Insights and Commentaries

CCS Commercial and Regulatory Frameworks

Lessons learned from the CCS experience in the United States

30th April 2024

The Global CCS Institute hosted a webinar featuring carbon capture and storage (CCS) experts from the Institute, the US Government, and academia on 16 May 2023. The following Insight summarizes the information provided in the webinar (watch here).

Key Insights

• The US has a robust history of pioneering CCS technologies for climate mitigation and hosts the largest number of operational, developing, and under-construction CCS facilities in the world.
• US policies bolster CCS deployment by supporting the industry's technical, financial, regulatory, capacity-building, equitable development, and environmental justice needs.
• The policy, legal, and regulatory environment for CCS comprises a complex combination of local, state, federal, and international laws and agreements, resulting in a need for clarity to enable CCS developers and investors to proceed with confidence.
• US domestic policy development in carbon management contributes to and is reinforced by related international policies.
• CCS projects may involve policy and regulatory considerations from multiple federal agencies, including the US Environmental Protection Agency (EPA), US Department of Transportation (DOT), Bureau of Ocean Energy Management (BOEM), and offices within the US Department of Energy (DOE).
• Federal and state efforts to synchronize policies and expedite CCS deployment include granting states the authority to regulate intrastate CO₂ pipeline siting and storage permitting, where state standards must meet or exceed federal standards.
• The US DOE provides online resources to support community engagement, dialogue, education, and capacity-building.
• The US CCS industry has expanded research, development, and deployment following the passage of several historic federal laws: Utilizing Significant Emissions with Innovative Technologies Act (USE IT, 2020), Bipartisan Infrastructure Law (BIL, 2021), and Inflation Reduction Act (IRA,2022). BIL and IRA provide a combined $382 billion toward carbon management, including funding and incentives for CCS project development.
• In response to the 2022 increase in the 45Q tax incentives, the US CCS industry is rapidly expanding and primed for cost reduction, with 73 new facilities announced in 2023, representing a capture capacity of 312 Mt.
• Forward-looking recommendations emphasize the need for enhanced policy clarity and improved community engagement practices to effectively socialize all stages of CCS.

Introduction

The United States (US) has over 50 years of experience in research and deployment of carbon capture and storage (CCS). The growing urgency in addressing global climate change has increased attention on CCS and spurred policy developments that propelled growth in CCS deployment in the US. Over half of the world’s CCS projects are in the US, due in part to significant government funding dedicated to building a clean energy economy. The Inflation Reduction Act (IRA) of 2022 alone contributes $369 billion toward a reduced-carbon economy.[1][2] As carbon capture technologies advance the focus is turning to CO₂ transport pipelines and Class VI well permits for CO₂ storage.

On May 16, 2023, the Institute hosted a webinar to discuss the US policy, regulatory, and legislative frameworks contributing to the country’s rapid growth in all stages of CCS development.

The webinar's presenters included Stephanie Hutson of the US Department of Energy’s (DOE) office of Fossil Energy and Carbon Management (FECM), Dr Sallie Greenberg of SG Consulting, and Ruth Ivory-Moore and Errol Pinto of the Global CCS Institute. The panel discussed the current status and evolution of CCS in the US, highlighting policies and regulations that promote advancements in both industry and communities while identifying key areas for continued progress.

CCS evolution and current status

The US has been using carbon capture technology to separate gases since the 1920s[3] and has experience with commercial-scale underground injection of carbon dioxide (CO₂) since the 1970s.[4] In the last decade, increasing US ambition to address climate change has resulted in an increased focus on carbon management in multiple federal agencies, including several within the US DOE such as the Advanced Research Projects Agency-Energy (ARPA-E), the Office of Science, the Loan Programs Office (LPO), the office of Energy Efficiency and Renewable Energy (EERE), the Office of Clean Energy Demonstrations (OCED), and the office of Fossil Energy and Carbon Management (FECM).[5] The FECM strategic vision is designed to advance the evolution of CCS in the US to support the nation’s goals of 50% emission reductions from 2005 levels by 2030, CO₂ emission-free power by 2035, and a net-zero emissions economy by 2050, which are driving CCS-supportive policies (Figure 1).

Figure 1: Hutson FECM Presentation, Strategic Vision [6]

As the global leader in CCS projects, the US has extensive experience with CCS research, development, and demonstration (RD&D), CO₂ capture, CO₂ transport by pipelines, and geologic storage. Over the past 15 years, the US CCS industry has evolved from first- and second-generation CCS technologies in 2008 to scaled-up testing and FEED studies, and finally to exploring carbon removal technologies (Figure 2).  The country also has 8,000 km of operational CO₂ pipelines. As a result, the DOE estimates that the US has captured approximately 15.57 million metric tons (MMT) of CO₂ as of April 2023.

Figure 2: Hutson FECM Presentation, Evolution of Carbon Capture at DOE [7]

According to Dr. Sallie Greenberg, the evolution of CCS policies could be traced back to the Clean Air Act (CAA) of 1970 that first codified air quality management.[8] The Utilizing Significant Emissions with Innovative Technologies Act of 2020 (USE IT), amended the CAA to mark the first introduction of the US Environmental Protection Agency’s (EPA) support for CCS and Direct Air Capture (DAC). [9] Specifically, the legislation streamlined the CO₂ pipeline permitting review process, initiated guidance to expedite CCS development by the Council on Environmental Quality (CEQ), and established task forces to incorporate stakeholder input into updated guidance.

The US has developed a comprehensive policy, legal, and regulatory (PLR) framework that provides support to accelerate all stages of domestic CCS development and deployment. The framework includes incentives and regulations designed to facilitate capture, transport, and storage processes through the Bipartisan Infrastructure Law (BIL) of 2021 and the IRA of the following year (see details below, Policy and Regulatory section). Additionally, in acknowledgement of the global cooperation needed to achieve the climate targets of the Paris Agreement, the DOE’s international engagement through multilateral and bilateral efforts to accelerate the scale-up of carbon management technology include the Carbon Management Challenge,[10] the Africa Center of Excellence for CM Technology and Innovation,[11] the collaborative agreement for Decarbonizing Cement with CCUS through the Clean Energy Ministerial (CEM),[12] and the Carbon Dioxide Reduction (CDR) launchpad.[13]

Policy and regulatory environment

Incentives and Support

The main support for CCS projects is provided through funding and incentives put forward by the BIL of 2021 and the IRA of 2022 (Figure 3). The BIL dedicates $12 billion to carbon management funding over 5 years, including over $3.5 billion for CCS demonstration and pilot projects at point sources through the OCED, $2.2 billion for CO₂ transportation infrastructure, over $2.5 billion for CO₂ storage validation and testing, $310 million for the Carbon Utilization Program, and $3.6 billion for DAC Hubs.[14]

Figure 3: Hutson FECM Presentation, BIL Funding for CCUS [15]

The IRA includes specific funding mechanisms to incentivize CCS development, including increasing the tax credit value for CCS through the 45Q provision and extending the start-of-construction deadline to 1 January 2033 to enable new projects to access 45Q funds (Figures 4 and 5). The IRA reduces the capacity threshold for eligible projects, authorizes credits to be claimed for 12 years after initiating operations, and allows the transfer of 45Q tax credits in exchange for non-taxable cash payments.[16] Furthermore, the IRA provides additional funding to the EPA to streamline the processing of applications for Class VI well permits, which govern the injection of CO₂ for underground storage in accordance with the Underground Injection Control (UIC) program that was implemented in 1980 under the Safe Water Drinking Act (SDWA) of 1974. [17] In late 2023, the EPA allocated $48 million of the IRA Class VI funds toward grants for states and tribes to support their applications for primary enforcement authority, known as primacy, which allows states and tribes to process their own Class VI well applications. As of this writing, the EPA has granted primacy to North Dakota, Wyoming, and Louisiana. Additionally, the LPO provides over $100 billion in loan guarantees for qualifying CCS projects.

Figure 4: Greenburg Presentation, 45Q Evolution [18]

Figure 5: Greenberg Presentation, Inflation Reduction Act [19]

Regulations

The US Department of Transportation's Pipeline and Hazardous Materials Safety Administration (PHMSA) oversees CO₂ pipeline safety. The Department of the Interior (DOI) regulates storage on federal lands, and the EPA's (UIC) program governs CO₂ injection.

Transporting CO₂ from the capture site to the storage location is primarily done via pipelines. PHMSA exercises statutory authority over the safety of CO₂ pipelines, overseeing their construction, operation, maintenance, and coordinating emergency response efforts. In February 2024, PHMSA issued a notice proposing updates to its requirements aimed at bolstering the safety of CO₂ pipelines, particularly focusing on aspects such as emergency preparedness and response.

PHMSA rules also allow states to seek an annual certification to oversee intrastate CO₂ pipelines, provided that the states’ standards either meet or surpass federal standards. PHMSA investigates concerns and issues corrective actions. State laws dictate the siting of pipelines on non-federal land, and developers must acquire a right of way (ROW) from landowners in the form of purchase easements. For pipelines needing to cross federal land, the Bureau of Land Management (BOEM) can grant a ROW under the Mineral Leasing Act (MLA) of 1920. For pipeline projects using federal funding, the National Environmental Protection Act (NEPA) requires developers to submit an environmental impact statement.

After transport through pipelines, the CO₂ designated for storage in Class VI wells falls under the purview of the EPA’s UIC program rules. With a 13-year history, the UIC program covers various classes of wells. However, Class VI wells adhere to unique criteria that are specifically designed to address the long-term impacts associated with CO₂ injection and storage (Figure 6). The US Energy Information Administration (EIA) reports over 900,000 existing oil and gas production wells in the US, onshore and offshore.[20] Repurposing these wells for CO₂ requires the same permitting process as for new wells.

Figure 6: Pinto Presentation, UIC Requirements for Class VI wells [21]

States have the option to pursue primary enforcement authority (primacy) for the UIC program to regulate injection wells within their borders. There are clear benefits of state primacy, including the fact that states and the industries within them have the most comprehensive understanding and experience of their local geology. Several states are pursuing Class VI primacy and advancing CCS-related legislation (Figure 7).

Figure 7: Greenberg Presentation, EPA UIC Class VI Program, State Primacy, and CCS Legislation [22]

Education and capacity building

The DOE is committed to “transparency, integrity, and empathy” [23] in all its work. Therefore, DOE-funded projects must address equity issues, environmental justice, and include meaningful public participation. In line with this commitment, the DOE’s Office of Legacy Management is dedicated to providing “accurate and timely information to communities to protect human health and the environment”. [24] Similarly, the office of FECM’s strategic vision prioritizes advancing justice, labor, and engagement (Figure 1). To further support this priority and bridge the gap between DOE and the public, FECM provides resources for engagement, dialogue, education, and capacity-building (Figure 8).[25] [26] [27] [28]

Figure 8: Hutson Presentation, FECM Resources and Engagement [29]

Policy Impacts

The US has made significant progress in overcoming technical and non-technical barriers to CCS deployment. This progress is in part due to federal policies established between 2020 and 2023. Figures 9, 10, 11 show the growth of CCS projects from 2020 and 2023,[30] which is linked to laws passed during the same period, such as USE IT, BIL, and IRA. These policies are enabling the US to fulfill the major recommendations outlined in the National Petroleum Council’s (NPC) 2019 study.[31]This study detailed the necessary support from the US government, including sufficient incentives, reduced uncertainty, and a reliable regulatory environment, to drive confident industrial investment and effectively tackle the dual challenge of meeting energy needs while mitigating climate change.

Figure 9: Greenberg Presentation, Impacts of 45Q & Policies on CCS Project Development [32]

Figure 10: Greenberg Presentation, CCS Project Map from 2020 [33]

Figure 11: Greenberg Presentation, CCS Project Map from 2023 [34]

Challenges

Federal policy can have an outsized impact on emerging sectors, like CCS, compared with mature ones. Accordingly, it is imperative to establish a clear policy, legal, and regulatory framework that navigates the intersection of regulation and legislation. For example, the 45Q tax credits link new tax incentives to existing UIC regulations. Similarly, intersecting or competing regulations at the state, federal, and international levels, including multinational commitments, national net-zero targets, and state regulatory initiatives like Class VI primacy, must be clearly defined to build private sector confidence and investment momentum.

While passing Class VI regulatory authority to states through primacy offers the advantage of potentially faster permit processing within individual states, these benefits are moderated by the unique challenges arising from the complexity of each project. Further clarity is needed in regulatory coverage, particularly concerning CO₂ transportation, and monitoring, reporting, and verification (MRV) for Class VI CO₂ storage permitting, as well as issues related to pore-space and mineral rights.

While current PLR frameworks governing CO₂ transport and storage help to mitigate uncertainty and project risks, additional rules are needed to clarify and streamline Class VI permitting, state-primacy applications, and pore-space ownership.

Conclusion: Building on successes and tackling challenges

Given the expected surge in carbon capture capacity in the coming years, collaboration and coordination across federal government agencies and states are important. The DOE anticipates US CCS-supportive policies to result in a 3 to 4-fold increase from the current capacity, the establishment of 20-40 hubs with over 200 gigatons of storage capacity, and 200 Class VI storage wells capable of injecting 100 Mtpa. FECM tracks CCS developments as well as progress with DOE initiatives and R&D activities (Figure 8).

Because the enhanced 45Q tax incentive was established through congressional action, it is expected to endure changes in US administrations and continue to drive CCS. A secure 45Q tax incentive combined with regulatory advancements and ongoing development and deployment efforts should reduce project costs. CCS acceleration is most effective when the PLR framework aligns with states' objectives. A continued evolution of the CCS policy landscape is expected, as current policies are implemented and additional regulations are developed, including licensing for offshore CO₂ storage.

To accelerate CCS deployment, pipeline networks need to be expanded. A 2021 Princeton study projects the need for 66,000 to 100,000 km of CO₂ pipelines in the US to reach net-zero targets by 2050, with the anticipated cost of approximately $170 billion for new pipeline construction and converting or replacing existing infrastructure.[35] To address public resistance to pipelines, engagement practices need to be refined, including identifying and working with trusted messengers within communities. Due diligence efforts to understand communities, including through research on their history, concerns, and unique needs, will be helpful. Early and proactive community engagement by developers and operators is recommended, including dissemination of project information and information on CO₂ in accessible formats, such as factsheets. Additionally, while positive shifts in public perception have been noted, there is a need to clearly distinguish CCS as a climate mitigation solution rather than a means to perpetuate the fossil fuel industry.

The lead author of this piece is Tara Illgner, Public Affairs Lead with the Global CCS Institute. Valuable contributions were provided by the Institute's Ellina Levina (Head of Public Affairs), Joey Minervini (Americas Public Affairs Manager), Wendy Wells (Editorial Manager) and Jessica Oglesby (Head of Events and Communications).

[1] The White House. (2023). Inflation Reduction Act Guidebook | Clean Energy | The White House. https://www.whitehouse.gov/cleanenergy/inflation-reduction-act-guidebook/

[2] The U.S. Inflation Reduction Act of 2022 - Global CCS Institute. (2022, August 26). Global CCS Institute. https://www.globalccsinstitute.com/news-media/latest-news/ira2022/

[3] Carbon, Capture, and Storage: History, current state, and Obstacles for the Future (Part 1) | Environmental Law Institute. (2021). https://eli.org/vibrant-environment-blog/carbon-capture-and-storage-history-current-state-and-obstacles-future-part

[4] You asked: Does carbon capture technology actually work? (2019). State of the Planet. https://news.climate.columbia.edu/2019/09/27/carbon-capture-technology/#:~:text=The%20first%20carbon%20capture%20plant,Sleipner%2C%20in%20the%20North%20Sea.

[5] DOE’s Office of Fossil Energy and Carbon Management makes historic shift to center work on climate change. (2021). Energy.gov. https://www.energy.gov/fecm/articles/does-office-fossil-energy-and-carbon-management-makes-historic-shift-center-work#:~:text=To%20respond%20to%20the%20climate,a%20historical%20shift%20in%20focus.

[6] Strategic Vision: The role of FECM in achieving Net-Zero Greenhouse Gas emissions. (2023). Energy.gov. https://www.energy.gov/fecm/strategic-vision-role-fecm-achieving-net-zero-greenhouse-gas-emissions

[7] Global CCS Institute, Hutson, S., Greenberg, S., Ivory-Moore, R., Pinto, E., Global CCS institute, Levina, E., Greenberg, S., & Greenberg, S. E. (2023). CCS Commercial and Regulatory Frameworks: Lessons learned from the CCS experience in the United States. https://www.globalccsinstitute.com/wp-content/uploads/2023/05/Webinar-Lessons-Learned-from-the-CCS-Experience-in-the-US-GCCSI-003.pdf

[8] Evolution of the Clean Air Act | US EPA. (2023). US EPA. https://www.epa.gov/clean-air-act-overview/evolution-clean-air-act#:~:text=The%20enactment%20of%20the%20Clean,industrial)%20sources%20and%20mobile%20sources.

[9] President Trump Signs Barrasso’s Bipartisan Carbon Capture Bill into Law. (2020). U.S. Senate Committee on Environment and Public Works. https://www.epw.senate.gov/public/index.cfm/2020/12/president-trump-signs-barrasso-s-bipartisan-carbon-capture-bill-into-law

[10] Carbon Management Challenge (CMC). (2023). https://www.carbonmanagementchallenge.org/cmc/

[11] Africa Centre of Excellence for Carbon Management Technology and Innovation - COP 27. (n.d.). Energy.gov. https://www.energy.gov/fecm/articles/africa-centre-excellence-carbon-management-technology-and-innovation-cop-27

[12]  Collaboration to advance CCUS in the cement sector. (2022). Clean Energy Ministerial. https://www.cleanenergyministerial.org/collaboration-to-advance-ccus-in-the-cement-sector/#:~:text=Pittsburgh%2C%20USA%2C%2023%20September%202022,%2C%20utilisation%20and%20storage%20(CCUS)

[13] Ackiewicz, M. & U.S. Department of Energy. (2023). Updates from CDR Mission. https://www.energy.gov/sites/default/files/2023-07/10.%20CSLF%20Technical%20Group%20Meeting%202023_MI%20CDR_Ackiewicz.pdf

[14] US Department of Energy. (2022). Carbon Management Funding. In Bipartisan Infrastructure Law. https://www.energy.gov/sites/default/files/2022-09/FECM%20Infrastructure%20Factsheet-revised%209-27-22.pdf

[15] Global CCS Institute, Hutson, S., Greenberg, S., Ivory-Moore, R., Pinto, E., Global CCS institute, Levina, E., Greenberg, S., & Greenberg, S. E. (2023). CCS Commercial and Regulatory Frameworks: Lessons learned from the CCS experience in the United States. https://www.globalccsinstitute.com/wp-content/uploads/2023/05/Webinar-Lessons-Learned-from-the-CCS-Experience-in-the-US-GCCSI-003.pdf

[16] Inflation Reduction Act: a historic investment in climate, communities, and jobs. (2022). https://www.energy.gov/sites/default/files/2023-03/IRA-and-Carbon-Management-Opportunities-in-Tribal-Nations.pdf

[17] 40 CFR Part 146 -- Underground Injection Control Program: Criteria and standards. (2024). https://www.ecfr.gov/current/title-40/part-146

[18] Global CCS Institute, Hutson, S., Greenberg, S., Ivory-Moore, R., Pinto, E., Global CCS institute, Levina, E., Greenberg, S., & Greenberg, S. E. (2023). CCS Commercial and Regulatory Frameworks: Lessons learned from the CCS experience in the United States. https://www.globalccsinstitute.com/wp-content/uploads/2023/05/Webinar-Lessons-Learned-from-the-CCS-Experience-in-the-US-GCCSI-00.pdf

[19]  Ibid.

[20] US oil and gas wells by production rate - U.S. Energy Information Administration (EIA). (2023). https://www.eia.gov/petroleum/wells/

[21] Global CCS Institute, Hutson, S., Greenberg, S., Ivory-Moore, R., Pinto, E., Global CCS institute, Levina, E., Greenberg, S., & Greenberg, S. E. (2023). CCS Commercial and Regulatory Frameworks: Lessons learned from the CCS experience in the United States. https://www.globalccsinstitute.com/wp-content/uploads/2023/05/Webinar-Lessons-Learned-from-the-CCS-Experience-in-the-US-GCCSI-00.pdf

[22] Ibid.

[23] Community engagement initiatives. (2024). Energy.gov. https://www.energy.gov/lm/community-engagement-initiatives

[24] Ibid.

[25] Planning for Societal Considerations & Impacts in FECM Projects. (2023). Energy.gov. https://www.energy.gov/fecm/planning-societal-considerations-impacts-fecm-projects

[26] Conference proceedings. (2023). netl.doe.gov. https://netl.doe.gov/events/conference-proceedings

[27] United States Department of Energy. (2022). Industrial Decarbonization Roadmap. In U.S. Department of Energy (DOE/EE-2635). https://www.energy.gov/sites/default/files/2022-09/Industrial%20Decarbonization%20Roadmap.pdf

[28] Carbon Matchmaker. (2024). Energy.gov. https://www.energy.gov/fecm/carbon-matchmaker

[29] Global CCS Institute, Hutson, S., Greenberg, S., Ivory-Moore, R., Pinto, E., Global CCS institute, Levina, E., Greenberg, S., & Greenberg, S. E. (2023). CCS Commercial and Regulatory Frameworks: Lessons learned from the CCS experience in the United States. https://www.globalccsinstitute.com/wp-content/uploads/2023/05/Webinar-Lessons-Learned-from-the-CCS-Experience-in-the-US-GCCSI-00.pdf

[30] Clean Air Task Force. (2022). U.S. Carbon Capture Project Map – Clean Air Task Force. https://www.catf.us/ccsmapus/

[31] Meeting the dual challenge - report downloads. (2019). https://dualchallenge.npc.org/

[32]  Global CCS Institute, Hutson, S., Greenberg, S., Ivory-Moore, R., Pinto, E., Global CCS institute, Levina, E., Greenberg, S., & Greenberg, S. E. (2023). CCS Commercial and Regulatory Frameworks: Lessons learned from the CCS experience in the United States. https://www.globalccsinstitute.com/wp-content/uploads/2023/05/Webinar-Lessons-Learned-from-the-CCS-Experience-in-the-US-GCCSI-00.pdf

[33] Ibid.

[34] Ibid.

[35] Princeton University. (2021). Net Zero America. Net Zero America. https://netzeroamerica.princeton.edu/img/Princeton%20NZA%20FINAL%20REPORT%20SUMMARY%20(29Oct2021).pdf.

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