The Future of Carbon Capture and Sequestration

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By ratifying the 2015 Paris Agreement,[1] nations across the world made a commitment to reducing greenhouse gas emissions by at least 40% by the year 2030.  Carbon dioxide is one of the primary greenhouse gases found in the Earth’s atmosphere, accounting for 76% of global greenhouse gas emissions according to published reports.

Any effort to reduce greenhouse gas emissions will undoubtedly rely heavily on reducing the presence of carbon dioxide in the atmosphere. There are two primary ways to achieve a reduction of CO2: (1) decrease the output of carbon dioxide emissions; or (2) increase the amount of carbon dioxide that is removed from the atmosphere.

The latter option is known as carbon capture and sequestration (“CCS”). CCS is the process of seizing atmospheric carbon dioxide and storing (or “sequestering”) these gases in physical formations in the ground.[2] Carbon capture and sequestration techniques have existed for decades, but the development of specific technologies for CCS has been largely cost prohibitive due to lack of governmental support in the legislative, regulatory and financial arenas.

However, majors such as Exxon, Chevron and Shell are joining a broader push to make the requisite technology cheaper and more efficient. Producers and governments have shown interest in CCS as it allows for the continued use of fossil fuels while reducing net carbon dioxide emissions. “The demand for energy is growing, and the expectations to lower the carbon footprint are increasing,” says Barbara Burger, president of Chevron’s venture-capital arm.[3]  Another reason for producers’ interest in CCS programs is that injection of carbon dioxide underground can serve to release trapped oil. This process is known as enhanced oil recovery and is currently the top use for captured carbon dioxide globally.[4]

A necessary step for wide-scale CCS development and deployment is the creation of a clear legal framework to regulate this new technology. In Texas, for example, case law has not yet settled critical questions regarding real property rights for capture, injection, and storage such as the issue of who owns the rights to lease subsurface pore space for carbon storage when the mineral and surface estates have been severed.  Additional legal and other issues surrounding CCS include transportation, long-term storage monitoring, migration and leakage liability, monitoring and enforcement of agreements, risk management, competition, taxation, and incentives such as carbon tax credits.[5]

Creating effective CCS regulatory systems may be a difficult task because of the technology’s unique features, such as the inherent complexity of potential long-term storage needs, but if this framework becomes well-established, CCS would likely prove to be a vital process utilized by nations around the world to meet global environmental goals over the next twenty years.

[1] https://unfccc.int/process-and-meetings/the-paris-agreement/what-is-the-paris-agreement.

[2] Nigel Bankes, Jenette Poschwatta & E. Mitchell Shier, The Legal Framework for Carbon Capture and Storage in Alberta, 45 ALTA. L. REV. 585, 589 (2007).

[3] https://www.wsj.com/articles/carbon-capture-is-winning-fans-among-oil-giants-11581516481.

[4] https://www.globalccsinstitute.com/.

[5] https://www.betterenergy.org/blog/primer-section-45q-tax-credit-for-carbon-capture-projects/.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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