Updated: Carbon Capture and Storage and The American Clean Energy and Security Act

The American Clean Energy and Security Act of 2009 (ACESA) provides a number of important provisions that will facilitate the demonstration and deployment of carbon dioxide capture and storage (CCS) technologies. Below is a brief overview of the most important of these provisions.

Coal use is responsible for over 40 percent of global carbon dioxide emissions, and significant, deliberate action will be required to reduce these emissions. The ACESA lays a strong foundation for moving CCS technology to scale by reducing costs and providing funding for demonstrations.

The American Clean Energy and Security Act of 2009 has the following strengths:

• Develops a comprehensive national strategy for deployment. The bill requires Federal agencies, with EPA leadership, to develop a comprehensive strategy for commercial deployment and deliver a report to Congress within one year. The report will identify barriers and regulatory challenges and will recommend regulation, legislation, and other actions to facilitate CCS deployment. (Sec. 111)

• Establishes regulations for geologic storage. Amends the Clean Air Act and Safe Drinking Water Act to establish regulations for geologic storage. Requires EPA to finalize the rules for carbon dioxide geologic sequestration wells, including financial responsibility requirements, within one year. The bill also requires EPA to identify a coordinated process for certifying and permitting geologic storage sites within two years. (Sec. 813)

• Requires emissions reporting for geologic storage sites. Geologic storage sites are regulated sources under the cap and trade program. Mandatory emissions reporting is required beginning in 2011. (Sec. 700 and Sec. 722)

• Requires a formal report and evaluation of regulatory framework every three years. The bill requires EPA to formally report data on geologic storage sites, evaluate the performance of the geologic storage sites, and reassess the regulatory framework for geologic storage sites to Congress once every three years. (Sec. 813)

• Establishes a task force to design legal frameworks. The bill establishes a task force to provide recommendations to Congress within two years that include a study of the ability of existing laws and insurance mechanisms to manage risks associated with CCS, the implications and considerations for different models for liability assumption, and subsurface property rights. (Sec. 113)

• Promotes R&D and early deployment of CCS. The bill establishes a Carbon Storage Research Corporation to be run by the Electric Power Research Institute (as proposed in HR 1689, introduced by Rep. Boucher). The Corporation would use funds collected through a feed-in tariff to issue grants and financial assistance for commercial-scale CCS demonstrations. Funding is capped at $1.1B per year for no more than 10 years. The bill also includes provisions for governance, government oversight, information sharing and intellectual property for both the Corporation and projects it would undertake. (Sec.114)

• Provides bonus allowances for stored carbon dioxide. The bill provides bonus allowances to the first facilities that implement capture and secure geologic storage that results in a 50 percent reduction in annual carbon dioxide emissions. Payment is available for electric generating units fired by coal or petroleum coke at least 50 percent of the time and with a nameplate capacity of 200MW or greater, and to industrial sources that emit more than 50,000 tonnes of carbon dioxide per year and do not produce liquid transportation fuel. Funds will be divided into tranches with the payment on sliding scales with higher payments for greater percentage capture. This program provides a mechanism for offsetting the technical risk assumed by early-adopters and a financial incentive to capture and store greater percentages of carbon dioxide than is required under the performance standards.

Specifics of the bonus allowance payments are outlined below (Sec. 786).

Phase I (first 6 GW of CCS equipped plants)

• Units achieving capture and storage of 85% or more of the carbon dioxide that would have otherwise been emitted would receive $90 bonus allowance value for each tonne of CO2 captured and sequestered
• Bonus allowance payment for lower percentage capture will be determined by the EPA administrator, with a minimum payment of $50 per tonne of CO2 captured and sequestered for a 50 percent reduction in carbon dioxide
• An extra $10 per tonne bonus allowance is given for early-adopters, or those that begin operating at a 50% capture and storage rate before 2017
• A lower but undefined bonus allowance will be given to projects that combine geologic storage with enhanced oil recovery

Phase II (6-72GW)

• Allowances are distributed through an annual reverse auction (unless otherwise decided by the EPA) with bids based on the desired level of incentive for 10 years of geologic storage
• Allowances will be divided into a series of 6 GW tranches

• Value of allowances will be on a sliding scale with higher values for greater percentage capture. Precise values will be determined by the administrator and re-evaluated every 8 years

• Sets performance standards for new coal-fired power plants. The bill amends the Clean Air Act to require new coal-fired power plants to meet performance standards. The EPA Administrator must review the standards and may tighten them depending on the performance of commercially-available technology. (Sec. 812)

  • Standards apply to all plants permitted after January 1, 2009 where 30% or more of their fuel is coal and/or petroleum coke
  • Plants permitted from 2009-2020 must achieve a 50 percent reduction in annual emissions by 2025 or earlier (depending on the level of commercial deployment of CCS technology)
  • Plants permitted from 2020 onward must achieve a 65 percent reduction in annual emissions from the unit

• Allows for retrofits of existing plants to apply for bonus allowances. The bill provides criteria for retrofit facilities and specifies that such facilities should apply CCS to at least 200 MW with a 50-65 percent annual reduction in carbon dioxide emissions from the portion of the unit that has been retrofitted (as proposed in the Space amendment).