State Regulations

State

 

Rate basing

State funding for CCS projects is often more substantial than incentives from the federal government. 

The most important of these is the ability to be placed into the rate base of a utilities customer base. Carbon capture and storage projects face several barriers in getting placed into customer rate base.  The first barrier is existing state laws that define what can and can’t be rate based.  Often existing law focuses on finding the most reliable and least cost option.  This can be a challenge for any new technology, including CCS, to meet. 

 

Newer technology can have more cost uncertainty or reliability risks.  And state public service commissions may not be inclined toward CCS because it may not be immediately needed to meet federal environmental standards.  Gaining rate base treatment for a project is also costly.  Projects may face extensive consumer our industry opposition during proceedings.

 

To overcome these barriers, state laws may need to be amended to specifically allow rate basing of CCS projects or their components, including capture, compression, transport and storage.

 

 

Geologic Storage Utility

 

A new institution is needed to support planning, deployment, and rate recovery of sequestration injections sites during the growth of CCS. A geologic sequestration utility would be a specialized, regulated utility that would commercialize injection (and, in some cases, transport) of carbon dioxide into brine aquifers. It would manage, and assume liability for, CO2 disposal from power plants, manufacturers, and other stationary sources of CO2.

 

For these services, the utility would recover its cost in rates, along with a reasonable rate of return. Its purpose would be to reliably develop geologic sequestration at a system-wide scale. It should not compete with otherwise commercial operations, such as EOR, although it could conceivably help facilitate EOR through joint ventures. Its service territory would be comprised of a formation (or set of formations, such as a sedimentary basin) for which it would be desirable to have a single entity coordinate and manage the resource.

 

The central challenge facing geologic sequestration is how to scale up from a few test injections to the commercial injection of CO2 from hundreds of sources in aregion. A GSU would do several things to speed widespread commercial sequestration:

 

Scale: It may take a decade to fully develop a single sequestration site. A GSU, funded by rate recovery, would have the resources to develop many sites simultaneously, making it possible to receive CO2 from multiple stationary sources.

Reliability: A GSU would offer a reliable, “over-the-fence” CO2 sequestration option for power plants and other stationary sources, allowing them to focus on their core businesses.

Efficiency: A GSU could better manage issues arising from multiple projects, including transparency, selecting and characterizing storage sites, acquiring property rights, and addressing property damage and other liability issues.

Financing: A GSU would be able to ensure stable funding for sequestration and manage costs through ratemaking.

Liability: A GSU would free electric generators from potential liability concerns by creating a public utility capable of recovering (through rates) the funds needed for any remedial action.




Fact

What CATF is doing in federal policy:

  • CATF is working closely with the Administration and leaders in Congress to develop climate policies and regulations grounded in science, technology, and the law
    • Provide non-partisan, data-driven analysis that has won the trust of Senate and House members and staff,  and help to identify and defend policy designs that will achieve the greatest climate benefit at the least cost.
    • Strengthen laws and regulations to clean up coal and implement carbon capture and storage