New Report analyzes California Carbon Capture and Storage Protocol
24th May 2019
The Global CCS Institute has launched a report analyzing California’s recently passed Carbon Capture and Storage Protocol (the Protocol). The report provides a summary of the regulation for project developers as well as policymakers in other states and countries, given its global applicability. While comparing it to other relevant regulations – including the federal carbon capture tax credit also known as 45Q – the report seeks to raise awareness for the opportunities created through the Protocol and to help project developers and policymakers understand the incentive structure and requirements alongside the environmental safeguards.
The Protocol, which was passed as an amendment to California’s Low Carbon Fuel Standard (LCFS), incentivizes carbon capture and storage (CCS) projects that reduce the lifecycle emissions from bioethanol, hydrogen, and crude, provided the fuel is sold into the California market. The Protocol, in a pioneering move, also incentivizes direct air capture projects globally, provided they adhere to the regulation’s standards. The Institute’s report comes on the heels of an announcement that Oxy Low Carbon Ventures and Carbon Engineering will begin engineering the world’s largest direct air capture plant which will also be designed to be eligible for both California’s CCS LCFS credits and US federal 45Q tax credits.
“The Global CCS Institute welcomes the amendment of the LCFS with a CCS Protocol. This relatively recent development demonstrates that governments are beginning to recognize that in light of ambitious climate goals, full decarbonization is close to impossible without large-scale deployment of carbon capture and storage,” said Guloren Turan, General Manager, Advocacy and Communications, at the Global CCS Institute.
The Institute’s report reviews the Protocol which was passed in September 2018 with broad support from a diverse set of stakeholders including environmental and climate advocates, as well as industry, and went into effect in January 2019. The LCFS aims to reduce the carbon intensity of the State’s transport fuel mix by 20 per cent by 2030, relative to 2010 levels.
“Fighting climate change to keep global temperatures from increasing beyond 1.5 degrees Celsius requires immediate and unprecedented action. California pioneered the first Low Carbon Fuel Standard in 2007. With a Protocol for carbon capture and storage now in place, California will continue to drive down its emissions, accelerate investments in breakthrough technology, and create opportunities for a new kind of climate entrepreneur. I look forward to working with my colleagues in Congress to spur innovation in clean energy development though carbon capture technology,” said Congressman Scott Peters (D-CA) about the regulation.
Currently trading at roughly $180 t/CO2, the LCFS provides one of the highest values on carbon globally. For US-based projects it can also be stacked with a CCS-specific federal tax credit known as 45Q, which will ramp up to $50 t/CO2 for geologic sequestration and $35 t/CO2 for CO2 stored via enhanced oil recovery, combining it to the highest CCS incentive globally.
“When California’s Carbon Capture and Storage Protocol took effect in January, it was a major step in ensuring that investment in CCS can be a viable tool in reducing greenhouse gas emissions from the state’s transportation sector,” said Deepika Nagabhushan, Program Director, Decarbonized Fossil Energy with Clean Air Task Force, a major US ENGO involved with advocating technological, regulatory and legislative pathways for addressing global climate change.
“The Institute’s report will help guide businesses to capitalize on the incentives at both the federal and state levels in the near term in developing CCS projects that have the effect of reducing California’s transportation CO2 emissions,” said Ms. Nagabhushan.
The report provides a concise summary of the most important details of the regulation while also offering insight into the interaction of states and federal regulation. For example, it describes how to stack the credits, compares the LCFS and 45Q eligibility, and lays out the criteria projects need to fulfill to qualify for both incentives. It also details storage, MRV, and liability requirements offering a comprehensive yet accessible analysis of the regulation.
“The direct air capture provisions also highlight that climate change is a transnational problem warranting global solutions,” highlights Ms. Turan.
“California has set itself an ambitious and laudable goal of becoming carbon neutral by 2045. To achieve this goal, the state will first have to double down on the carbon solutions that it has already championed, such as efficiency, renewable energy and clean vehicles. But it must also without a doubt aggressively pursue a broader suite of technologies and tools to curb its carbon emissions, and even remove them from the atmosphere. The latest changes to the LCFS regulation enabling CCS to participate in the program represent a visionary move on the state’s part, and a landmark in the quest to deploy such technologies more widely,” says George Peridas, Director, Carbon Management Partnerships, Lawrence Livermore National Laboratory.