Indiana lawmakers have introduced a pair of bills aimed at establishing the validity of carbon capture and sequestration projects in the state.
The House Committee on Natural Resources passed House Bill 1249, which gives a Vigo County carbon capture and sequestration project special liability protections, and House Bill 1209, which lays the foundations for a state authorization process for CCS projects.
Carbon capture and sequestration involves capturing carbon dioxide emissions from power plants or industrial processes and injecting the carbon dioxide into rock formations deep underground.
CCS projects could prevent hundreds of millions of tons carbon dioxide from entering the atmosphere and trapping heat, which could reduce the severity of future climate change impacts.
But the technology has so far not lived up to its potential.
The U.S. Department of Energy spent $1.1 billion on coal-fired and industrial CCS demonstration projects between 2010 and 2017, and the Infrastructure Investment and Jobs Act 2021 committed an additional $2.5 billion to other CCS demonstration projects between 2022 and 2025.
Only three out of 11 projects were completed in the DoE’s initial CCS investment, two located in Texas and one in Illinois, although the DoE circumvented cost controls to keep the projects afloat.
The three projects cost US$620.6 million to capture a total of 3.4 million metric tons of carbon dioxide per year, or less than 1% of the nation’s total. 5.1 billion metric tons annual energy-related carbon dioxide emissions.
One of the three projects was closed in 2020, reducing the carbon capture potential to 2 million tonnes of carbon dioxide per year.
Proponents of CCS, including producers and users of fossil fuels responsible for a large portion carbon dioxide emissions, say more government investment is needed to make projects financially viable and ultimately more efficient at capturing carbon dioxide.
Critics argue that CCS projects and federal tax cuts backing the projects give coal-fired power plants and other carbon dioxide emitters a lifeline that could prolong the emissions the projects are meant to offset.
Indiana lawmakers decided to test the effectiveness of carbon capture and sequestration in 2019 by to allow a pilot project in the county of Vigo in Wabash Valley Resources LLC hydrogen and ammonia plant in West Terre Haute. The project depended on obtaining a Class VI Underground Injection Control Permit from the US Environmental Protection Agency.
Nearly three years after the pilot project was approved by the state, the company has yet to receive its permit and has yet to begin sequestering carbon dioxide, despite obtaining tens of millions of dollars at the federal level and private funding.
House Bill 1249, introduced by Representative David Abbott, makes changes to the description of the pilot project and protects Wabash Valley Resources from lawsuits by those affected by the CCS project unless they can prove that there was actual interference with the person’s use of their property. or “direct and tangible” physical damage to a person’s property. A person would not be allowed to sue because of a “perceived risk” to their property, including a decrease in the value of their property due to the CCS project.
Similar language was introduced as an amendment to a carbon market bill last year, but was removed when it threatened to sink the bill.
“We think this is a very important project. It is a pilot project. This means that we will launch the test rocket before flying to Mars. So we’re using this as our test baby, so to speak, and we’re going to learn from it. We’re going to start an entrepreneurship that has invested millions of dollars for a benefit that’s going to help everyone in Indiana,” Abbott said when introducing the bill. “I think it’s extremely important, and this question of responsibility is just a clarification. It’s already established in the law. We’re just making it clearer.
The bill faced opposition from the Indiana Department of Natural Resources, which said the wording of the bill could allow Wabash Valley Resources, as operator of the pilot project, to benefit immunity from liability that other entities would not have and could allow the company to take land without compensating the owner.
“In effect, you transfer a property to a private company without compensating the owner. While the ministry welcomes exploration in this area, we would prefer not to see this language incorporated,” said MNR Director of Legislative and Public Policy Caitlin Smith. “We believe pilot operators should have to acquire pore space and ownership and all other necessary property rights before sequestering carbon, and, as a pilot operator, should not have liability protections. so broad at the expense of landowners and the state. taxpayers in an area where we are still learning more about the potential short-term and long-term consequences of these projects.
Concerns about unique liability protections and their effect on property rights have led farm groups like the Indiana Corn Growers Association, Indiana Soy Bean Alliance and Indiana Farm Bureau to oppose the bill in its current form.
“While we understand that CO2 storage or disposal is a growing commercial industry, this should not take precedence over property rights. And, so, I think this bill could be clearer on whether the underground pore space is retained by the landowner, which if not would be a significant departure from policies historically favorable to Indiana landowners,” the Indiana Farm Bureau associate said. director of political engagement Jeff Cummins.
If the CCS pilot project is allowed to appropriate the porous space under someone else’s land, it could affect the landowner’s prospects of using their land to sell carbon credits on a carbon market.
The bill also encountered opposition from the Citizens Action Coalition, the Hoosier Environmental Council and the NAACP Indiana State Conference.
Despite concerns and opposition, the bill passed the committee by a narrow 7-5 vote.
House Bill 1209, drafted by Rep. Ed Soliday, sets the foundation for a permitting program for CCS projects in the state.
If the bill becomes law, once CCS projects apply for and receive a UIC Class VI permit and purchase or lease the rights to the pore space where the carbon dioxide would be injected, the project operator can request permit from MNR.
If the project is approved, the operator will have to pay 8 cents for each ton of carbon dioxide estimated to be injected into the underground storage facility. The money would go into a trust fund to cover MNR’s costs for long-term monitoring and management of the facility.
The bill would also prohibit punitive damages in lawsuits when the CCS operator complies with MNR permit requirements.
The bill is backed by fossil fuel operations in Indiana, BP and Countrymark.
“There are over 100 CCS projects in the works around the world, and these projects will compete to determine which progress, like all projects in all investments we make. Indiana has a clear advantage in this competition. Its underground potential is unique in the United States and globally,” said Damien Bilbao, vice president of business development for BP in the United States.
Researchers have found that the hundreds of depleted oil and gas deposits found in Indiana since the late 1800s would be “optimal candidates” for carbon dioxide sequestration due to favorable porosity, structural depth, temperature and other characteristics.
BP’s Whiting refinery in northwest Indiana produces approximately 440,000 barrels of crude oil every day. According to EPA estimates, each barrel of crude oil produces 0.43 metric tons of carbon dioxide, or about 189,000 metric tons of carbon dioxide equivalent.
A single CCS project would only be able to capture and sequester about nine days worth of carbon dioxide produced by oil from the Whiting refinery each year.
House Bill 1209 passed the committee by a vote of 10 to two. Both bills will now be considered by the full House.