Carbon Sequestration Regulation and Permitting Moves Forward

Posted on September 24, 2008 by Joe Koncelik

Carbon capture and sequestration (CCS) is a critical strategy proposed for combating climate change.  It involves the injection of CO2, a greenhouse gas, generated by coal-fired power plants and industrial facilities deep beneath the earth's surface for long term storage. 

There are potential significant issues with CCS, including:

  1. 1.  Pollutants from the plant mixing with the CO2 that is injected leading to contamination of water supplies;
  2. 2.  Potential mobility of CO2 once it is injected; and
  3. 3.  Corrositivity of CO2 may result in release of subsurface contaminants into drinking water supplies

The Department of Energy and Coal State's are betting heavily on the success of carbon sequestration.  Federal funds are supporting some 25 projects around the country that will investigate the feasibility of CCS. 

To address the concerns with CCS, U.S. EPA and the States are beginning to develop regulations for CCS projects.  This Summer major developments include release of U.S. EPA's rules and the issuance of an Underground Injection Control (UIC) permit by Ohio EPA for an Ohio test site.

Beginning this month, the Midwest Regional Carbon Sequestration Project (MRCSP) is utilizing FirstEnergy's R.E. Burger Plant as a test site for injection of up to 3,000 tons of CO2. As reported on the MRCSP web page, the period of injection could vary from three to eight weeks, depending on the properties of the injection zones and the time needed for experimental set-up, regulatory oversight and monitoring.

The injection follows Ohio EPA's issuance on September 2, 2008 of a permit to allow the installation and pilot testing of the underground injection well for purposes of carbon sequestration.  This is the first permit issued in Ohio that would allow injection of CO2 subsurface for purposes of carbon sequestration.  Some interesting aspects of the permit include:

  1. Injection will occur at three different geologic locations-  the intervals range from 5,923 feet to 8,274 feet below surface.  The intervals are selected to prevent mobility of the injected CO2.
  2. Closure financial responsibility-  Total project closeout including closure of the well in accordance with regulatory requirements were estimated at $75,000 to $100,000.  This amount only covers sealing of the well.  No money is set aside in the event any other issues arise. Some may question whether this is sufficient financial assurance if it was anything other than a test site.
  3. Monitoring of Injected Fluids-  On a quarterly basis, the injected material will be analyzed for various contaminants including SO2, NOx, particulate matter, and mercury.  The monitoring is an attempt to verify contaminants from the plant are not mixed with the injected CO2.

Issuance of the permit precedes finalization of U.S. EPA proposed rules governing regulation of carbon sequestration projects.   U.S. EPA's proposed rules and Ohio EPA's permit rely on similar legal authority on the Safe Drinking Water Act (SWDA).  The permit together with the proposed rules give insight into how CCS projects could be regulated in the future. Areas covered by both the permit and U.S. EPA's proposed rule include:

  • Geologic site characterization to ensure that wells are appropriately sited
  • Requirements to construct wells in a manner that prevents fluid movement into unintended zones;
  • Periodic re-evaluation of the area around the injection well to verify that the CO2 is moving as predicted within the subsurface;
  • Testing of the mechanical integrity of the injection well, ground water monitoring, and tracking of the location of the injected CO2 to ensure protection of underground sources of drinking water;
  • Extended post-injection monitoring and site care to track the location of the injected CO2 and monitor subsurface pressures; and
  • Financial responsibility requirements to assure that funds will be available for well plugging, site care, closure, and emergency and remedial response.

While the regulations and permitting of CCS are moving forward, not everyone is embracing CCS. In recent testimony before the U.S. House of Representatives Energy and Commerce Subcommittee on Environment and Hazardous Materials, serious concerns were raised by the American Water Works Association (AWWA) about the potential effect CCS technology may have on the nation's underground sources of drinking water.  Strong regulations and successful pilot tests will go a long way to addressing these concerns.

 

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Sustainability, take note of fuel and energy saving opportunities

Posted on August 14, 2008 by Joe Koncelik

Here is a sampling of sustainable practices that can directly improve  your company's bottom line. As you can see from the descriptions, these practices involve large Fortune 500 companies.  However, there is no reason they can't be implemented by smaller companies.  The examples in this post can help save fuel and reduce energy costs.  With ever increasing prices for both the incentives and advantages of thinking proactively continue to grow.

Plastic or Wood Pallets?  The Wall Street Journal reported that using plastic pallets instead of wood for trucks is not only more environmentally friendly, but also a money saver. The Journal reported:

They last longer, they weigh less, and they don’t need paint or chemical treatments. Since a plastic pallet can easily handle 100 trips—versus two trips for a single-use wooden pallet—the difference in greenhouse-gas emissions is stark: 45,000 kilograms of carbon dioxide for the plastic pallets, compared with 300,000 kilograms for the wooden pallets. Most importantly, says iGPS, you don’t have to chop down trees to get plastic pallets: A Virginia Tech study found that 40% of the U.S. hardwood harvest goes to wooden pallet production.

On the iGPS website (a manufacturer of plastic pallets) even has a calculator which lets shipping companies tally how much fuel they’d save by switching from wood to plastic.

Retailers Discovering Energy Efficiency-  Another Wall Street Journal article covered the increased usage by major big box retailers and supermarkets to energy efficient heating, cooling and lighting. Stores like Office Depot, Kroger and Walmart are saving energy and money by adopting advanced energy efficient designs in their stores.  In Ohio, a state that will be facing significant increases in energy prices, smaller retailers and commercial store owners are wise to take heed.  Here are some of the changes being implemented:

  • Skylights that have reflective mirror that tracks the sun to provide natural lighting throughout the store thereby reducing energy costs
  • Intelligent lighting systems that automatically adjusts the fluorescent lighting based on the availability of natural light in the store
  • Parking lots use concrete not tar to reduce heat generated around the store
  • LEDs (light-emitting diodes) rather than incandescent bulbs in freezer units

The article notes that construction costs increased by 10% to add these energy efficient technologies, but each store is projected to save 25% in energy costs.  This will allow recovery of their upfront costs within a matter a few years.  I am certain those calculations don't even take into account the likelihood of increased energy prices.

Smartway the "smartway" to reduce diesel costs-  U.S. EPA's Smartway program is an innovative brand that represents environmentally cleaner, more fuel efficient transportation options.  Smartway can help finance equipment that can significantly save fuel costs.  For example, Auxiliary Power Units (APUs) allow truckers to power their truck without idling.  Smartway also rates vehicles based upon their emissions.  Perhaps one of the most useful tools you can find on U.S. EPA's website is the Smartway calculator.

 

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CO2 to Jolt the Coal States

Posted on June 20, 2008 by Joe Koncelik

Everyday we are bombarded with stories of rising gas and energy prices.  The USA Today recently had a front page article on the increases in electricity rates due to the rise in fuel costs.  The article said utilities are raising rates up to 29% due to soaring fuel cots.   Its not just oil that has skyrocketing prices, natural gas and coal have experienced dramatic increases as well.  Since the beginning of the year coal prices have gone from around $60 per ton to well over $100 per ton (depending on the type of coal purchased). 

Ohio businesses have yet to experience the impacts from what is happening in the energy markets.  Until recent passage of Senate Bill 265, Ohio had frozen its electric rates so recent fuel cost spikes have not been taken into account in rates.  As reported by John Funk in the Cleveland Plain Dealer, the utilities have begun meeting with the State to discuss price increases. 

Ohio better brace itself for even a larger jolt in prices attributable to CO2 regulation.  Federal legislation such as S. 2191 (the Lieberman-Warner Bill), which would regulate carbon emissions, had a quick death a few weeks ago in the Senate.  However, it is inevitable that federal legislation that establishes a carbon cap and trade program will pass soon after we have a new President (both McCain and Obama support the cap and trade approach). 

With 87% of Ohio's power coming from coal, what impact would such a cap and trade program have on Ohio?  Most understand there will be an impact, but I'm not sure most understand the magnitude.  To illustrate the impact, I attached a chart from U.S. EPA's modeling of the impact of the Lieberman-Warner bill on electricity generation.  The two charts project the amount of electricity generation from various sources (blue = coal, yellow = nuclear, green = other sources).

The chart to the left (click to enlarge image) is the status quo- no greenhouse gas regulation.  It projects coal-fired power would continue to dominate generation in the US. The chart on the right shows what will happen if something close to Warner-Lieberman passes. 

Not only does the amount of coal power shrink relative to nuclear and other sources like renewables, the composition of generation from coal dramatically shifts. The change from blue to red in the chart project the conversion of coal to carbon capture and sequestration (CCS).  U.S. EPA projects that ALL coal plants will institute CCS by the year 2035.  Why?  Because the cost of emitting carbon will be so high that the economics will drive utilities to institute CCS. 

Even U.S. EPA notes in its analysis that this projection is "optimistic."  That certainly is an overstatement given the fact there are no successful CCS projects currently being implemented.  So what does it mean if CCS is unrealistic in that time frame?  It means huge cost increases for coal-fired utilities because the price of allowances under the cap and trade program will rise.  

With fewer reductions there is a corresponding increase in the value of the C02 reduction credits used to offset emissions.  Higher costs for C02 credits translates into larger compliance costs for coal-fired utilities. Those huge costs will be passed on to consumers in the form of electricity price increases. 

Seems to me Ohio business and officials better start seriously considering the implications of federal regulation of CO2.  I am not advocating against passage of greenhouse gas regulation.   Ohio better start planning for a carbon constrained world and how electricity prices tied to coal generation may affect Ohio's competitiveness.

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