Representatives of nations around the world attending the COP28 international climate conference signed an agreement last week that endorsed carbon capture and sequestration by the fossil fuel industry as a strategy for combating global warming.
In the U.S., the Biden Administration is also pushing carbon capture, with Biden last year signing a law, the Inflation Reduction Act, that could provide up to $30 billion in taxpayer subsidies to oil and gas companies, ethanol plants and other industries that capture carbon dioxide from their smokestacks and pipe it underground, allegedly to remove it from the atmosphere permanently.
But a new report by the Environmental Integrity Project shows that federal authorities fail to independently verify that “captured” carbon actually stays underground after companies receive their taxpayer subsidies. EIP’s analysis of 21 carbon capture monitoring, reporting, and verification (MRV) plans approved so far by the U.S. Environmental Protection Agency shows that the agency allows fossil fuel companies to write their own rules and plans, does not require specific monitoring strategies or technologies, and requires no third-party verification of data self-reported by companies.
"EIP's report joins a growing body of work demonstrating that federal and state carbon injection well guidelines pose a grave threat to communities and the environment,” said Jane Patton, U.S. fossil economy campaign manager with the Center for International Environmental Law. “It also echoes consensus that the ‘carbon sewer system’ buildout is a massive gift of the public's money to the very fossil fuel interests causing the climate crisis.”
Of the 21 monitoring plans for underground carbon storage projects approved by the EPA, 16 of them were submitted by oil and gas companies. Projects that receive these taxpayer subsidies employ new, controversial technology that captures carbon dioxide emissions from industrial sources – or directly from the air – and injects it underground, with the intention of removing it from the atmosphere permanently. It factors heavily into the environmental agenda of the Biden Administration, which increased the tax credits available to carbon storage projects in the 2022 Inflation Reduction Act. This push for carbon sequestration has spurred a wave of new announcements for carbon storage projects.
Some projects could be eligible to receive millions. Blue Flint Ethanol in North Dakota, for example, which expects to sequester 200,000 metric tons of CO2 annually once operational, could be eligible for up to $17 million a year. While per-metric-ton tax credit rate is lower for enhanced oil recovery projects, most of the carbon dioxide sequestered in the United States right now is injected by oil and gas companies.
The oil and gas and ethanol industries reported sequestering nearly 8 million metric tons of carbon dioxide in 2022, a fraction of the total 2.7 billion metric tons of greenhouse gases all industries reported emitting to EPA in the same year. That amount of CO2 sequestered could be worth up to $213 million in tax credits in 2022. For companies that meet the hiring, wage, and operation date requirements set by the Inflation Reduction Act, the same amount could be eligible for up to $504 million in 2023, once the expanded tax credit takes effect.
However, these tax credits often go towards producing more fossil fuels or disposing of long-buried carbon dioxide that flows up from producing oil and gas wells. Companies that use carbon dioxide to loosen up and extract hard-to-reach underground oil deposits, a process called enhanced oil recovery, are eligible to receive tax credits. Companies can also receive tax credits for disposing of acid gas, a mixture of carbon dioxide and hydrogen sulfide formed as a byproduct of natural gas processing.
Occidental Petroleum and Perdure Petroleum (also known as CapturePoint) are two of the most prolific companies already storing carbon, with five enhanced oil recovery projects between them, sequestering a combined 6.6 million metric tons of CO2 underground in 2022.
"As Louisianans fighting for a just and livable future for ourselves and our children, these flawed tax credits, often given to massive fossil fuel corporations, should be used instead to assist with real solutions to address the climate crisis,” said Eloise Reid, manager of the Louisiana Against False Solutions Coalition.
EPA requires that companies reporting this carbon sequestration data have approved monitoring, reporting and verification (MRV) plans, which are meant to ensure the carbon is stored securely in underground rock formations and that companies are reporting accurate data. These EPA-approved plans can also be used to qualify for tax credits.
The Environmental Integrity Project reviewed all 21 plans approved by EPA as of Oct. 31 in the report, “Flaws in EPA’s Monitoring and Verification of Carbon Capture Projects.” It found that these plans:
These monitoring plans are important for verifying the injected carbon stays confined to the underground reservoir and is not leaking back to the surface or into underground sources of drinking water. Ineffective monitoring at these carbon injection sites could allow carbon to escape into the atmosphere and allow companies to claim tax credits for carbon that is no longer in secure geological storage. Operators of at least 58 more long-term carbon storage projects are currently seeking permits from the EPA.
However, only five long-term carbon storage projects have received EPA approval for their monitoring plans so far. Unlike enhanced oil recovery or acid gas disposal, long-term carbon storage injects carbon underground with the sole purpose of removing it from the atmosphere.
Most of the approved projects are oil- and gas-related. Ten of the other plans were for enhanced oil recovery projects and six were for acid gas disposal sites. Carbon injection at these sites is secondary to the production of more fossil fuels, which will contribute more carbon dioxide emissions into the atmosphere. However, these companies can still claim tax credits for carbon storage.
Reid, manager of the Louisiana Against False Solutions Coalition, said that instead of tax breaks for such proposals by oil and gas companies, the group “instead advocates for an increase in renewable energy production, reducing emissions by capping abandoned oil wells, phasing out fossil fuel production and development, and making sure companies cannot greenwash their way into continuing to harm our people and our environment.”
The “45Q” tax credit for carbon sequestration was first created in 2008, and then expanded in 2018 and again in 2022. The newly expanded tax credit could cost taxpayers an estimated $30 billion over 10 years, depending on how many carbon capture projects come to fruition. This same amount could pay for 750,000 households to install solar panels or for 6.4 million homes to be weatherized.
The Environmental Integrity Project’s report also found that the monitoring plans have no specific technological requirements. While the plans must include certain elements, such as an identification of pathways through which carbon can leak and a strategy to detect and quantify leaks, companies can essentially write their own rules for how they will do that.
The plans are often vague or ambiguous about the monitoring that will take place at the site. Companies are not always specific about how often monitoring actions will be performed or plan to “re-evaluate” how often surveys will be performed in the future. In some cases, the plans did not even commit to any specific strategy for monitoring. One monitoring plan simply explained that the “most appropriate” method to quantify a carbon dioxide leak would be chosen if a leak were found, with little elaboration.
The plans also lacked a clear long-term monitoring requirement. Long-term carbon storage projects are governed by permits that specifically regulate carbon injection, and they require companies to continue monitoring even after carbon injection ceases. Enhanced oil recovery and acid gas disposal are governed by broader permits that regulate oil and gas-related injection and have no such long-term monitoring requirements. According to their monitoring plans, most of these oil and gas-related projects anticipate as little as two or three years of monitoring post-injection, a sharp contrast to the 10 years promised by long-term carbon storage projects.
Enhanced oil recovery projects must also address the significant challenge of keeping carbon underground in oil and gas fields already perforated by prior drilling. Wasson San Andres, an oil field in heavily drilled West Texas, has 4,700 wells in the monitoring area, many of which are inactive or abandoned. All of these wells need to be monitored for leaks.
Many critics remain skeptical about carbon storage as a strategy to address climate change. They argue that not only is it untested in the long term, but the technology is also very expensive.
For example, Petra Nova West Ranch, an enhanced oil recovery project in Texas and one of the earliest sites to adopt carbon capture, was shut down in 2020 following a decline in oil prices. The shutdown came after only four years of operations, despite the company reporting spending $1 billion on retrofitting a coal-fired power plant with carbon capture technology, along with a $190 million grant by the Department of Energy. Operations resumed at the site earlier this year, but even before the shutdown, the project was not meeting its goals. Between 2017 and 2019, it only captured 3.54 million metric tons, about 15 percent short of the 1.4 million tons per year expected.
Lead photo: An Iowa farmer points out features on a map illustrating proposed carbon-capture pipelines that would run through her property on April 26, 2022. (Francis Chung/E&E News/POLITICO via AP Images)