which are u n related to endangermen t of undergr ound sources of drinking water. We ha ve added la ngu age to furthe r emphasize these issues.

3. EPA says that it is important to note that the a g e n cy does not have authority un der the SDWA to release injection well owners or operators from long-term liability. T h e draft report had already done so on page 39 and 40, wher e it expl ained that EPA does not have the statutory aut hority to rel ease well owne rs or op erators from liability or transfer financial responsibility fr om the well owner or operator to a third party. In response to EPA’s comments, we have added l anguage to the report to further cl arify this poi nt.

4. EPA suggests that GAO note in its fin a l report tha t EPA had discussed RCRA and CERCLA issu es in the prea mble to its proposed rule. The draft report had, in fact, menti oned that EPA add r essed RCRA and CERCLA i s sues in the pr eamble. For example, page 42 of the draft noted that t h e preamble explained t h at pure CO 2 in and of its e lf is not listed as a hazardous substance under CERCLA, and cautioned that injected CO 2 streams could contain h a zardous constituents that would make these streams “hazardous.” That said, we co ntinue to bel i eve th at

Page 64 GAO-08-1080 Carbon Capture and Stora g eAppendix III: Comme n ts from the Environ m ental Prot ection Age n cy

the preamble’s limited treatment of t h ese issues still leaves much to be resolved ab out the implications of th e Resource Conservation and Recovery Act (RCRA ) and the Co mprehensive Environmental Response, Compensation, and Li abil ity Act (CERCLA) for CO 2 sequestration. Specifi cal ly, EPA sugg ests that det e rminations about whether injected CO 2 is a hazardous waste or sub s tance will be made

on a case- by -case basis. Moreover, EPA says it is “currently in the process of further evalu a ting how CERCLA and RCRA may apply to [geologi c se questration] sites.”

5. EPA notes that the prop osed rule in cludes clarif ications on t h e effect of permits on property rights. How ever, these eff ects were not among the property rights-relate d issu es of greatest conc ern to the stakeholder s we interviewed. As we stated in the report, these stakeholder s told us they were concerned about a lack of clarity regarding o w nership of injected CO 2 and ownership of geolo gic formations.

6. Notwithstanding the p e rmit-related property rights issues ra ised in comment 5 above, EPA explains tha t it does not have th e aut hority to propose federal regulati ons related more broadly to propert y rights issues. We agree that EP A’s authority does not e x tend to many of these issues discussed in the report, which is why the report notes that the resolution of this and ot her issues will require the involvement of other federal a gen cies and, in some cases, states.

Page 65 GAO-08-1080 Carbon Capture and Stora g eAppendix IV: A GAO Conta c t and Staff

c kno w l edg m e n ts

Page 66 GAO-08-1080 

# Appendix IV : GAO Contact and Staff Acknowledgments

John B. Stephenson, (202) 512-3841 o r stephensonj@gao.gov

In addition t o the cont ac t named abo ve, Ste ve Els t ein, Assistant Director; Chuck Bausell; Cindy Gi lbert; Kather yn Summers Hubbell; Michael O’Neil l; Ben Shouse; Jeanette So ares; and Michelle Woo d s made major contributions to this report. Additional assistance was provided by Katherine M. Raheb an d Melinda Cordero.

Carbon Capture and Stora g e 

# GAO Contact

Staff Acknowledgments

(360906)

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