Insights and Commentaries
CCS in the Americas: A Regional Overview
2024 CCS Policy, Legal, and Regulatory Review
4th December 2024
The Americas region has three main jurisdictions with active CCS-related developments: the United States, Canada, and Brazil. North America represents one of the most mature policy and regulatory environments for CCS, with a history of development in this area spanning two decades. The US and Canada are in a phase of ongoing improvement and adjustment to policies, legislation, and regulation to ensure investor confidence and support for large-scale deployment of the technology.
Brazil is beginning to establish itself as a leader in CCS in South America, providing a model for other nations on the continent. Brazil achieved a major milestone with the passing of the Fuels of the Future Bill 528/2020, establishing obligations for operators of geologic storage sites.
This regional analysis explores the progress and challenges in these key jurisdictions.
United States: A Pioneer in CCS Policy and Infrastructure
The United States has positioned itself as a global leader in CCS, with the technology forming a critical component of its strategy to meet its Nationally Determined Contribution (NDC) of reducing greenhouse gas (GHG) emissions by 50%-52% below 2005 levels by 2030. This ambition is supported by significant policy interventions, including:
- 45Q Tax Credits: The Inflation Reduction Act (IRA) in 2022 increased the value of tax credits for CCS projects. See the table below.
- Infrastructure Investment: The 2021 Infrastructure Investment and Jobs Act (Bipartisan Infrastructure Law, BIL) has facilitated investment in CCS through grants, loans, and guarantees.
These two laws and the promise of fiscal and public finance support have spurred a wave of new project announcements, providing the private sector with the financial certainty necessary to invest in large-scale CCS initiatives.
The US also benefits from strong institutional support and having enabled investments in the CCS industry early on, through decades of research and development efforts in CCS technologies and regional partnerships to support projects. Examples include the Regional Carbon Sequestration Partnerships (RCSPs), and the CarbonSAFE program. Future policy support has further strengthened this position and made it possible for more industry participants to invest in CCS.
Table: Increases to the 45Q tax credit from the Inflation Reduction Act of 2022
Class VI Primacy: Empowering States
The momentum in policy and regulatory development in the US has extended to the states. The Environmental Protection Agency (EPA) oversees the Underground Injection Control (UIC) program, with states having the option to apply for Class VI primacy - granting them authority to manage the program locally.
North Dakota, Wyoming, and Louisiana have already secured Class VI primacy, while states like Texas, Arizona, and West Virginia are in the application process. This state-level engagement reflects a growing recognition of the economic and environmental benefits of CCS, with many states enacting legislation to address pore space rights, permitting, CO2 pipelines, and long-term site stewardship.
Canada: Public-Private Partnerships Driving CCS Growth
Canada is another jurisdiction with support for CCS from both federal and provincial governments. In its current NDC (submitted in 2021), Canada committed to reducing GHG emissions by 40%-45% below 2005 levels by 2030. This target is underpinned by the Net-Zero Emissions Accountability Act, which requires the Canadian Government to be accountable and transparent in its commitment to achieving net-zero emissions by 2050.
Several studies indicate that while CCS has already safely stored nearly 45 million tonnes of CO2, the sector must scale significantly to reach a minimum annual storage capacity of 15 million tonnes by 2030 to meet emission reduction targets.
Federal programs supporting CCS include:
- The CCUS Investment Tax Credit (ITC).
- GHG Offset Credit System Regulations (which includes a DAC protocol).
- Investments from the Canada Infrastructure Bank for CCUS infrastructure.
- Clean Fuel Regulations.
- Canada Growth Fund.
At the provincial level, Alberta’s Technology Innovation and Emissions Reduction (TIER) system provides pricing regulation for GHGs. The regulation covers about 60% of emissions within the province. TIER-regulated facilities must keep emissions below a benchmark value and functioning like other trading systems, and generate performance credits if emissions are below the benchmark. If emissions are above the benchmark, facilities comply by generating Alberta Emissions Offsets, submitting emissions performance credits, or buying TIER fund credits that provide financial support for the TIER fund. Regulated facilities can create emissions offsets using CCS or EOR as an emissions reduction technology, which in turn can be converted to sequestration credits. Sequestration credits function like emissions performance credits and can be traded. TIERregulated facilities can capture CO2 and geologically store it onsite or send it to another facility for geological storage or EOR (Government of Alberta, 2022). Proceeds from the TIER fund also support organisations like Emissions Reduction Alberta, which in turn provides funding for CCUS technology development (Emissions Reduction Alberta, 2020)
Brazil: Establishing a CCS Framework in South America
Brazil has emerged as a leader in South America with the passage of Bill 1425/2022, establishing a comprehensive legal and regulatory framework for CCS. Brazil is the first South American nation to enact CCS-specific legislation, which could provide a replicable CCS framework for other nations in the region.
The Fuels of the Future Bill 528/2020 marked a significant milestone, introducing obligations for operators of geological storage sites. However, Brazil faces several challenges in advancing CCS:
- Financing and Fiscal Support: Limited access to tax credits and other financial incentives may hinder project development.
- CO2 Transportation Infrastructure: Developing public-private partnerships for CO2 pipelines or other transportation solutions is critical to integrating the CCS value chain.
- Public Perception: Engaging local communities to build awareness and support for CCS projects is essential to overcoming potential opposition.
Despite these challenges, Brazil’s proactive approach to establishing a regulatory framework positions it as a potential regional leader in CCS, with the capability to inspire similar developments across South America.
To read the full 2024 CCS Policy, Legal, and Regulatory Review click the link below.
Thought Leadership - CCS Policy, Legal and Regulatory Review - Global CCS Institute
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