‘Tangled Web’ of Laws, Regulations Stifles Carbon Capture Push

By Dean Scott of Bloomberg.

"President Joe Biden faces significant hurdles in his effort to reach net-zero emissions by 2050, including a daunting maze of environmental concerns and permitting requirements that stand in the way of thousands of carbon capture projects that may be needed to help reach that goal.

The administration estimates more than 1,000 carbon capture operations may be needed to trap as much as 1.7 billion tons of carbon dioxide emissions per year. It would be an ambitious undertaking, requiring a ten-fold increase in current projects over the next decade.

Power plants and big-emitting industries like steel and cement also face challenges to make carbon capture—a decades-old process that has traditionally been limited to oil recovery—cost-effective. They’d also need big technological leaps to divert significant emissions into permanent underground reservoirs and other geological formations.

Congress has chipped away at some permitting hurdles and expanded tax credits, pilot projects, and research dollars for permanent storage of carbon dioxide, the most prevalent greenhouse gas. But without comprehensive climate legislation or carbon tax plans on the horizon, the wave of carbon capture projects seen as vital in combating climate change could amount to little more than a trickle.

And there’s still nothing on the horizon to distill federal requirements spanning some 15 laws into a cohesive regulatory roadmap to speed carbon capture deployment, said Matt Fry, the Great Plains Institute’s state and regional policy manager for carbon management.

“The reality is, no matter what the project is, you have to meet the criteria of all those laws,” Fry said. “It is a tangled web.”

Virtually every pathway to global net-zero emissions considered by the United Nations Intergovernmental Panel on Climate Change (IPCC) and the International Energy Agency includes significant carbon capture deployment.

NEPA Needed

Despite supporting carbon capture, Biden hasn’t embraced significant streamlining of the 50-year-old National Environmental Policy Act, which empowers environmental groups to challenge environmental assessments in court. NEPA remains “the overriding environmental statute” posing an obstacle to wide-scale carbon capture deployment, said Hunter Johnston, a partner with Steptoe & Johnston LLP who navigates requirements for carbon capture projects.

Much-anticipated Council on Environmental Quality guidance released in February was skimpy on regulatory changes Biden might support but also less than a full-on embrace of the technology, Johnston said.

The interim guidance said “successful widespread” carbon capture deployment will require “efficient regulatory regimes” and meaningful public engagement.

It echoed CEQ’s June 2021 report, which said the U.S. “has an an existing regulatory framework capable of safeguarding the environment, public health and public safety,” said Sarah Forbes, CEQ’s Director of Carbon Capture Utilization and Sequestration. The proposed guidance will be finalized after CEQ reviews nearly 50 comments it received from unions, industry, and environmental groups.

And while carbon capture tax incentives were crucial to launching many U.S. projects in the pipeline, “incentives alone are not enough for successful and responsible technological deployment, which also requires standards that provide regulatory certainty,” the report said.

Environmental Justice Tensions

The Biden administration also faces resistance from environmental justice advocates who fear carbon capture projects will add to burdens on disadvantaged communities.

Biden should have addressed those issues head-on in the guidance, Johnston said, by making the case “that carbon capture and sequestration is beneficial to society at large” for all, including disadvantaged communities that already suffer disproportionately from climate impacts.

The technology remain “unproven” for large-scale emissions storage, said Anthony Rogers-Wright, environmental justice director for the New York Lawyers for the Public Interest. It’s the newest “epoch of environmental racism,” he said, which will slow the transition from fossil fuel power plants to clean energy and saddle disadvantaged communities with pipelines and other infrastructure.

But navigating U.S. regulations can be daunting, particularly for projects getting federal funds or crossing federal lands, which can trigger requirements under as many as 15 federal statutes, including the Clean Air Act, Safe Drinking Water Act, and Endangered Species Act. Getting bipartisan agreement to streamline those requirements isn’t likely anytime soon, said Sen. John Barrasso (R-Wyo.), who has worked to shepherd legislation chipping away at some regulatory hurdles.

Barrasso’s USE IT Act, signed by President Donald Trump in 2020, included narrow Clean Air Act tweaks to push EPA to support technologies pulling carbon dioxide from ambient air, and made some carbon capture infrastructure, such as pipelines, eligible for streamlined permitting.

But Biden’s guidance failed to “put forth any real solutions,” Barrasso said in an e-mailed statement. If CEQ fails “to provide a reasonable roadmap” for faster deployment, “I believe Congress should look at additional opportunities to streamline permitting and speed up deployment of this critical technology.”

Outdated Requirements

The current regulatory framework is manageable for many carbon capture projects underway, Fry said. But many environmental requirements are outdated “and didn’t contemplate” the accelerated deployment now being considered, he said.

“Without wholesale rewrites, the opportunities to adjust things in a way that would be more efficient and drive projects at a more reasonable pace” could be lost, he said.

Carbon capture backers say there’s been some progress in states now stepping in to try to fast-track regulatory approvals: states including Wyoming, North Dakota, and Louisiana have taken the reins on some regulatory reviews.

Administration officials say Biden has shown his commitment by backing more generous tax incentives and signing the 2021 infrastructure package, the single largest investment ever of $10 billion in carbon management and carbon capture.

Those efforts still aren’t likely to be enough to construct the 1,000-plus carbon capture projects envisioned to meet U.S. climate goals. Accelerating permitting and even more incentives are needed—including giving projects until the end of 2030 to break ground and still qualify for tax credits—according to the Carbon Capture Coalition, representing industry, labor, and several environmental groups

Beyond its guidance, CEQ is also reworking NEPA requirements, though it’s restoring Obama-era requirements to have agencies consider projects’ indirect and cumulative effects—which carbon capture backers say could slow approvals.

Daunting Review Process

U.S. carbon capture projects have grown rapidly over the last decade to about 45 projects in operation or in the pipeline and 5,200 miles of pipelines—more than any other nation.

But Brittany Bolen, a former EPA policy chief and senior counsel for the Trump administration, said regulatory reviews for such projects are time-consuming. Navigating reviews to inject carbon dioxide into underground wells, which require EPA approving Class VI well requirements, can take four to six years.

Some states have responded by seeking “primacy” which could speed up reviews, said Bolen, attorney and senior policy adviser in Sidley Austin LLP’s environmental and government strategies practices.

Multiple permits or reviews could be required for individual projects, Bolen said at a March 9 Sidley forum on carbon capture. They can include Clean Water Act permits for discharges to surface water; Title V operating permits under the Clean Air Act; new source review pre-construction permits for new or modifying sources; and permits under the Safe Drinking Water Act Underground Injection Control requirements for wells.

“And this is not an exhaustive list,” Bolen said. EPA greenhouse gas reporting requirements also are “a key component” for operations seeking 45Q carbon capture tax credits to verify their stored emissions, she said."