Carbon Capture And Sequestration (CCS): A Pipedream Or A Real Business Opportunity For Gas Pipeline Developers?

By Bruce E. Warner and Mark S. Shaffer | May 2009 Vol. 236 No. 5

A power plant's emissions.

Currently, proposals to reduce greenhouse gas (GHG) emissions into the atmosphere are central to both federal and state legislative and policy initiatives. Many of these proposals cite CCS as a promising approach for substantially abating GHG emissions.

This article attempts to address CCS issues at a high level. It looks at the problems and the potential for successfully deploying CCS systems.

Policy and Politics: The capture of CO2 at its source and its transportation to storage for indefinite containment (sequestration) or for use in other applications such as enhanced oil recovery (EOR) attracts many advocates of reducing carbon emissions because large amounts of CO2 emitted from electric power generation and industrial burning of fossil fuels are suitable for either containment or use in EOR. A recent publication by the Congressional Research Service noted that theoretically, carbon-capture technology could remove as much as 80-90% of CO2 emitted from electric power plants and other industrial sources.

However, as the same publication notes, because of environmental, technological and cost issues related to capturing CO2, analysts disagree on when CSS processes might be widely available in the U.S. at competitive levels with other currently available technologies for generating electricity. Public policy issues with respect to the regulatory treatment of CO2 as a commodity and whether transmission facilities should be regulated also will decide when such facilities realistically can be deployed.

While contemplated policies such as cap-and-trade programs that impose costs on generators for CO2 emissions would favor CCS projects, wide-spread deployment of CCS facilities will depend on many unpredictable factors that will evolve as the public policy debate continues in the context of impending executive and legislative initiatives.

The Obama administration strongly endorses reducing GHG emissions. Its 2010 budget proposal calls for a carbon cap-and-trade (auction) program that will begin in 2011. House Energy & Commerce Committee Chairman Henry Waxman (D-CA) has expressed his intent to have a GHG bill ready by the end of May. While its contours are yet to be determined, most legislators and environmental interests endorse a cap-and-trade approach.

Some interests, including major oil companies, support a carbon tax approach. Either approach will result in a price on carbon that will affect the cost of commodities such as gas, plastics and electricity. Regardless of which approach ultimately is adopted with respect to carbon reduction, the development of a CCS infrastructure is a primary component of plans to reduce GHG emissions and presents an opportunity that deserves serious attention by pipeline developers.

The Basics
While the immediate potential for CCS projects is unclear, the authors believe that the advent of the public policy debate related to budget and GHG legislative proposals should encourage pipeline developers to seriously explore the development of an interstate CCS pipeline transportation market. Pipelines have the skills and resources needed to provide this infrastructure. Within the United States, somewhere between 3,000-4,000 miles of CCS pipelines have been developed over the past 30 years to transport CO2 for EOR. Given the emerging energy policies of the Obama administration, there is no doubt that a much expanded role for CCS pipelines seems probable.