If any U.S. company should feel safe involving itself in carbon capture and storage projects, it should be Kinder Morgan.
The Houston-based pipeline giant already transports 1.3 billion cubic feet of carbon dioxide a day through 1,300 miles of pipelines that comprise the country’s largest such network. The CO2 is used to pump oil out of the ground in a process known as enhanced oil recovery.
Yet, CEO Rich Kinder says he wouldn’t touch a CCS project right now, not until the government answers some serious questions about legal liability if something goes wrong.
“I would be remiss and probably hung out to dry if I said I’m taking on that,” Kinder told the Reuters Global Energy Summit in Houston. "This is a plaintiff lawyer’s dream."
Questions about who would be legally responsible for damage that might result from carbon stored underground are among the major hurdles that CCS faces, in addition to its high cost and the long timeline for getting the still-developing technology into large-scale operation.
The technology has powerful backers in Washington. President Obama and Energy Secretary Steven Chu tout CCS as a key strategy for cutting U.S. carbon emissions. The Waxman-Markey climate bill racing through the U.S. House includes $10 billion for CCS development, and the stimulus package apportioned $3.4 billion for CCS demonstration projects. The Intergovernmental Panel on Climate Change estimates that CCS could cover 15% to 55% of the carbon dioxide reductions needed to prevent dangerous climate change.
But Kinder points out that even if governments put a high enough price on carbon emissions to make CCS a financially attractive option, companies would still steer clear until major legal issues are resolved:
Kinder Morgan is not “willing to sign up for guaranteeing to the U.S. government or to whomever that it will forever stay in the ground in this salt dome in Louisiana – and if it doesn’t – just come back and see ole Kinder Morgan and we’ll make you good for it."
"We’re not going to do that, and no right-thinking person would."
There are several legal liability questions surrounding CCS:
-What if the stored carbon affects drinking water by making it acidic or bringing metals into the groundwater supply?
-Who should be responsible for damages to the ecosystem is the carbon is released?
-Who pays if the pressure from the carbon underground increases a tendency towards earthquakes in the area?
-What happens if the carbon underground travels to a site owned by someone else?
-If eventually a price is placed on carbon emitted to the atmosphere, who will pay if carbon stored underground leaks out, contributing to climate change?
-Is a CCS operator still liable for any damages that occur 10 years or 50 years after a site is closed?
Tim Bradley, president of Kinder Morgan’s carbon dioxide group, say ownership issues also need to be settled before businesses will embrace CCS projects.
For example, he says, 100 square miles are necessary to contain the carbon dioxide emissions from an average-sized power plant. A lot of people own the tracts of land above that storage space.
“So who owns the porous space? [The tiny pockets below ground where the CO2 is stored, shown in the photo] And what if we can’t get all of them in the area to agree? Do we abandon the project and look elsewhere? Our point is that it’s hard to be a leader and jump into this opportunity until that opportunity is better defined.”
Then there is the question of what happens when a site is full. The EPA has proposed that the operator continue to monitor it for 50 years.
"That seems pretty daunting – to take a leadership role in CCS if the activity is going on for a particular period of time and then you have to monitor it for 50 years in case anything bad happens – not that we think anything bad will,” Bradley said.
Regulatory oversight is another issue. The EPA drafted regulations last year for carbon stored underground using its authority under the Safe Drinking Water Act, but those rules, which have not been finalized, would only address sources of drinking water. The other long-term liability issues won’t be addressed by the EPA under current statutes.
Eminent domain and regulatory oversight are also important issues, Bradley points out:
“Should CCS operators or the state have the right of eminent domain to use the porous space? Or should surface owners trump that? What is the right of the pipeline constructor and the owner to condemn the land and install a pipeline on that land? Right now, natural gas owners have the Federal Energy Regulatory Commission to get pipelines for the good of the public. We don’t have that.”
Lacking federal direction, some states are taking it upon themselves to create their own CCS liability regulations.
Montana decided last month that the state could take over carbon storage sites that were 30 years old and problem-free, and it determined that ownership of underground spaces would go to the surface landowners. Officials in New Mexico, Washington and Oklahoma have also studied ways to address the issues of liability, oversight and ownership of carbon storage.
Wyoming, which set rules in 2008 clarifying that the ownership and liability for sequestered CO2, also granted ownership of the pore space to land surface owners. It put the state Department of Environmental Quality in charge of regulating long-term storage of carbon dioxide.
But Wyoming Gov. Dave Freudenthal says the federal government must address liability.
In a letter last month supporting a U.S. Senate bill proposing the development of 10 CCS demonstration projects, Freudenthal wrote to Senate Energy and Natural Resources Committee Chairman Jeff Bingaman:
"The largest impediment to progress in Wyoming is the issue of long-term
liability for the sequestered CO2.""If we are serious about CO2 sequestration in the United States, we need to marry scientific understanding with rigorous financial analysis to establish the actual risk profile of CO2 in the ground. This is the pathway to a rational and efficient long-term insurance solution."
See also:
Exuberance over Carbon Capture and Storage Ignores Time Frame for Deployment
In Montana Carbon Sequestration Fight, CO2 is Not Coca Cola
Are Environmentalists and the Fossil Fuel Industry Calling a Truce?
Climate Bill Earmarks $500M for Clean Coal ‘Admin Expenses’
